UGANDA – The government of Uganda has launched an investigation into the mass exodus of big foreign companies from the country, the latest being the planned divestment of Massmart’s Game store in the country.
The probe also aims to finding out whether there is something government can do to avert any other similar exits and whether there are any other regional markets that are taking advantage of the situation.
“We are studying this. I assigned my team to find answers to why each of these companies has exited, the likely impact of their exit today and in the medium term,” the Ministry of Finance Permanent Secretary, Ramathan Ggoobi.
“My team will find answers on whether this is a common trend elsewhere, and there is a remedy to it that we are not doing,” Ggoobi added.
Last month, South African retail giant Massmart, the parent company of Game Stores announced its planned exit from the Ugandan market.
“The performance and the complexity in running those businesses is something that frankly we needed to address. We’ve commenced a formal sales process, we’re currently in discussions with potential purchasers to take on those stores,” said Massmart Chief Executive, Mitchell Slape.
However, the Games Stores exit does not only affect Uganda but 13 other stores in East and West African region to include five stores in Nigeria, four in Ghana and three in Kenya.
Prior to that, Africa’s leading retailer Shoprite classified its operations in the country as discontinued after 21 years of operations.
“In line with the group’s non-RSA review process, our operations in Madagascar and Uganda have been classified as discontinued,” a statement by Shoprite said.
Other industries such as the telecommunication and education sectors have also been affected by the divestment with likes of Africell and GEMS Cambridge International School exiting the market.
Despite, the gloomy picture, experts argue that Uganda is still a preferred destination for foreign investors.
In January last year, Carrefour, one of the largest hypermarket and supermarket chains in the world officially launched its operations in Uganda marking the company’s entry into the Sub-Saharan African country.
Earlier this year, the Dubai-based conglomerate Majid Al Futtaim (MAF) and the regional franchise holder of Carrefour opened its second store in the country.
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