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Country Commercial Guides for FY 2000: Uganda Report prepared by U.S. Embassy Kampala, released July 1999   Note*

IV. MARKETING U.S. PRODUCTS AND SERVICES

Distribution and Sales Channels

Products are generally distributed through small distributors, who then sell products to smaller shopkeepers. However, larger distributors and distribution networks such as Lonrho United Kingdom and Metro from South Africa are changing sales patterns.

Use of Agents/Distributors: Finding a Partner

The Uganda Manufacturers Association (UMA) maintains a reading room and often fields inquiries from agents and distributors or companies looking for outside partners. The UMA does not maintain a formal network. The Ugandan National Chamber of Commerce and Industry may also assist with identifying local agents and distributors. See Appendix C for contact information on these two organizations. The Commercial Section at the U.S. Embassy can also be of assistance in this area. Nonetheless, it would be difficult to choose an agent or distributor without visiting Uganda, surveying the situation, and then interviewing candidates.

Franchising

There are few franchises operating in Uganda; no U.S. food company or retailer has opened establishments in Uganda to date. Caltex, the U.S. based fuel company, and the other fuel companies, however, do offer their service stations on a franchise basis.

Direct Marketing

Most foreign products are marketed through a local company with experience/expertise in the respective area.

Joint Ventures/Licensing

There are no restrictions on foreign ventures with local investors.

Steps to Establishing an Office

The Uganda Investment Authority (UIA) is the GOU's organization which facilitates the registration and licensing of foreign firms. The UIA can assist companies wishing to establish an office by providing advice on registry, licensing, immigration, tax, and customs matters, and sub-licenses and permits.

The UIA has not completely lived up to its promise as a one-stop office. Once investors leave the friendly confines of the UIA, they face more difficult receptions in government agencies such as the Uganda Revenue Authority and the Immigration Department within the Ministry of Internal Affairs. Corruption and ineptness can be encountered. Moreover, other government ministries can actively intercede to impede (or sometimes assist) a business venture. A local partner may be able to ease some of these difficulties. Office space which meets reasonable standards is rare, but the quality of available offices is improving, and rents are declining in Kampala.

Selling Factors/Techniques

Products are marketed through advertising in newspapers and on radio and television. These are fairly new selling techniques for Uganda, and they appear to be very popular and successful. For example, Coke and Pepsi have run successful promotions with contests based on collecting bottle caps or finding bottle caps with special symbols. Radio and newspaper advertising dominate. Television advertising has not been fully developed.

Advertising and Trade Promotion

There are several advertising agencies in Kampala, including Media Consultants Ltd., a McCann-Erickson affiliate; tel: 256-41-231-212 and fax: 256-41-236-042.

Major newspapers and business journals include:

The New Vision, P.O. Box 9815, Kampala, tel: 256-41-235-209 and fax: 256-41-235-843

The Monitor, P.O. Box 12141, Kampala, tel: 256-41-236-939 and fax: 256-41-232-369

Radio and television stations include:

Radio Uganda, P.O. Box 7142, Kampala, tel: 256-41-257-257
Radio Sanyu, P.O. Box 30961, Kampala, tel: 256-41-285-494
Capital Radio, P.O. Box 7638, Kampala, tel: 256-41-235-092/3/4 RadioOne, P.O. Box 4587, Kampala, tel: 256-41-344-385
Simba Radio, P.O. Box 31564, Kampala, tel: 256-41-543-672
Uganda TV, P.O. Box 7142, Kampala, tel: 256-41-245-376
Sanyu TV, P.O. Box 30961, Kampala, tel: 256-41-234-250/30
MNET, P.O. Box 2373, Kampala, tel: 256-41-341-431/38
WBS Television, P.O. Box 5419, Kampala, tel: 256-41-344313/4
Lighthouse Television, P.O. Box 23934, Kampala, tel: 256-41-543475/543435

Pricing Product

Pricing is based on what the market will bear, tempered by the nearby Kenya marketplace and, increasingly, imports from South Africa. Generally, European and North American goods and services are quite expensive, and there is little local competition to moderate prices. For any large-scale equipment or services, the competition is with large European and Asian companies. Fuel, clothing, and consumer and electronic goods are often smuggled across the border to evade customs taxes. These smuggled goods create a large gray/black market that undercuts legitimate distributors. In addition, Uganda has a large demand for used clothing, cars, and equipment.

Sales Service/Customer Support

Customer support can be a major issue for American products being sold in Uganda. U.S. manufacturers need to adequately demonstrate that they can supply spare parts. Moreover, they should carefully select, train, and monitor service providers for their products.

Selling to the Government

Most government purchases are made through tendering. The Central Tender Board controls tendering, and advertises in the newspapers and by sending invitations to organizations in Kampala. SWIPCO, a U.S. based company, is currently responsible for auditing all procurement of $50,000.00 and above by GOU ministries and parastatals.

Protecting Your Product from IPR Infringement

The Investment Code of 1991 makes provisions for foreign exchange remittances with respect to transfer of foreign technologies. In order to benefit from this, investors must have registered agreements with the Uganda Investment Authority regarding the transfer of technology.

Under Section 32 of the Patents Statute of 1991, the Registrar of Patents awards patents for an initial period of 15 years, with a possible five-year extension if a request is made one month before expiry of the original term.

Bootlegging of cassettes and videos is common, and any visitor to Kampala has the opportunity to purchase recent music and movies for a minimal price. U.S. firms marketing goods which can be copied easily with relatively low technology should be aware that bootlegging of their product is a possibility.

Need for a Local Attorney

Generally, Ugandan courts are not an effective venue for solving civil disputes involving foreigners. Nevertheless, a knowledgeable and reputable local attorney can offer sound business advice. A list of attorneys, some of whom were educated in the United States, is available from the Consular Section at the U.S. Embassy.

Performing Due Diligence

Credit reporting is in its infancy in Uganda and due diligence is difficult to perform. Sellers are advised to collect as much of the price in cash as possible and to collateralize all loans. Sellers should also be aware that fraud is widespread and that accounts and bank statements may not reflect actual financial data. Rather than accepting documents at face value, it is best to ensure their accuracy with a high level person in the respective financial institution or accounting firm. Similarly, it is advisable to contact other persons who transact business with the firm being researched, especially other foreign customers and providers. PriceWaterhouseCoopers, Ernst & Young and Deloitte & Touche operate in Uganda. In addition, U.S.-based CitiBank and Merchant Bank of East Africa will begin operations in Uganda in Summer 1999. In addition, USAID has funded the newly-opened Uganda Business Information Bureau, UCB Building, Short Tower, Third Floor, Plot 12 Kampala Road, Tel: 256--41-233628/349059, Fax: 256-41-234259, e-mail: uib@starcom.co.ug.