2 August 2012

Uganda: China Petty Traders Exploit Weak Immigration Laws

Uganda's weak immigration laws are fuelling the entry of more Chinese traders involved in petty street business, according to James Mulwana, the chairman Standard Chartered Bank.

"Petty trade is not encouraged by the Chinese government. The onus is on the immigration departments of the relevant country to set certain rules one needs to follow and the amount of money that one needs to have to be considered an investor in a country," he says.

Mulwana was speaking to the press after attending the African Chairmen's Conference in China last month, which took place in Beijing. The purpose of the conference was to forge deeper ties between China, one of the world's fastest growing economies, and Africa, presently the most exciting emerging market.

It is not the first time that complaints have been lodged against the immigration department. A stringent process to acquire work permits - which usually go for about $1000 - has been further marred by bribery allegations. And yet cracking down on China's petty traders might not be as easy if handled poorly, could rattle a couple of feathers. According to Uganda's Ministry of Foreign Affairs' website, trade relations between the country and China are strong.

China has offered Uganda's products quota free and duty free access to the Chinese market. The Asian superpower has also given scholarship opportunities to Ugandan students, donated medical equipment, and contributed significantly to the country's ICT network.

Kampala traders complain that they are choking under the weight of cheap and substandard Chinese imports. "They (Chinese) are everywhere - in fake shoes, fake electronics and some of them have started vending on the streets," says a charged trader.

Figures from a survey by Federation of Uganda Employers say most Chinese traders are small, comprising up to 73% of the 150 Chinese Enterprises surveyed. More Chinese traders instead widen the market for banks. Chinese traders use the banking channels to save and transfer money, more than their smaller Ugandan counterparts. Ecobank Uganda recently set up a Chinese desk to cater for the businessmen transacting in China.

"The introduction of the Chinese Business Desk is a giant step for the bank and the country to tap into the business opportunities that China is currently channelling to Africa," says Ecobank Uganda Managing Director Michael Monari.

A statement from Ecobank notes that last year, the amount of bilateral trade reached $400m, with China's export to Uganda amounting to $359m, increasing by 43.7%, and with Uganda's exports to China totalling $40m.

Standard Chartered bank also set up a unit to cater for traders dealing in China, and the same for Chinese traders in Uganda, early this year. The bank's unit has grown that it now hosts trade delegations, according to bank officials.

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