Franchising Frenzy in Uganda: International Brands Exit Amidst Regulatory Hurdles
According to experts, the excessive manipulation of international brands and stringent government regulations have contributed to the challenges faced by foreign businesses operating in Uganda.
In recent years, franchising has emerged as a popular business model for international brands seeking to expand their footprint into new markets like Uganda.
However, the exodus of well-known brands such as Tuskys, Uchumi, and Shoprite has raised concerns among economists, who point to regulatory hurdles and unfavorable trade laws as major factors driving these departures.
According to experts, the excessive manipulation of international brands and stringent government regulations have contributed to the challenges faced by foreign businesses operating in Uganda.
These issues, coupled with unfavorable trade laws, have led to the vanishing presence of once-prominent international brands in the Ugandan market.
Despite these setbacks, strategic alliances between international and local brands have emerged as a dominant force in Uganda's business landscape.
By leveraging commercial diplomacy, these alliances not only transfer skills but also contribute significantly to the country's GDP.
John Walugembe, a senior economist, emphasised the need for the government to reconsider its approach to regulation in order to harness the potential of the franchising sector and boost the economy.
He suggests that overlooking strict internal policies and excessive regulations by tax authorities could pave the way for a more conducive business environment.
Traders echo these sentiments, calling for harmonization of trade laws and policies to support Uganda's drive of Buy Uganda Build Uganda.
Thadeus Musoke, chairperson of KACITA, emphasised the importance of addressing regulatory challenges to fully unlock the potential contribution of the franchising sector to Uganda's economy.
While some international brands have thrived under the franchising model, others have struggled to meet market demands.
Internal policies, such as those adopted by Nandos and Pizza Hut, have facilitated success for some, while others like Tuskys, Shoprite, Uchumi, and Nakumatt, have opted to exit the market despite enjoying initial market leadership.
