The Observer (Kampala)

15 April 2014

Uganda: Kenya Is Here. Are We Up for the Challenge?

analysis

An old friend, convinced that I had contacts to some of the business top shots in town - a very wild thought, I must quickly add - asked me for a favour.

"Get me one of those Chinese or Kenyans to invest in my land. It can be agriculture, housing or mining," he said, anxious to hear whether I had the magic wand that could turn his more than 3,000 acres of village land in Karamoja into some sort of gold mine.

"Those guys are serious; they mean business," he added.

Not to break his heart, I told him I would see what would come up. My surprise, besides my friend thinking I had such contacts, was his inclusion of Kenyans on the list of top investors.

How did the Kenyans get here? Where were we? At one time, the only Kenyan investment we could put a finger too was either those Maasai crafts they sold just in front of the railway station offices along Jinja road, or those pot-bellied drivers behind the now defunct Akamba buses. And this is just less than 10 years ago.

Something happened. Less than 10 years ago, KCB bank, NC bank, and Equity bank managed to expand into Uganda. The likes of Uchumi and Nakumatt opened up shop here just the 'other day' and can be found outside the city centre. Centum, a Kenyan investment house, is in the early stages of putting a massive residential project in Entebbe.

Some of these companies - Centum, Equity, and KCB - did not just launch into Uganda, they floated their shares on the Uganda Securities Exchange, offering Ugandans chance to be part-owners of their growth stories. How about we Ugandans; what have we done?

In less than 10 years, we managed to sell Dairy Corporation for a song; looked on with hardly any remorse as Sembule group begged and failed to get government help, later going down after failing to carry the burden of debt; paid little attention as Zzimwe construction wrote its last chapter in the construction of Ugandan roads; and, one beautiful sunny morning, woke up to the headline that the cabinet had raided the Central Bank and made away with more than $700m in reserves, not to invest in agriculture, but to buy Russian fighter jets!

This week, the Nation Media Group's Business Daily newspaper reported that Kenya's Gross Domestic Product - a measure of the value of goods and services produced in a year - would this year surpass the $50bn mark, and make it the fourth largest economy in Africa after Nigeria, South Africa and Angola. For that, Kenya would become a middle income country - a status Uganda wants to achieve by 2040.

Kenyan companies have driven this growth by aggressively venturing across the borders, servicing their clients who move throughout the region. To be fair to some Ugandans, there have been some of those that have crossed the borders to start businesses. The problem is that many of these traders have crossed to South Sudan to either sell mineral water or ride boda bodas!

So, how will the future shape up? Kenya is expected to continue its march into the region. That is because East Africa is gradually turning into one bloc. Other than shun Kenya's entrance into Uganda, we have to embrace it. Kenya brings to Uganda employment opportunities and synergies that we would probably not acquire elsewhere. They also bring a different mindset on how to do business.

Ugandan firms will have to look out for partnerships with Kenyan firms if they are to survive. My friend from Karamoja has cleverly seen the opportunities with this. This whole notion of Uganda competing with Kenya is just a waste of time. Dear reader, it's too late; Kenya is far ahead.

That is why last week's signing of a partnership between Kenya's Standard group, a company that is more than 100 years old, and NBS television, was a smart move. That partnership will see exchange programmes among the staff, which will ultimately increase the skills. Uganda, however, has to insist that Kenya does business here fairly.

The fear among Ugandans that Kenyan firms, looking to procure services, will want to deal with their countrymen, thus creating some sort of cartel, is real. It's already happening.

There is no reason as to why Uchumi or Nakumatt should hire a Kenyan to work as a cleaner. Kenyan banks should not hire a Kenyan to work as a teller. There are many Ugandans who can do those jobs. Kenya's failure to play by the rules could easily lead to xenophobia, a situation that helps no one.

Twitter: @jeff_mbanga

The author is the business editor at The Observer.

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