China’s small traders seek their fortune in Uganda


Squeezed out at home by big businesses, as many as 50,000 have set up shop in Uganda.

It has been barely five months since Mr Qingdong arrived in Uganda’s capital Kampala and already the 46-year-old has set up shop, selling cheap Chinese mobile phones popular with locals.

As the bespectacled man from China’s Zhejiang province hardly speaks any English, which is widely spoken in the country, he hires two Ugandans to serve customers. Business is good, helped by the shop’s location at the front of an electronics mall, where foot traffic is high.

Asked why he would leave his family for a place that is nearly 20 hours away by plane, he said: “Everything in China is dominated by Alibaba.”

Squeezed out mostly by big businesses such as Alibaba, the e-commerce giant, thousands of small- time traders, including Mr Qingdong, have travelled thousands of miles to seek greener pastures in Uganda. There are no official figures available, but the Chinese who spoke to The Straits Times reckon there are between 10,000 and 50,000 of them in this country.

“Uganda is safer and more peaceful than other African countries. It’s no longer good to do business in China,” said 31-year-old wholesaler Kelly Bian, who brings in bedding sets from China.

Their decision is made easier by the increasingly close relationship between China and Uganda. Chinese state-owned companies have invested heavily into the resource- rich African continent. The Chinese footprint in Uganda ranges from multimillion-dollar infrastructure development projects to smaller firms operating factories and individual distributors seeking a piece of the Africa pie.

China’s interest in East and Central Africa has been attributed to tantalum, a rare and valuable metal that is used to make capacitors in smartphones. Uganda and its neighbours, Democratic Republic of Congo, Rwanda and Tanzania, are known to have huge deposits of tantalum.

In a show of China’s commitment to help develop Africa, President Xi Jinping pledged US$60 billion (S$84.3 billion) in development assistance for the continent at a summit last December.

But with a slowing global economy and a weak Ugandan currency, which fell 17.5 per cent against the dollar last year, the economic relationship is facing problems at the macro and micro levels.

Chinese state firms are building an oil rig, hydropower dams and roads, with the bulk of the cost provided as loans by Chinese banks. For example, the Karuma hydropower dam project is handled by Chinese state firm Sinohydro, with 85 per cent of the US$1.7 billion project financed by state-owned Export-Import Bank on a 4 per cent interest loan to the Ugandan government.

Such loans are adding to Ugan- da’s public debt, with soft loans from China reaching US$2.5 billion as of October last year.

Still, the Ugandan government is confident it is able to pay its debts.

“There is a lot of hope that when the oil and gas industry takes off, money from the sector would pay for the loans,” said Mr Basil Ajer, a director at the Uganda Investment Authority. Oil prices, however, are now less than US$30 a barrel.

Mr Ajer said Uganda is also looking at boosting exports though it remains an import nation.

Uganda’s trade imbalance is especially pronounced with China, its No. 1 trading partner. In 2015, Chinese exports to Uganda amounted to US$701.7 million compared with just US$57.6 million in exports from from the largely agricultural nation.

On the streets, both Ugandan and Chinese traders are lamenting that business has slowed from the weak Ugandan shilling and worries over potential disturbances after the country’s Feb 18 elections.

While both sides are affected, Ugandan retailers say their Chinese competitors have more capital and connections to cope with the slowdown. The latter also sell the same goods but at lower prices.

“People prefer to buy from stores with cheaper prices. How do we compete?” asked Mr Musa Kataregga, 25, an employee at a shop selling mobile phone accessories.

Youth unemployment is a huge problem in Uganda, a country of about 40 million which produces about 500,000 graduates a year.

The influx of Chinese investments has not brought commensurate job opportunities, some noted. Chinese-run operations usually hire Ugandans only for manual jobs such as construction workers or hotel cleaners while reserving mid- or top-level positions for the Chinese.

“Ugandan graduates don’t have the skills needed for the job market,” admitted government spokesman Ofwono Opondo, who blames an outdated university system that the government is trying to fix.

Ugandans also have an attitude problem and a bad work ethic, Mr Opondo told The Straits Times.

“That’s why the Chinese bring their own people here,” he said.

Uganda wants to please its top trade partner and welcomes China’s no-interference policy in another country’s internal affairs.

“The West wants to meddle and has not outgrown its colonial or ‘Uncle Sam’ mentality.

“We want mutual agreement and respect,” said Mr Opondo.

But pleasing the Chinese has incurred some trade-offs. There are grouses aplenty among locals. Residents living near Chinese factories complain of health problems arising from polluted air and water. Employees of Chinese-run businesses claim they are treated unfairly, among other things. Local retailers say Chinese wholesalers undercut them by selling goods directly to consumers.

Among some Ugandans, however, there is an air of acceptance about the Chinese presence.

“They bring money and infrastructure to the country when the government hasn’t done much,” said laptop technician Saul Zaake.


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