Consumers want the cheap prices but local traders want the profits
Hostility towards Chinese petty traders appears to be growing in Uganda but so is the dependence on Chinese imports.
On April 19, the hostility erupted once again as hundreds of traders in the capital city, Kampala, staged a closed-shop protest and marched along some streets brandishing placards telling the Chinese to “Leave our country.”
The protests were led by the Kampala City Traders Association (KACITA) and its spokesperson, Issa Sekitto, told The Independent on April 22 that the local traders are angry that the Chinese are opening up distribution shops on every street in downtown Kampala.The local traders say if the Chinese are in the country as investors, they should set up factories, production plants, and leave retail business for Ugandans.
KACITA’s move is popular because retailing provides one of the easiest entries into employment for thousands of young people in Uganda but the opportunity is being eaten into by Chinese competitors. The locals say that because the Chinese have more capital and connections, they easily undercut them in all areas right from manufacturing, transportation, distribution, and retail.
KACITA which boasts of close to 200,000 traders says over the last seven years the traders have been complaining to the government over aliens doing petty trade but with little success, hence the street protests.
What is at stake, it appears, is the control of the growing trade in imports from China into Uganda. China is the second largest exporter of goods to Uganda after India and, according to the Uganda Investment Authority (UIA), the value of trade between China and Uganda in the last 10 years increased from US$15 million in 2006 to US$222 million in 2014, which shows an annual growth rate of 42%.
But the flow of goods is almost one way – from China to Uganda. According to World Bank statistics, the imports from China are mainly consumer goods (47%), followed by intermediate goods (26%). Capital goods are a close third at 22% and raw materials are just 4% because Uganda still has a very low manufacturing base. This means Uganda is dependent on imports for almost all of the manufactured goods it consumes.
In a sign of this growing dependence, when the Chinese traders re-opened their businesses a day after the latest protests, their shops were choking with customers eager to catch up on business they missed during the protest.The local consumers happily patronise Chinese businesses for the low prices, substantial variety of goods, and lack of alternatives.
Ugandan traders do not like that. They appear to prefer the old arrangement where the Chinese imported the goods but remained in the background as their main suppliers of wholesale goods and the locals ruled in retail.
Before the influx of Chinese retailers, the leading lights of Uganda’s trading community were making a killing from importing cheap goods directly from China and selling directly to the consumers. That changed when a few Chinese ventured into the country and set up large whole-selling ventures of consumer goods.
Finally, it appears, the Chinese clearly want the extra buck they get when they deal directly with the buyers and appear determined to cut off the middleman and brave the animosity. Chinese traders are now a common sight in many of the multi-storeyed arcades along streets like William, Wilson, Ben Kiwanuka, Nakasero and Market Square in Kampala where they occupy hundreds of outlets selling mobile phones, shoes, textiles, ladies’ accessories, electronics, and other hardware.
Lawrence Bategeka, the MP for Hoima Municipality and vice chairperson of the Parliamentary Committee on National Economy says the Chinese partly got attracted to Uganda after they observed the flow of trade between Uganda and China.
“The Chinese came and found a liberal environment; they saw a big opportunity after noticing that the Ugandans who were doing business were getting remarkable margins,” Bategeka recently told The Independent.
Another explanation could be that many of the Chinese, in fact do not have capital to run the big operations that the locals are pushing them into.
So far, it is not clear how this tussle will end but there have been many fights before and the Chinese have won all of them. As a result, despite the animosity, the number of Chinese nationals in Uganda has been growing rapidly in the past decade. Currently, conservative statistics put their population at over 10,000. And the Uganda government appears too handicapped to stop the influx.