In March 2017, Amelia Kyambadde, the Minister of Trade Industry and Cooperatives officially launched the ‘Buy Uganda, Build Uganda’ (BUBU) campaign to give effect to the BUBU Policy formulated in 2014.
The Ministry of Trade, Industry and Cooperatives (MTIC) will lead the implementation of Policy in collaboration with relevant Government Ministries, Department and Agencies (MDAs) and Private Sector Organizations.
The campaign aims at encouraging Ugandans to buy locally produced goods so as to reduce expenditure on imported goods, some which are produced in Uganda.
However, the campaign has generated debate not only on its timing, but also its effectiveness; some think it is ill-conceived, misguided and mere sloganeering.
While the programme would be good, analysts say a lot needs to be done for the Ugandan manufacturer/producer; goods must be produced not only at a low cost, but also with high quality standards so as to compete with global brands considering the fact that we are in a liberalized world.
They also argue that Ugandans love their country and would therefore buy ‘Proudly Uganda’ products if they are available in right quantities, qualities and prices.
According to latest statistics from the Bank of Uganda (BoU), Uganda spent US$5.2bn on imported goods in 2016, while its earnings on exported goods stood at a paltry US$2.92bn. In 2015, Uganda’s expenditure on imported goods was US$6.05bn, while its export earnings stood at US$2.66bn. This means that Uganda’s Balance of Payment (BoP) deficit stands at US$2.28bn as of 2016.
It is worth noting that currently over 60% of products sold in Ugandan supermarkets are imported.
Misguided Policy?
Dr. Fred Muhumuza, an economist and lecturer at Makerere University’s College of Business and Management Sciences, observes that the problem is not that Ugandans do not want to buy Ugandan things, but rather the products are not available as when people need them compared to foreign products.
“… many Ugandan products are expensive and of low quality. The producers are to blame, but more so the failure of Government to promote evolution of a vibrant and independent private sector is the big problem,” Muhumuza says in an exclusive interview with Business Focus.
He adds: “What we have is largely patronage-based private sector that rides on corruption. The genuine (products) can hardly succeed. It is not easy to do business of production in Uganda due to hostile economic environment despite the so called power and roads.”
Observes argue that Ugandan products are to get a large market share in Uganda, government must first reduce the cost of doing business and also make the entry of cheap and substandard products into the country difficult.
For example, Ugandan manufacturers are subjected to various taxes, a thing that makes their products expensive and therefore avoided by the market because the alternatives are cheaper.
Analysts argue that exorbitant taxes have made a number of Ugandan entrepreneurs become importers because it is profitable to import some products than manufacturing them locally.
When it comes to standards, the Uganda National Bureau of Standards (UNBS) doesn’t have the capacity to appropriately execute its mandate.
Due to its weakness and other support agencies, Uganda has seen a number of products (many edible) go to the market without any certification from UNBS. This has put the health of unsuspecting customers at risk, but also such entrepreneurs lack market from the elite class who want well certified commodities.
Others argue that promoting ‘Made in Uganda’ when 69.4% of Uganda’s population is engaged in subsistence farming won’t pay much dividends because the market is still small.
Charles Ocici, the Managing Director at Enterprise Uganda, a body nurturing entrepreneurs, says that BUBU is a ‘great policy’ but ‘easier said than done’.
He says while the emotional and intentional aspects of BUBU are good, the practical aspects of it seeing light of day are limited.
“Ugandans are buying a solution and prestige. If BUBU is to succeed, our products must compete on price, quality and service. But very few Ugandan items have that status,” Ocici said in an interview with Business Focus.
Like Muhumuza, Ocici says the irregularity of Ugandan products has seen Uganda continue importing items that would otherwise not been imported.
He cited the importation of honey and tomatoes.
“Why should we import tomatoes and oranges from South Africa? We do so because Ugandan products are irregular; when tomatoes and oranges are in plenty, they go to waste because our post-harvest handling is poor,” he said.
He observes that once Ugandan goods are of high quality, they will compete favourably with international brands. He gave an example of Jesa milk that is a household name in Uganda.
“Jesa milk outcompetes international brands; Ugandans love it. This tells you that Ugandans will consume Ugandan goods once they meet their standards,” he adds.
He says competing requires going beyond getting the ‘Q’ (Quality) mark from UNBS that is paid for.
“Ugandans must acquire skills to produce high quality products,” he says, adding that BUBU requires a lot more hard work than sloganeering.
He notes that those promoting it buy foreign products.
For example, while Uganda has furniture, many homes and offices prefer imported ones because Uganda’s furniture lacks in quality, but some furniture isn’t locally produced because it’s cheaper to import it than make it locally.
Jeopardizing EAC
Others experts argue that Uganda’s move could jeopardise the East African Community efforts of having a common market.
Recently, the Governor of Bank of Uganda, Prof. Emmanuel Tumusiime Mutebile noted that Uganda gains important benefits from the economic integration in East Africa which provides the market for almost a half of Uganda’s merchandise exports and for more than a half of Uganda’s manufactured exports.
“BUBU essentially involves the use of trade distorting non-tariff measures which are a direct violation of EAC customs union protocol which prohibits partner states from undertaking any administrative measures which discriminate in favour of its own producers at the expense of those of its partners,” said Mutebile.
He added: “Protectionist measures which discriminate against our partners states will put this market at risk, jeopardising the economic prospects of Uganda’s manufacturing exporters which are the most efficient manufacturing firms in the economy.”
He explained that if Uganda is to re-orient her economy towards producing for export markets, it must shift the scarce resources away from producing for the domestic market [as presupposed by BUBU] and this will require a deliberate reduction in demand for domestic products.
However, the main architect of BUBU, Kyambadde has always defended it, arguing that it is intended to foster quality of locally produced commodities before they hit the international market.
“We are not stopping anybody from importing, but what we are saying is that let those commodities first gain confidence here, for better performance out there,” Kyambadde responded to Mutebile.
Amos Wekesa, an entrepreneur engaged in tourism is in full support of the campaign, calling it ‘a good idea’ that will help Uganda get import substitution which ‘we badly need’.
“This will create jobs for our youths,” he says, adding that it will also go a long way in reducing expenditure on imported goods.
Asked whether Uganda has enough products, Wekesa said: “I don’t think so, but starting will enhance interest in people to do more.”
He however says Uganda needs to create both domestic and international demand for her products. This means producing goods that meet international standards.
