Opportunities and Challenges of the Ugandan Business Environment A Situational Analysis Edited by Joseph M. Ntayi, PhD Sunday A. Khan Foreword by Frank B. Sebbowa, PhD fountain publishers www.fountainpublishers.co.ug Fountain Publishers P.O. Box 488 Kampala E-mail: [email protected] [email protected] Website: www.fountainpublishers.co.ug Distributed in Europe and Commonwealth countries outside Africa by: African Books Collective Ltd, P.O. Box 721, Oxford OX1 9EN, UK. Tel/Fax: +44(0) 1869 349110 E-mail: [email protected] Website: www.africanbookscollective.com © ICBE Research Fund (TrustAfrica and IDRC) 2015 First published 2015 The book was published by Fountain Publishers Ltd on behalf of the ICBE Research Fund (TrustAfrica and IDRC). We expect those who reprint, photocopy, download, etc., to simply acknowledge the ICBE Research Fund (TrustAfrica and IDRC). Typeset by Ronald Kasule Senfuka ISBN: 978-9970-25-336-4 Table of contents List of Contributors ..................................................................................iv Foreword ...................................................................................................vi Preface .....................................................................................................vii Acknowledgement .....................................................................................ix Chapter One: Introduction: Context and Overview...........................................1 Joseph M. Ntayi and Sunday A. Khan Chapter Two: Labour Export As Government Policy: An Assessment of Uganda’s Potential for Export of Labour in the Framework of Regional and Multilateral Agreements .......................................9 Geoffrey Bakunda and George F. Walusimbi-Mpanga Chapter Three: The Effects of Investment Climate on Manufacturing Firms’ Growth in Uganda .....................................................................87 Aggrey Niringiye Chapter Four: Service Quality Perceptions: A Case of Foreign Direct Investors to Uganda .....................................................113 Jotham M. Byarugaba Chapter Five: Governance of the Commons: Co-management Vs Public Private Partnership for Supply Chain Competitiveness in Uganda’s Liberalised Fishing Industry ...................................139 Michael Mugabira and Richard Chivaka Chapter Six: Challenges to the Growth of Capital Markets in Underdeveloped Economies: The Case for Uganda ..............182 Samuel Sejjaaka Chapter Seven: Pitfalls of Informal Business Management in Uganda: The Case of Small and Medium Enterprises ...........................217 Joseph Mpeera Ntayi, Sarah Eyaa, Flavian Zeija, and Gerrit Rooks Chapter Eight: Globalisation Threats to and Opportunities for Foreign Direct Investment: Lessons for Uganda and Other Low Income Countries .................................................................................260 Mutunzi Ahmed Kitunzi Chapter Nine: Corporate Entrepreneurship and Performance of the Telecommunications Companies in Uganda ...........................284 Audrey Kahara-Kawuki Index .......................................................................................................330 iii List of Contributors Geoffrey Bakunda, PhD, is an Associate Professor of Trade and International Business and Dean of Faculty of Marketing and Hospitality Management at Makerere University Business School, Kampala Uganda. P.O. Box 1337, Kampala, Uganda; [email protected], [email protected]. George F. Walusimbi-Mpanga holds a Master of International Trade Policy. He is a trade economist and the Executive Director of the Uganda Coalition of Service Industries. P.O. Box 7203, Kampala, Uganda; g.walusimbimpanga@ gmail.com. Aggrey Niringiye, PhD, is a Lecturer in the School of Economics and Management, Makerere University. P.O. Box 7062, Kampala, Uganda; [email protected]. Jotham Mbiito Byarugaba, PhD is a Lecturer in the Department of Marketing and International Business at Makerere University Business School. P. O. Box 1337, Kampala, Uganda; [email protected]. Michael Mugabira holds a Master of Management, Postgraduate Diploma in Management, Bachelor of Science (Industrial Chemistry) and is a member of the Chartered Institute of Purchasing and Supply (CIPS-UK). He is currently pursuing a PhD in Business Administration at the Graduate School of Business, University of Cape Town. Prior to his PhD studies, Micheal was a Senior Investment Executive at the Uganda Investment Authority (UIA). P.O. Box 10809 Kampala, Uganda; [email protected]. Richard Chivaka, PhD, is an Associate Professor of Accounting at the Graduate School of Business, University of Cape Town. Private Bag X3, Rondebosch 7701, South Africa; [email protected]. Samuel