Chris Obore
30 March 2008
Kampala — THE revocation of import licences for at least 15 companies involved in the importation of Tiger Head batteries has dragged in the names of more senior politicians.
Sunday Monitor exclusively reported last week that Tourism, Trade and Industry Minister Janat Mukwaya had asked officials at the Ministry of Justice and Constitutional Affairs to draft a statutory instrument declaring M/s White Showmans Ltd the sole importer of the batteries into Uganda.
Mr Bob Kabonero, a renowned city tycoon, owns the company. He is also the owner of Kampala Casino and Pyramids Casino & Restaurant in Kampala.
Ms Mukwaya wrote to the ministry on March 4 and by March 20, statutory instrument NO.16 of 2008 was issued, thereby banning on other traders from importing the batteries.
This development has met stiff resistance from the affected traders, who argue that the minister's decision was in bad faith and aimed at protecting the interest of one businessman. Protectionism, the traders argue, is contrary to government's policy of free market economics.
Ms Mukwaya's letter had communicated that M/s Guangzhou Tiger Head Battery Group in China "in their change of marketing strategy appointed M/s White Showmans Co...as their sole agent..."
But one trader, who declined to be named for fear of being victimised, said: "We should be free to buy Tiger Head batteries from any other agent from China and bring it to the country."
According to this trader, M/s White Showmans' sole agency should not mean traders can't buy from other authorised agents and import the same product to the country.
Our investigations have revealed that trade in Tiger Head batteries is a lucrative business.
"Those batteries have a lot of market. Ninety percent of the consumers buy Tiger Head because they are relatively cheap and rechargeable if you get the good ones," Mr Issa Sekitto, the spokesman of Kampala traders, said.
Political games
According to the aggrieved traders, the sole agency deal was reportedly initiated when Chinese Prime Minister Wen Jiabao visited Uganda in November 2006.
Our sources say that one of the Foreign Affairs ministers brought the matter of M/s White Showmans' interest in sole agency to the attention of Mr Jiabao.
Subsequently an assistant to the Chinese Vice President and that country's Minister of Foreign Affairs Li Zhaoxing, together with some officials from the Uganda Embassy in China, reportedly visited Guangzhou Tiger Head Group and informed them that henceforth the government of Uganda would allow only M/s White Showmans to import Tiger Head batteries.
Kabonero reacts
While the ill-feelings that have been generated by this turn in events spread, Mr Kabonero however, insists that he has no malicious intentions. He says that the manufacturers had for long been battling against imitation of their products.
And that as part of this fight against fake products, they sought to have a sole agent in Uganda. "They interviewed five companies and White Showmans was not the best," said Mr Kabonero.
"We were second choice but M/s Panyahululu, which was the best, lost because the manufacturers found out it had connections in Xian Dong, where fake products are suspected to come from."
According to Mr Kabonero, other companies interviewed were Kabale Distributors, M/s Cape Van International Ltd and M/s Cole International Trading Co Ltd.
"We went to China for interviews at different times in 2006. It was my luck that I was given the sole agency," he said.
Mr Kabonero added that his company was chosen because he guaranteed to import not less than 50 containers and to fight counterfeits.
"I told them the best way to fight counterfeit is to give me sole agency," he said. He rejected reports that he was able to get the deal because of his purported political connections.
"I started business humbly in Arua and I have been building on that," he said.
"I am not putting anybody out of business but my sole agency will emancipate other traders who have been buying expensively."
Mr Kabonero said that he is going to appoint distributors across the country "and they will be free to buy from my warehouse".
The tycoon added "I am not going to relent" because government does not control manufacturers.
Museveni petitioned
Not daunted, the angry traders have however taken their fight right to the doorsteps of the highest office--thepresidency.
They have also petitioned the Speaker of Parliament and the Minister of Justice and Constitutional Affairs.
In their petition to Speaker Edward Ssekandi, the traders say that Ms Mukwaya's directive was an indirect way of reintroducing monopoly in a liberalised economy.
