Kikuubo Vs Chinese: The dialectics of Uganda’s development

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OPINION

By Nnanda Kizito Sseruwagi

President Yoweri Kaguta Museveni has consistently articulated his vision as well as NRM’s historical mission as the socio-economic transformation of Uganda. This vision/mission entails the transformation of Uganda from a poor, rural, agrarian society to a modern, rich, prosperous, industrial one.

Industrial societies were historically born out of the industrial revolution. The Industrial Revolution succeeded the agricultural revolution as a phenomenon that transformed the global human economy, with an even greater result of overturning the pattern of everyday life.

Human production output greatly increased due to the transition from hand production methods to industrial mechanized factory systems. Although the revolution was sparked off in Britain in the late 18^th century, it later coursed like strong wine through the veins of North America in the early 19^th century and further spread from Western Europe to Japan in the late 19^th century. It is argued that since China had a long history of fluent pre-industrial production methods, it prevented it from experiencing the economic pressure that necessitated the industrial revolution in the West.

Now, let us turn back to Uganda. Over 70% of Ugandans are still peasants cultivating the land. Subsistence agriculture allows them a meal, but nothing extra to sell, participate in the monetary market or contribute taxes to the national treasury. Therefore, the majority of the Ugandan population is absent in the country’s economic production system, but very present in the country’s budget expenditure for public goods and services. This is disastrously unsustainable.

Then enters the billionaires of our economy – the Kikuubo traders. Kikuubo is a long-stretch of retail businesses in an open market in downtown Kampala. 

That hyperactive, narrow business corridor is famed for offering all types of domestic goods at fairer prices compared to other retail shops across the country. It attracts retailers who buy imported merchandise cheaply and restock it in their up-country Dukas at a higher price. The transactions traded in that half a kilometer of shops are estimated to be billions of dollars annually. This explains why it is the Mecca of most of Uganda’s successful indigenous entrepreneurs.

Kikuubo is an important piece in the economy of Uganda not only because it has made many of our local businesswomen and men, but also because it takes relatively less capital to compete for business opportunities and gainful employment as compared to agriculture.

Recently, businesspeople under the Kampala City Traders Association (KACITA) have been demonstrating against what they call Chinese retailers who are allegedly taking over their business model in Kikuubo. However, the logistics of executing retail business in a foreign country involves so many factors which make it a very expensive venture. These factors should necessitate us to examine these claims a little further.

These traders met with President Museveni on 19th April 2024, to hear out their concerns. He later wrote a detailed comment about this meeting. I was very pleased to see that he termed it as “historic” because it “involved the debate on whether Uganda should break out of the colonial and neo-colonial slavery of producing what we do not consume and consuming what we do not produce”.  This is a profound debate to have in our country. We should have it more frequently.

The President highlighted two important issues to the traders. But his message might have been delivered halfway because of his indirect approach to communication in the spirit of politeness. But I felt that he was courteously rebuking them. He was showing them that exporting raw material from Uganda to foreign industries while importing manufactured goods back home to Kikuubo, is not a model that would develop our economy and transform our society.

In emphasizing how important their business is, the traders told the President that people travel from as far as Congo (DRC) and South Sudan to buy goods from Kikuubo. But the president wisely reminded them that that is a dangerous trap because “it turns the whole of East and Central Africa, into a dumping ground for foreign consumers and capital goods”.

Mr. Museveni was indirectly defending the factories set up with the help of the Chinese in the Sino-Uganda Mbale Industrial Park. Commissioned by himself in 2023, these 16 new factories covered a range of industries where Uganda lost a lot of money while exporting products such as adhesives, chemicals, jeans, textiles, and electronics. Therefore, through these factories, we are both saving money but also creating jobs for thousands of Ugandans. Most importantly, as noted by the president, these industries will enable us to develop our own industrial capacity. The president decried the incapacitation of African economies which import “big items such as air-crafts etc. and also the most ordinary such as clothes, food, etc.” which stunts our growth.

No country in the world ever transformed from a poor agrarian society as Uganda is to an industrial modern economy as Ugandan aspires to be, through the exportation of foreign goods and reselling them at a profit in one’s home country. It doesn’t matter whether Kikuubo employs a million more Ugandans tomorrow and makes tens of billions of dollars in profit, that model of entrepreneurship has never transformed any country and will never transform Uganda.

Our development will come from national companies. Indigenous capital remains the major, historically known stimulus of transformative economic growth. Since Uganda lacks expertise in manufacturing, our Chinese partners have taken the unenviable task of helping us set up industries that manufacture goods which most other countries would rather only export to us.

Ugandan youth are working in these factories, learning how to use industrial machines and also make them. As such, the market is reasonably going to be shocked by the massive production of cheaper textiles and electronic products which are manufactured from Mbale or Kapeeka and from all these industrial parks which the government has set up. We need to either embrace them and start buying and selling Ugandan-made goods, or endure the obvious competition likely to come from these domestic goods. Let us not be trapped by the old ways which international capital accustomed us to get used to.

The author is a senior research fellow at the Development Watch Centre.

nnandakizito@dwcug.org