Posts in category: Business idea

Toward the end of June 2023, the Uganda Manufacturers Association organized a dialogue aiming to bridge market information gaps between the producers and distributors and forge ways of promoting the uptake of locally manufactured goods by the local market.

The dialogue was attended mainly by manufacturers, supermarket owners, UMA staff, representatives from the UNBS-Quality Standards Bureau, Uganda Revenue Authority, and the Chief Guest from the Minister of State for Industry.

According to Mr. Tindiwensi, who is both a trader and chairman of the Uganda Supermarkets Owners Association (USOA), Supermarkets entered Uganda’s economy in the late 80s and early 90s these included supermarkets such as Metros Cash and Carry, others from South Africa. Over the years, Uganda started to register more and more supermarkets such as Uchumi, Nakumatt, and Turskys originating from Uganda’s neighboring countries. Most of these have since left the Ugandan market. The most recent and only operating one is Carrefour.

During the same period of their operation, several Uganda businesses also set up supermarkets. 

The rebirth of supermarkets in the late 80s and 90s resulted from the favorable investment climate at the time coupled with the growth of supermarket demand factors such as rising urbanization, increasing middle class, and the growing population of employed women. Why? Because the women population forms the reservoir for consumers that come to supermarkets found in the urbanized community and middle-class and emancipated women.

Whereas the foreign supermarkets have since closed shop or exited the Ugandan market, the Ugandan-owned ones are still around. They may struggle to stay afloat but cannot flee because this is home.

These local supermarkets form the USOA, an association that brings together about 60 supermarkets with over 100 store outlets spread across the country, with a noted number of its members in the Kampala metropolitan area.

USOA was founded and formerly registered with URSB in 2020 and is embarking on recruitment of as many and more local supermarkets that meet the requirements.

Uganda Supermarkets Owners Association’s mission is to set good quality standards to promote a good and positive image of supermarkets in Uganda, generally protect consumers, and look out for the overall business interest of its members.

Who are the local supermarket customers?

Most of Uganda’s supermarket customers are mainly younger and more educated consumers who earn medium to high incomes. They own assets such as refrigerators, cars, and big houses that facilitate the purchase in large quantities from supermarkets because they can store especially food items. 

This profile of consumers in Uganda is not different from any other economy like in Uganda. Supermarket consumers rank product quality, fresh food quality, safety, variety transparency, and customer service higher than other retail outlets such as shops time and gain called dukes and open roadside markets. 

According to Mr. Tindiwensi, he firmly believes that this is what will drive BuBu, which was a central point of discussion during the dialogue. The focus is that every consumer good manufactured in Uganda should aim at having a space on the supermarket shelf and having it stay there. USOA comes into the picture to drive toward attaining the BUBU objective.

Thus, as USOA, the objective is to provide forums for engagement, a united voice of advocacy, and promote good business relations and interaction and exchange with other business associations.

USOA will also help collect information, process, and extend it. They will also manage relations with the government to promote quality service, professional business practices, and capacity building for the members.

Supermarkets fall under the services sector of Uganda’s economy. According to the financial report for the Year 2022/2023, Supermarkets in Uganda have heavily contributed to the growth recovery of Uganda’s economy. Out of the 4.5% achieved, supermarkets contributed 2.5% of it.

Supermarkets are major off-takers of agricultural products. They are also big off-takers of industrial products. 

Supermarkets are accredited with the acceleration of Uganda’s industrial development because they link the manufacturers with the consumers. The linkage is very fundamental. Everywhere you go in our society, every producer or manufacturer aims to access supermarket shelves. 

It is assumed that if a Manufacturer’s product cannot stay on the shelf of a local supermarket in Uganda, chances are likely that it will not survive on the shelves elsewhere.

As a result, they endeavor to support micro, small, and medium enterprises by getting their products to a broad and more affluent market, by skills sharing, helping them have their products certified and most importantly, formalizing their businesses.

Despite all the efforts made by all the local supermarkets, the manufacturers also had some issues to raise against the supermarkets whom they rely on for business. 

They called these the 9 Pain Points;

1. Long credit sales settlement: The bigger the supermarket, the longer the waiting period

2. Advanced payment of products: No supermarket pays upfront; you need to wait until total sales.

3. Unreliability and credibility of supermarkets: Some supermarkets tend to close within six months of working with them and are left to suffer losses.

4. Foreign-owned supermarkets never want to buy local products.

5. Consumer perception about locally manufactured products: Consumers tend to think that locally manufactured products are inferior.

6. The exploitation of local manufacturers by the local retailers: in most cases, they want high profits and squeeze the selling price up to a level that manufacturers are left with cents.

7. Some Supermarket procurement teams solicit bribes from suppliers.

8. Delay of products on shelves: Manufacturers are greatly affected by having to make replacements. This may not be the case with suppliers from Kenya who might not face the same consequences. The losses are a little massive on the part of the local suppliers. Devise ways of how to support each other. For instance, if there is a local product and an imported one, sell the local product first so that the local manufacturer is not much affected.

9. The complex application procedure in supplying big supermarkets: It is verifiable that there are situations that some manufacturers have to undergo with multinational supermarkets. Before you can get your products on the market, the manufacturer undergoes a tedious approval process.

Since we are in the same room, we agree on the basic requirements expected of the local supplier, keeping in mind that they both operate in the same environment and are aware of the different challenges in particular power and transportation costs before delivery.

With USOA in place and the frequency of dialogues like this, the nine challenges mentioned above would be addressed.

Business owners and supermarket Owners were encouraged to interact and strengthen their business relations and participate fully to enrich the efforts towards the realization of the BUBU agenda.