Liberalisation of the economy has been a priority for President Yoweri Museveni. As part of the Economic Recovery Programme (ERP), Mr Museveni in 1987 proposed privatisation of government interests in business -- these included virtually all concerns from hotels to commodity marketing boards.
This process began in 1991 and set the ground for Uganda's transition from a mixed to a fully-fledged free market economy.
"The implication of the minister's letter is that there shall not only be a lack of competition but prices of the goods will rapidly shoot upwards...the consumer will suffer the consequences," reads the petition to the Speaker dated March 25.
The aggrieved traders also argue that issuing a statutory instrument against other companies was wrong because being a sole agent does not mean being a sole importer.
A sole agent means the only person or company with which the manufacturer deals directly while sole importer means the only company or person authorised to import a particular product.
"Please note that ordinarily a sole agent in one country or region only means that this agent could get favourable or discount prices from the manufacturer or the manufacturer only directly supplies the sole agent at favourable price," reads the petition.
The traders also argue that for international brands, the channel of supply is not only the sole agent in one country because "the importers can choose to get supply from the sole agent in Uganda or other agents for example in Hong Kong, or agents in other countries or regions for example suppliers in Dubai."
The traders say this is the case with international brands like Toyota.
The traders argue that the minister's directive was unfair because even if the manufacturer had appointed a sole agent in Uganda, the same manufacturer does not have the rights to restrict which firm can or cannot import its goods into Uganda.
"These rights must be handled and decided by the Ugandan government; and our government decided long ago for free trade," said Mr Deo Matsanga, who signed the petition as the chairman of the aggrieved traders.
Traders complain
Mr Matsanga told Sunday Monitor that one of the companies affected by Ms Mukwaya's directive, Kampala Modernity Ltd, belongs to the chairman of the ruling NRM party's volunteer group in eastern region, Mr Sulaiman Mafabi.
Sunday Monitor has learnt that Mr Mafabi has been bankrolling NRM activities in Mbale, Sironko and Manafwa districts. It is not clear whether he will now re-think his largesse to the party.
"We have petitioned the President because why should one person lock out other cadres from business?" he said, "Mr Mafabi spends millions in campaigning for NRM and the best reward is not denying him business in favour of one man."
Added Mr Matsanga: "In Mbale, no businessman has been helped by the state. The President wanted to help Mr Stephen Wekomba but he was also frustrated; we are now fighting for a fair share of the national cake."
Mr Matsanga is an associate at Kampala Modernity Ltd while Mr Wekomba is one of the popular businessmen in Bugisu. President Museveni had reportedly promised to assist him market wheat flour from his Safi Millers in Mbale.
Sunday Monitor has learnt that Mr Museveni also promised to assist Mr Wekomba expand his business. The presidential pledge has never been fulfilled, according to one knowledgeable member of Mr Wekomba's family.
Speaker responds
Mr Ssekandi has acknowledged receipt of the traders' petition and asked for an investigation. "By copy of this letter, the Chairperson Committee on Tourism, Trade and Industry is requested to take up the matter for necessary action," reads Mr Ssekandi's letter copied to Mr Matsanga.
Sunday Monitor has learnt that Mr Mafabi and Mr Matsanga have also put their case before the influential Ms Amelia Kyambadde, who is President's principal private secretary.
Consequently, Ms Kyambadde reportedly instructed one presidential legal aide, Omar Muhammed, and Mr Richard Jabo, a presidential aide on the economy, to investigate the matter and write a brief to the President.
Although we could not get a comment from Ms Mukwaya on this story, she had earlier told Sunday Monitor that she does not discuss policy matters in the newspapers. She also dared traders to take her on.
The political dimension which this conflict has taken plays into the generally held public belief that big business in Uganda can only succeed where one has access to people with the right political connections and not merit.
For instance, the public has been incensed at the way government has been almost recklessly allocating public funds to private businesses like the limping Apparels Tri-Star garment enterprise, bailing out of businessman Hassan Basajjabalaba and then the buying of the controversial 25% shareholding in Speke Resort Munyonyo - all of which account for billions of shillings in taxpayers' money. Parliament has also complained about this practice by the ministry of Finance.
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