4 December 2012

Uganda: Oil - Hoima Local Traders Losing Out

Oil finds in the western district of Hoima have sparked an immediate upturn in business there but many local traders are crying foul.

Members of the Hoima Indigenous Traders Association (HITA) are worried they could be muscled out of business by their bigger, mostly Kampala-based competitors.

"Now we can't sell like we used to do. In hardware business, they are selling cement at the wholesale price of Shs 28,000 for a 50kg bag both to wholesalers and retail customers," says HITA Chairman Robert Tibagwa.

When traders go to their regular suppliers in Kampala, like Roofings, Sembule Steel Mills and Uganda Baati, they are referred back to the new dealers in Hoima. There are many reported clashes between indigenous traders and their mainly Asian competitors.

"So we are phasing out of town because of Indians. Let there be a law stopping them from [engaging in] retail trade," Tibagwa added.

But the Indian traders deny blocking the indigenous traders from accessing factories back in Kampala. "These people are simply afraid of competition in business," said Peter Asaku, proprietor of King Star, one of the largest hardware dealers.

Asaku, who has three branches in Hoima, said other local traders were still in business.

"These days I see people like Mzee Ssewanyana offloading direct from Kampala. For the issue of retail selling, we are guaranteed to transact both retail and wholesale by Uganda Investment Authority (UIA). It is even on our licence," Asaku said.

Other affected businesses include dealers in electronics and motorcycles, who are appealing for help. Hoima Mayor Mary Grace Mugasa said she would consider a by-law on the matter.

"I also met some Indians hawking soap and other small goods .... Even you a Ugandan can't go to India and start hawking and still be an investor. Indeed, we shall look into this," said Mugasa.

However, Hoima district chairman George Bagonza said he had anticipated the competition as the oil industry develops.

"I have been telling people here in Hoima and the entire Bunyoro sub-region that with this oil, competition is a must and other giant investors are coming.

The best they can do is to think of how they can favourably compete in the market with giants," Bagonza said.

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