Petty trade war

Petty trade is big issue

Wholesale and retail trade is a hot wire issue in Uganda as it contributes 24% to the country’s Gross Domestic Product (GDP) and employs the most people after agriculture at household level. Uganda has in the past been noted as the most entrepreneurial nation in the world. The trade contribution to GDP is higher than of the food processing and manufacturing that that contributes 15% and 14% respectively, according to the available data from the Uganda Revenue Authority.

Kyambadde’s views appear to be similar to President Yoweri Museveni remarks in July when he said Chinese and Indians should not engage in retail trade.

“It is not correct for the regulators not to take action against the Chinese and Indian retailers who unfairly compete against our retailers,” he said. “Retailing should be preserved for the Ugandans or, possibly, the other African immigrants as well.”

Museveni instructed the relevant government ministry to ensure that foreigners are re-directed to manufacturing and construction.

It is estimated that more than 600 foreigners trade in Uganda without the right work permits or documents to operate businesses, according to the trade ministry. Most are Chinese and Indian nationals.

Charles Ocici, the executive director of Enterprise Uganda, a USAID-sponsored agency promoting Small and Medium Enterprises, told The Independent that Amin expelled Asians in to reduce competition in trade in favour of the locals but the locals failed to manage the businesses and the economy suffered.

He said to successfully curb foreigners from participating in petty businesses, the local traders should develop capacity to ran business like their foreign counterparts. Most leading businesses in manufacturing, trade, and services are owned by foreigners or Ugandans of foreign origin.

“If the government implements that policy without training its traders to bridge that gap created as a result of the departure of the so-called petty traders, then, restricting these foreign traders in these small businesses will be a merely short term gain,” he said.

Isaac Shinyekwa, the head of Trade and Regional Integration Department at the Makerere University-based Economic Policy and Research Centre (EPRC) says there’s need for tighten immigration rules to ensure that whoever comes in the country, exactly does what he or she came to do.

“Foreigners doing serious business should be left to continue,” he told The Independent.

Dr. Frederick Golooba-Mutebi, an expert in social research who has written widely on trade related issues in the region, told The Independent that Uganda needs foreign traders.

“Clearly, if a country that has a miniscule formal sector and a government and economy that have little capacity for creating jobs, even for their own nationals, it really can’t stop foreigners arriving in droves and using their ingenuity to prosper in this Wild West society,” he said.

He added: “And if that ingenuity leads to intensification of economic activity, job creation, and more tax revenue and ultimately economic growth, it ought to be celebrated, not condemned.”

He says if the Chinese and Indian nationals come in to do big business and fail and instead of packing up and leaving, switch instead to petty trade and retail – and in the process ensure their own wellbeing and contribute to that of the Ugandans they employ or buy from or sell to – rounding them up and deporting them is as smart as shooting oneself in the foot.

In any case, Mutebi says, many of the large foreign businesses in Uganda including the Madhvani Group of Companies and the Mukwano Group of Companies started as small businesses and now employees thousands of Ugandan population and pays billions of shillings in taxes to the government.

Golooba-Mutebi says the foreign traders should be encouraged to regularise their immigration status and be let free to carry on making money, re-investing it, and creating more jobs.

He says the Chinese and Indians not only survive but prosper in petty trade because “there are limitless opportunities to exploit”.

“Ugandans who complain about being outcompeted are possibly those without the necessary business acumen,” he says, “Like other occupations, business should be for those who can weather the associated storms.”

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editor@independent.co.ug