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OPINION: Why Should Businesses Take the Bold Step to Move Out of Kampala?

Global Vivo energy CEO, Christia Chamas (R) at an opening event in Jinja

By: Colin Asiimwe

According to a 2015 report from the World Bank Group, viagra approved http://cinemalogue.com/wp-content/themes/genesis/lib/functions/breadcrumb.php Kampala’s population will rise to a staggering 20 Million residents by 2040.

Fueled by unprecedented numbers in rural Urban migration and rapidly expanding city limits the trend seems inexorably tied to the 2040 middle income status vision Uganda has set for itself.

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Kampala continues to deliver 70% of GDP although more than 85% of the country lives in rural Uganda. There is clearly a mismatch between businesses, medical services and population distribution.

This has raised the scary question for businesses that are currently based in Kampala whether to expand outside Kampala and what kind of business model will allow them to boldly expand and deliver services to the rest of the country while also winning in business.

For a lot of businesses, the bold defining step to out of the Kampala has been one fraught with indecision and often lack lustre execution.

This has left Ugandans outside the capital city unable to experience certain events, activities and benefits, promotions, and services. It has also left businesses in Kampala with growth ambitions outside it unsatisfied unless they are a market titan, a beverage brand, a telecom brand or a Movit or a Mukwano of sorts.

The fear is not unfounded as Uganda presents significant challenges for brands looking to expand out of Kampala. Principal being the plethora of languages spoken outside Kampala (Uganda has over 52 languages) and how this lowers the economies of scale enjoyed in Kampala where communication is done largely in English or rarely Luganda.

Some businesses have expressed the hesitation to move from Kampala because of the sparse population outside Kampala. This view is informed by the lower cost of reach per 1,000 persons in Kampala (Kampala’s daytime population is estimated at 6 million). Most businesses feel that they may not get these numbers which has impact on profitability and business bottom lines.

While other businesses hesitate because of the infrastructural investments and overheads that would be required in order to set up outfits and service points upcountry. This includes supply chain management, procurement, sales and marketing efforts all of which are critical to business success.

However, the case has been made that with only 15% – 18% of Ugandans living in Kampala there exists a large potentially open market outside Kampala that will reward businesses that are willing to take the bold decision to venture out there especially in budding urban centres like Mbarara, Jinja, fort Portal and Gulu which present the opportunity to tap into the emerging class of business traders and business communities in these towns provides a good incentive for businesses to move.

Secondly, the argument on infrastructure has repeatedly been countered by the availability of lower cost labour and more cooperative local authorities who will facilitate business flow and process management.

Further, the precedent set by those businesses that have gone head to lead the way in investing, expanding and setting up services in these emerging towns is spurring the rest of the business class into making the leap. One such company is Vivo Energy Uganda, distributors of Shell fuels and associated products who recently opened up a multi-million revamped station at Jinja Ambercourt.

In an almost clairvoyant show of faith, Standard Chartered also opened up an ATM at the station while Nairobi-based eatery Java House also opened up a massive restaurant within the complex.  Going to show that if brands are willing to lead, others are willing to follow.

In his remarks Global Vivo Energy CEO Christian Chamas said “…in fact it is imperative that businesses expand out of Kampala and bring the rich variety of services they offer to the rest of the country. It is not just about profits but also about having faith in the economy. And if we continue to do it, others will follow us and together we will build a stronger economy”

Finally, the long held view that customers not in Kampala cannot enjoy or could not possibly want a hot coffee in the morning or a one stop convenient retailing store has been dispelled because it has been proven that they want to and will enjoy the things their money can afford them.

The market for these services exists through the expanded services made available at Shell service stations that are paired with Standard Chartered banking service together with pharmacy services making these places not just fuel points but rather destinations. One could even say brands like Shell are fueling development.

In closing, the need for businesses to grow, expand and establish themselves out Kampala is incumbent and urgent not just for themselves but also for the customers they serve.

With strong, emerging decentralized urban centres, this will not be as much as a far cry as has previously been thought. The only question is which businesses will fuel this next phase of expansion?

The writer is the strategist at MetropolitanRepublic Uganda.

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