20 January 2013

Uganda: Foreign Petty Traders

KCCA halts issuing trading licences to foreign petty traders till Trade ministry clears them

Sinoway Jewelry is a Chinese-owned shop on William Street that deals in jewelry and other electronics. Ordinarily, such foreign businesses are registered and licenced to transact on wholesale basis. But you can buy a necklace at the shop on retail. When The Independent approached its Chinese proprietors to ask if they were allowed to retail, they rudely ordered us out of the shop. Just adjacent to the Sinoway is CH Uganda Ltd, another Chinese shop that deals in electronics specifically mobile phones. We found out that they sell mobile phones on both wholesale and retail.

Currently local traders are complaining about foreigners who jet in the country as large-scale investors in manufacturing, mining, trading, tourism, finance, agriculture etc but end up in small, petty business which, according to local traders suffocates their retail businesses and hence their livelihoods. A cross section of Ugandan retail traders in the city said they have complained to the authorities but nothing has been done about the foreigners in retail business.

Everest Kayondo, the chairman of the Kampala City Traders Association (KACITA) - an umbrella body of the business community in Kampala - told The Independent on Jan. 9 that the reason they don't want foreigners to engage in trade is because they present "unfair competition" to local retail business community.

This is because foreigners can easily procure and import goods from their countries of origin at a subsidized cost and sell them cheaply to end-users. They also can access cheap loans from banks from their countries of origin, which is not the case with the local traders who must endure high interest rates to remain in business. Traders said other foreigners persuade landlords to evict Ugandan tenants by offering higher rent.

"We have complained to government about this matter for years but nothing has been done about it," Kayondo said. "Distribution to end-users should be left for local traders so that foreigners can invest in large-scale projects to create employment opportunities to Ugandans."

Many foreign petty traders reportedly enter the country as visitors/tourists but end up in the petty business after bribing or forging work permits and trading licenses contrary to Ugandan trading laws.

Immediate registration

Several weeks ago, the Ministry of Trade, Industry and Cooperatives appeared to wake up from slumber when they announced that all foreign traders in the Greater Kampala (Kampala Capital City Authority, Mukono and Wakiso districts) should report for registration, a development that many local traders saw as an answer to their pleas.

"The ministry has received persistent complaints from the business community concerning the influx of foreigners in petty trade. The government has adopted a multi-sectoral and inter-ministerial approach to address this issue," the minister Amelia Kyambadde said in a press statement published on Dec. 5. "I am calling upon all foreigners doing trade in greater Kampala to report to the ministry for verification and registration." The exercise was to be conducted in two weeks from Dec.5 - 19, 2012 at the ministry head offices in Kampala. The ministry said it was doing so in accordance with legal provisions under sections 5, 8, 29 of trade licensing Act Cap 101, Section 54 of the Uganda Citizenship and Immigration control Act and sections 10 to 16 of the Investment Code Act.

The minster warned that failure to attend this registration exercise would lead top cancellation of the licenses in accordance with the aforementioned legislations. After the registration, a physical verification exercise to ascertain the authenticity of the information would be conducted. However, foreign traders originating from any of the East African Community member states have not been affected by the exercise.

When contacted for details about the registration exercise, R. Agaba, the commissioner for trade, said he couldn't reveal the numbers until the official report is released by the minister or the permanent secretary.

However, Agaba suggested that Ugandans should be more tolerant to foreign traders because there are benefits that can be derived from them. He said the ministry wants to have statistics about these businesses "for planning purposes."

"We can learn many good things from these people," he said. "And by the way they are a source of market for our food products and other goods. So we should not look at them as foreigners but as fellow countrymen ready to take up our culture."

However, Issa Sekito, the KACITA spokesperson, had a completely different view in a recent interview with The Independent. He suggested that the ministry shouldn't condone breaking the law because foreigners engaging in petty business in Uganda were violating the Trade Licensing Act that was amended in 2000. This, he said, was the reason they are shunning membership to traders' associations like KACITA.

For instance, Sekito said, KACITA has less than 10 Chinese traders on its membership, "yet there are many of them trading in Kampala." According to the Immigration Department, any foreign investor intending to carry out business or trade in Uganda has to obtain a work permit and a license from the Uganda Investment Authority. As a must, they are also supposed to deposit $100, 000 (about Shs 260 million) in the bank to attain a certificate of remittance among others so as to officially conduct business on Ugandan turf. Kayondo said those measures are not only insufficient but are also not implemented, which he roundly attributed to "corruption." "We have asked the authorities responsible to raise the remittance figure to $500, 000 to curb the influx of these foreign traders."

However, Kampala Capital City Authority (KCCA) appears to have heeded the traders' calls for action. Phoebe Lutaaya Kamya, the director revenue collection, told The Independent on Jan. 10 that the Authority had halted licensing all foreign petty traders unless they provide clearance from the trade ministry. "We have been licensing all groups of traders but now we are more careful," Kamya said.

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