Should we be celebrating retail growth?

Author: Matsiko Kahunga. PHOTO/FILE

Addressing us students and faculty at Makerere University in 1991, President Museveni asserted that Uganda was donating jobs by simply exporting raw materials. He demonstrated this by the example of a kilo of cotton against a T-shirt:  exporting a kilo of cotton means that the vital value addition stages take place outside Uganda, and we import the same T-shirt at a cost 30 times the kilo of cotton we exported. 

The future, he argued, is in industrialisation, and since man chose cotton as the main fibre when he decided to clothe his nakedness, and Uganda is blessed to have the best cotton in the world, we must take advantage of this. This was echoed years later by the Founder Chairman of Kenya-based Sameer Group, Dr Naushad Merali (RIP), while addressing a section of the Ugandan business community and policy makers in Kampala. In his words, “...we cannot develop East Africa by shopping malls.... like Dubai, which has three million people...East Africa has more than130 million people...only industrialisation will liberate us...”

Over three decades since the kilo-of-cotton-t-shirt dichotomy, Uganda goes chest-thumping as the fastest growing market for retail business in East Africa. Should we be celebrating or this should get us worrying?  Beyond the figures (averages and percentages), what lies beneath this ‘growth’?  And whose growth is this? 

A walk-through Kampala, from the upmarket shopping centres to the downtown flea market reveals it all: a consumer-importer-speculator economy.  Be it textiles and garments, footwear, electricals, electronics, furniture, paper, toys, name it. 

Since it is the final consumer who pays for everything, we are simply exporting jobs, skills, technology, while stifling the little innovation that there is in the country.  Thanks to our open-door liberal policy, we have literally become a dumping and damping ground. This is the aspect of our free trade that should make us worry. 

Besides stifling local initiative, the dumping scares away genuine investments in manufacturing. We preach self-employment and job-creation to young people, but how tenable is this? My friend, a polytechnic graduate in leather technology, had to abandon his cottage factory and join the army of hawking imported used shoes, belts and handbags. Bata had to close production and resort to importation, as it was being outcompeted by cheap imports.  

With the cost of manufacturing rising in Europe, Uganda and East Africa would be priority investment destinations for global manufacturers. Global brand companies find it cheaper to produce high quality, European standard products outside Europe, exporting them from those overseas production centres. Nestlé, the global food giant produces 80 percent of its output outside Switzerland, its motherland and headquarters.

Instead of chest-thumping about this retail ‘growth’, the policy makers and industry leaders must go back to the drawing board, to revisit the liberalisation policy. 

There are enough clauses and provisions in the various World Trade Organisation (WTO) agreements and protocols, which can be exploited to protect infant industries here. This is the only way to create jobs. 

Allocating billions to the youth in national budgets in the current environment of dumping and damping will make no difference.  It will be more rational and job-creating to set a time frame within which to reduce and eventually eliminate counterfeits and used goods from the Ugandan market.  

We only need to tell Yamato, Clarks or Nike that we have a five-year target within which to eliminate counterfeit and used garments and shoes from Uganda. They will come running with their money, technology, expertise and brand reputation. And the jobs they will create will not be matched by 100 years of ‘youth funds’. 

Matsiko Kahunga


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