Tuesday, July 13, 2010


In July this year the East African common market will become a reality. The common market means there will be free movement of goods, services and labour across the region. It will also mean restrictions of land ownership will be lifted to the region’s nationals.

This follows on from the customs union, which went into full operation at the beginning of this year but has been in partial operation since the 2005. The customs union means that goods coming into the region from abroad suffer only one tax but otherwise move through the region tax free.

Contrary to previous fears URA reports that revenues have grown rather than fallen as the trade within the region has jumped over the last few years. In fact customs duties have almost doubled rising to sh1,764.2b in 2007/08 from sh958b in 2004/05.

And we can expect with the coming into force of the Common Market this trend will in crease.

But it has also been suggested that the increasing intraregional trade has cushioned Uganda from the worst of the global financial crisis, greater demand for our goods regionally has reduced our reliance on the traditional European export markets.

What is for sure is that with the free movement of goods, services and labour in the region Ugandan businessmen and workers are going to face stiffer competition than they are accustomed to.

The Uganda businessman in particular faces a real life-and-death dilemma. Protected for long by tariff barriers they have been shielded from the full effect of Kenya Inc.

Kenya’s private sector thanks to years of relative stability and experience in a market driven economy have developed better managerial, marketing skills, have better developed financial services and a government which pays more than lip service to propping up its businessmen.

But in rethinking their strategy several areas sectors have been identified in which Uganda’s businessmen can win a competitive advantage against regional rivals – agro industry, education, medical and financial services, ICT, power generation and niche tourism.

To this list I may add entrepreneurship as a potential competitive advantage we can develop.

At the basic level entrepreneurs seek profit by meeting people’s needs. Profit is not guaranteed and the possibility of total loss is an ever present danger. The entrepreneur can start with no thing and build something as opposed to the bureaucrat who first needs resources to start working.

Historical accident – Idi Amin’s chasing away of the Asians in 1972 and the ensuing economic collapse, means Ugandans unlike their neighbours in Kenya, were thrown in to the deep end of business in order to fend for themselves. Whereas they may have bungled the going concerns that were left behind by the Asians and they have little to show by way of having built regional let alone national empires, the entrepreneurial spirit is alive and kicking.

In two World bank sponsored surveys a few years ago Uganda was the top and then second placed entrepreneurial nation in the world for two years running, judging by the amount of entrepreneurial activity in relation to the population.

However it was found that Ugandans were more necessity entrepreneurs – set up businesses for subsistence rather than opportunity entrepreneurs, who set up businesses to capitalise on an existing opportunity regardless.

And there in lies the crux of the matter and explains why we rush to open shops, take aways, taxis and piggeries because our neighbour also did it.

However the essential attribute of setting out on our own to start a business while relatively rare elsewhere -- we take it for granted because after all everybody is doing it around us, is something that can be harnessed and exploited.

This is the essential skill that will keep us a live in the face of the mounting challenge from more established and tested regional rivals.

The trick is how do we broaden the horizons of our businessmen, expand their vision beyond living large in a sea of poverty?

Entrepreneurship is already being taught in our schools, but it does not go far beyond definitions and theories.

While it is still early days Enterprise Uganda has a program that is good to the extent that it fires up its alumni to go out, create businesses and offers them some support in their new endeavors.

Maybe the East African common market is just the impetus our businessmen have needed to jerk them out of their complacency. Fighting back successfully will be determined by our businessmen’s openness to new ideas, practices and partnerships and a systematic, transparent and well executed government program to help the private sector gird its loins.

Published May 2010, New Vision

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