Market Entry Strategy
Uganda has signed a Common Market Protocol with other members of East African Community which are Kenya, Tanzania, Rwanda and Burundi and will see the free movement of goods and services within this region and further expanding trade activities.
British companies can approach the Ugandan market in several ways:
o A number of international firms export directly to customers. With regard to the UK, this system is mainly for machinery and highly technical equipment. For consumer goods other methods are used.
Using an agent or distributor
o This involves entering contractual agreements with local agents and distributors. A good local agent may play an important role in bids on tenders, which often require detailed knowledge of the local conditions and bureaucracy.
Establishing an office
o The Uganda Investment Authority facilitates the registration and licensing of foreign firms and advises on registry, licensing, immigration, tax, customs matters, sub-licences and permits. With a large number of new office buildings in Kampala, quality office space is available.
o A number of UK companies have established franchises, ranging from electrical equipment, machinery, cosmetics and food. A recent expansion in the establishments of large supermarkets and convenience stores has increased the use of this for consumer goods.
o In spite of the rapid expansion in use of cellular telephones and computers, Uganda currently does not present strong opportunities for telephone or internet marketing. However, this is increasingly becoming important. Most foreign products are marketed through an experienced local company.
Joint Ventures / Licensing
o There are no restrictions on joint ventures with local investors.
Selling to Government
o The government conducts most of its purchases through public tendering, controlled by the Central Tender Board (CTB). The CTB advertises tenders in local newspapers. The Public Procurement and Disposal of Assets authority (PPDA) audits government tenders.
Other Start up Considerations
(a) Distribution and Sales Channels
Consumer products in Uganda are generally distributed through regional wholesalers, who in turn supply small and rural shops. With entry of large retailers, suppliers can now deal directly with major purchasers.
(b) Selling Factors / Techniques
Companies commonly market through billboards, road signage, newspapers, radio and television advertising. Companies have also promoted themselves through music concerts and by supporting sports and other community events.
(c) Electronic Commerce
E-commerce is still undeveloped in Uganda. Few Ugandan companies sell their products through the internet, although many do have websites. Mobile phone banking and trade is increasing both in-country and within the East African region.
Price competition from Asian producers means UK products are generally considered expensive, albeit of high quality. It is common for experienced buyers to favour products from the UK and other European producers based on quality.
(e) Sales Service / Customer Support
Customer support can be a major boost for UK companies. It is therefore important that they should carefully select, train and monitor service providers for their products.
(f) Protecting Intellectual Property
Uganda has started to improve the protection of intellectual property rights, although police and courts are slow in prosecution. The Uganda Revenue Authority and the Uganda National Bureau of Standards regularly seize counterfeit goods, although many are readily available.
(g) Due Diligence
Credit reporting is in its infancy in Uganda and due diligence is difficult to perform. Sellers are advised to deal in cash transactions or use a letter of credit from a reputable bank, especially when dealing with new clients. Companies should check document accuracy with financial institutions or through a commercial law firm.
Support on most of the above issues can be attained from the UKTI team at the British High Commission Kampala.