Sejjaaka, PhD, is an Associate Professor of Accounting and Finance and Deputy Principal, Makerere University Business School. P.O. Box 1337, Kampala, Uganda; [email protected]. iv List of Contributors v Joseph Mpeera Ntayi, PhD, is a Professor of Procurement and Logistics Management and Dean of Faculty of Computing and Management Science at Makerere University Business School. His teaching and research interests are in public procurement, managing contracts, business ethics, industrial marketing, purchasing, commercial and humanitarian logistics management and supply chain management. P. O. Box 1337, Kampala, Uganda; ntayius@ gmail.com, [email protected]. Sarah Eyaa holds a Master of Business Administration (Procurement), a Bachelor of Commerce (Marketing) and is a qualified member of the Chartered Institute of Purchasing and Supply (CIPS-UK). She is a senior lecturer in the Department of Procurement and Logistics and Management at Makerere University Business School and is currently pursuing a PhD (Management) at the Newcastle Business School, University of Newcastle in Australia. P.O. Box 1337, Kampala, Uganda; [email protected]. Gerrit Rooks, PhD, is an Assistant Professor in the Department of Industrial Engineering and Innovation Sciences, at the Technische Universiteit Eindhoven. He is currently a visiting professor at Makerere University Business School. P. O. Box 513- 5600 MB Eindhoven, Netherlands; [email protected]. Flavian Zeija, PhD, is a senior lecturer and the Head of the Department of Business Law at Makerere University Business School. P.O. Box 1337, Kampala, Uganda; [email protected]. Mutunzi Ahmed Kitunzi is a consultant at Uganda Management Institute. P.O. Box 20131, Kampala, Uganda; [email protected]. Audrey Kahara-Kawuki holds Master of Business Administration and Bachelor of Science (Agriculture). She is a business consultant and a coach using the Solution Focused model and director of Zebra Solition Ltd. [email protected]. Sunday A. Khan, heads the ICBE Research Fund at TrustAfrica. He is currently on leave from the University of Yaoundé II where he is Senior lecturer in the Faculty of Economics and Management. khan@trustafrica. org, [email protected]. Foreword It is indeed an honor for me to write the foreword to this book, a carefully selected collection of expert research by well-known academics and individuals versed in the subject matter of business and investment in our society. I must applaud this revealing work on some of the challenges to investment, business, and economic growth in the country. This book comes at a time when Uganda must be preparing for its next major phase of economic development. The coming on board of proceeds from oil and gas should be a major driver of our socio-economic growth and development for the next decade and beyond. Reflecting on challenges experienced in the past provides us with an opportunity to plan which path the future must take. This book address past aspects while giving direction to the future. The regional integration to which Uganda is very committed on both political and economic fronts means that going forward it will not be business as usual. New ways of attracting benign foreign direct investment for Uganda must be devised. There is need to focus on which national and which regional projects to promote given the open borders we are creating. Careful analysis of the economic and political environment is needed to determine our behavior for the future. For while the markets for investors in provision of goods and services will be much larger and more attractive; free flow of goods, services and labor will lead to intense competition. This book gives indicators on which rates to take for sustainable investment with regional and national contexts. As East Africa begins to embrace regional capital mobilisation through cross-border stock market listings and transactions, sections of the book examining the capital markets environment provides excellent insights on the challenges and opportunities that cannot be ignored. All-in-all this book is a masterpiece on doing business in Uganda and in the region in general. It is a book well researched and therefore worth reading by researchers, political economists, drivers, and captains of business. It is absolutely a useful tool for those of us in national and regional investment promotion. Eng. Dr Frank B Sebbowa, Executive Director Uganda Investment Authority (UIA) vi Preface This book contains the findings of eight of the sixteen research projects from Uganda sponsored by the Investment Climate and Business Environment (ICBE) Research Fund. The publication of this volume falls in line with one of the key objectives of the ICBE Research Fund, which is to disseminate