How do we go from employee of the month to investor of the year?

South African retailer Shoprite is shutting down its continental footprint, including in Uganda, to concentrate on its home market. It joins a long list of South African and international firms that have burnt their hands in the local market, or simply decided it wasn’t worth the bother.

There was the clothes discounter, Pep, which discovered that it could not outcompete imported second-hand apparel. Before it, another wholesaler in Lugogo, name forgotten, tried and failed to dislodge Kikuubo, the local commodities exchange. Of course our thoughts and prayers continue to go out to the shareholders of Supreme Furnishers, whose managers thought it wise to run a hire-purchase scheme in a country without a national property register or national ID scheme. Needless to say, it ended in premium ocular secretions.

In purely liberal economic terms, Shoprite’s failure is renewal and another’s gain, in this case Carrefour, the French retail chain that is said to be lining up to take over. But there’s more to be said.

When the Shoprite caravan leaves town there will be nothing to show for almost two decades of operations. No known local shareholders, no long-term value, not even a Shoprite Borehole CSR project somewhere in Naguru. Only pictures of ‘Employee of the Month’ strewn in the rubbish dump of corporate failure.

Hopefully they will not leave a trail of unpaid and bankrupted suppliers as the Kenyan retail chains Uchumi and Nakumatt did before, but they will leave nothing. Whatever profit Shoprite made over the years has long been repatriated. It is an open-cast retail mine, to be filled in or ventured into again with a new operator with better digging technology. It does not have to be this way. How about we rethink the nature of local content in the national economy to ensure local contestation, rather than just mere participation? This is not to question the logic of free markets, but to adjust for the inbuilt advantages that some players have, which make the markets free only in name.

Some countries do this by ring-fencing specific sectors of their economies from foreign investment, ownership or control. And here we aren’t speaking of communist Cuba or North Korea, but ‘liberal’ economies from Australia, Canada, to America, India and others. Retail is one such area because of the throughput power of supply chains (essentially, the dominant retailers determine whose mangoes or eggs get onto the shelves, and can cut local producers out of the picture).

A less abrasive approach is to ensure a reasonable degree of local ownership in these entities, either through strategic local investment or by way of mass participation through local money markets. Two examples, both South African in flavour, are instructive.

First, for all the criticism of power distributor Umeme – and there can’t be many power utilities in the world which switch off their supply at the first sign of rain, but that’s a story for another day – the country is possibly stuck with it because of the investment in it by the NSSF pension fund.

This need not be a bad thing. Local savers get back some of the profit that Umeme is guaranteed to make, and the impending concession renegotiation is an opportunity for Ugandans, through NSSF, to negotiate for better terms and a more efficient operation. On the other hand Eskom, which is also South African and runs the old dams at Nalubaale Falls, has no such local skin and is very unlikely to have its concession extended.

 The other example is MTN, which from the word go came into the region in the late 1990s with local interests and shareholders. The upside that Charles ‘Chairman’ Mbire has made from his early bet on MTN has been invested in all manner of enterprises, from cement to pharmaceuticals, creating and multiplying local value.

Of course MTN, like Shoprite and Stanbic and others, employ Ugandans and pay taxes but the strategic shift is for us to deepen local content by pivoting from employment to ownership, even if it is a small slice.  What support could we have given local supermarket chain investors to buy out Shoprite or go into business with Carrefour?

How do we go from being employees of the month to becoming investors of the year?

Mr Kalinaki is a journalist and poor man’s freedom fighter.

[email protected]; @Kalinaki