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Supermarkets failing Bubu policy, manufacturers claim
Manufacturers claim some supermarkets demand for low prices in order to stock their goods, which is failing the Bubu policy. Photo / File
What you need to know:
- Uganda Manufacturers Association claims that some supermarkets demand for lower than market prices to stock certain products
Uganda Manufacturers’ Association has said that whereas supermarkets are supposed to be partners in promoting the Buy Uganda Build Uganda (Bubu) policy, they are discouraging manufacturers by demanding low product prices and putting in place unfair trade policies.
Speaking at a Bubu dialogue in Kampala early this week, Mr Eddie Senkumba, a board member of UMA, said they have got reports that suggest that supermarkets squeeze manufacturers into offering lower prices when they seek to establish a business relationship.
“They [supermarkets] always squeeze [local manufacturers] to see that they get the best price [that favour them,” he said, noting that there was need to address this approach to business because it is killing local manufacturing.
Mr Senkumba also claimed that some supermarket representatives demand bribes to put goods of some manufacturers on their shelves, urging the association of supermarkets to address this vice even as he acknowledged that it was “very possible that the heads or managing directors of these supermarkets are not aware of these vices”.
However, he did not provide any evidence to back his claims.
Bubu was launched in 2014 as an initiative of government, through the Ministry of Trade, that sought to promote consumption and usage of locally manufactured products.
However, the policy has faced a number of challenges, among which include the high cost of doing business, which makes end products sometimes relatively more expensive compared to imports. Consumers have also cited quality challenges thus making many prefer imports.
Some retailers have also cited unreliable supply patterns as well as inadequacy in capacity of some manufacturers to produce enough quantities to satisfy demand.
Mr Senkumba also noted that many local manufacturers are required to pick their unsold stock yet this does not apply to imported products.
“... because we are round the corner … if for a reason or two the product is not sold on time, supermarkets call us to pick up [unsold stock], yet foreign companies do not suffer the same,” he said, urging supermarkets to devise better ways without returning a lot of unsold stock, which not only cause disposal challenges but also creates substantial losses to manufacturers.
The retail sector, where supermarkets fall, has in the last five years seen a number of challenges due to reduced sales, which has caused a number or retailers to close shop.
This has resulted into massive losses for, especially small suppliers, many of whom have had to go through a tedious approval process to put their products on supermarket shelves.
New problem
The dialogue also heard that the new Electronic Fiscal Receipting and Invoicing Solution (EFRIS) implemented by Uganda Revenue Authority has disrupted supply and sale of goods on credit, which according to Mr Dan Tindiwensi, the Supermarket Owners Association chairman, has created a system that has no flexibility on when an invoice can be returned.
“The moment EFRIS was implemented, the business norm changed. Before, supermarkets would return invoices that are three months old. But now you can’t,” he said, noting that EFRIS had essentially eliminated credit, which creates a new problem for supermarkets to maintain proper cash flows for daily operations.
