A leisurely walk through downtown Kampala, specifically in the area known as Kikuubo, will reveal Uganda’s version of Chinatown.
The landscape is changing with the increasing presence of Chinese businesses setting up shop in the downtown alleys, alongside Ugandans stocking their shelves with Chinese goods.
In addition to the Chinese traders, there are also Indians, Somalis, Eritreans, Ethiopians, and Kenyans contributing to the diverse cosmopolitan atmosphere of the city centre.
The influx of various traders, particularly the Chinese, has significantly impacted the trade dynamics in Uganda’s downtown business district – the heart of the country’s local commerce. This has led to concerns about unfair competition, as Chinese traders benefit from advantages like access to cheap labour and low interest rates, while Ugandan traders face high business costs and challenges in securing financing.
The playing field is not level for all traders. However, landlords are benefiting from the growth of foreign businesses, as they have raised rent prices in response to the demand from traders. This has posed challenges for local businesses trying to survive in the competitive market.
The spirit of raising rent fees has spilt over into the housing sector, too, with apartment owners also hiking the lodging fees for their units. The issue is so critical that it recently found itself up for debate on the floor of parliament.
Allan Ssewanyana, the Makindye West member of parliament, recently lamented the steep rise in rent prices within his constituency, attributing the phenomenon to the influx of foreign traders who can afford higher housing costs. He expressed concern that landlords in the area preferred renting to wealthier foreigners like Eritreans, leaving residents at a disadvantage.
Jimmy Mutebi, a boutique owner in Kansanga, echoed similar sentiments, noting the impact of Somalis and Eritreans on local trading businesses. He highlighted how landlords favoured foreign traders who could pay several months’ rent upfront, making it challenging for local entrepreneurs to secure affordable rental spaces.
In areas like Kisenyi, where a significant number of Somali and Eritrean traders operate, shop rents range from Shs 300,000 to Shs 500,000 per month. Meanwhile, Arnold Lubega, a trader at Cornerstone building, revealed that rents for ground floor shops in the area ranged from Shs 700,000 to Shs 1 million monthly, with higher charges for top floor shops.
Despite high rental prices, landlords prefer leasing to Chinese and Somali traders due to their perceived financial stability and willingness to make upfront payments. This preference marginalizes local Ugandans who struggle to compete in the market.
Knight Frank’s report for the second half of 2023 highlighted a 4% increase in average monthly rents for two-bedroom apartment units, with a 1% increase for three-bedroom units. The prime residential market remained relatively stable, with occupancy rates surging by 6%.
Issa Ssekito, spokesperson for the Kampala City Traders’ Association (KACITA), pointed out the adverse effects of Chinese traders importing merchandise directly, sidelining local traders and potentially leading to unemployment.
The dominance of foreign traders in various sectors underscores the need for policies that protect the interests of local entrepreneurs and ensure equitable opportunities in the market.
