Public Private Partnership in Retail (R/PPP) Strategy in Uganda

Public Private Partnership in Retail (R/PPP) Strategy in Uganda

                           

Public Private Partnership in Retail (PPPR) is often defined as primarily a set of institutional relationships between the Government and various actors in the private sector. Uganda, with the population of more than 35 million people with an increasing middle class and economy, is a potential market for retail industry. Many foreign international retailers are still interested in entering the Ugandan market. The government of the Republic of Uganda seems to recognize the importance of the retail industry in the provision of products and services as critical. On this basis, Uganda Retailer and Wholesalers Association (URWA) is proposing to retail industry stakeholders to forge ahead and formulate the Public Private Partnership Strategy in Retail Industry as a means of monitoring and organizing the sector.

                                                 

Background

It is very important that the planning process provides a clear framework for the continued development of the retail sector in a way that provides certainty for retailers and communities in the relevant policy framework, in the assessment of development proposals, in ensuring good vitality of the places retailing activity takes place and in ensuring competitiveness, nationally, regionally and locally. Given its size and importance in terms of economy and employment, the retail industry is largely ran in retail premises rented in dollars especially in the capital of Kampala. This puts retailers at risk and consumers being at the mercy of foreign currencies and economies leading to lack of financial policy sovereignty and subject to foreign economic risks and uncertainties. A big percentage of retail products are imported especially in formal medium and large retail outlets leading to overdependence to external markets and consequent loss of local choice and competition which calls for local content considerations in the retail industry market and the state. The strategy will establish a framework among retailers, suppliers, consumers and manufacturers which will enable a more efficient flow of goods and information and will provide a system structured and managed by the National Retail Council (NRC).

One of the effective strategies is when sector industry associations, corporations and investors engage in trade through coalitions working in partnership with government with the overall goal of enhancing regulatory reform, policy, incentives and endorsement to improve the retail industry that will in turn produce better products.

The government retains the core state functions, services and authority that are to provide the policies expected of the state. The Retail Industry PPP Strategy will be informed by several other national policy documents, development plans and international best practices. These include:

§  National PPP framework,

§  National Trade Policy Framework,

§  MTIC Strategic Plan, and

§  Public Private Partnership for Retail Discussion Papers,

§  National Development Plan (NDP), and

§  MTIC Roadmap.

§  Private Sector Manifesto

§  International Best Practices and Evidence-based practices for Retail Sector Governance

The Retail Industry PPP Strategy will set out its Vision, Mission, Objectives, Rational and Principles that define parameters as a way to ensure sound strategic intentions, focus needs and challenges of the retail sector. Retail guidelines or codes of practice can help the retail industry self-regulate more effectively in addressing industry issues than perhaps government regulation could achieve.

Institutional Setup and Responsibilities for the Retail Industry PPP Strategy and Guidelines.

Institutional setup is to be designed to cover all the concerned stakeholders in such a way that each handles the roles within its competency and within the context of the prevailing laws. i.e

1.      Marketing Professionals Associations

2.      Retail Industry Sector Associations

3.      Trade Industry Associations

4.      Corporate Companies

5.      Development Partners

6.      CSOs

7.      Regulatory Authorities

8.      Research Organizations

9.      Suppliers and Country Agents

10.  Hyper-Supermarkets Chains

11.  Supermarkets

12.  Community Focused Groceries

13.  Open-air Markets

14.  Business Schools and Academia

15.  Service providers

16.  Local Governments

In executing its functions, the PPPR will be supported by the PPPR Steering Committee or Retail Council, which will be composed of permanent members representing the various functional departments of the Ministry, subsector representatives, and relevant bodies or associations representing the Private Sector, as well as ad hoc members that may be appointed from time to time for specific purpose of their expertise. Until such time that there is deep experience in the management of PPPRT/I, there may be a need for occasional hiring of specialized advisors and expertise such as lawyers, financial analysts, financiers, economists, sociologists, business people and retail experts to support the PPPRT Unit in the development and implementation of policies and PPP programs.

As far as possible, each retail trade association should develop the necessary in-house skills and structures to carry out its own duties. The most important aspect to consider in determining capacity requirement is to recognize that it is crucial for the PPPRT Unit to have multiple skills, which include expertise in the areas of retail, retail sector governance, finance and accountancy, business planning and economics, government relations and regulatory affairs and law of contracts. Additionally, another important consideration in determining the capacity requirement for R/PPP is to know what the key success factors are for PPP Units in general.

                                                                                                  

The R/PPP Strategy will be born out of the commitment of the National Retail Council (NRC) to deliver on its mandate “to oversee, provide and regulate the retail sectors in the provision of goods and services and ensuring quality, standards, safety, affordability and sustainability. The sector is an essential part of the economy and a strong retail sector is a key element of the vitality and competitiveness of cities, towns and villages throughout the country and indeed the country as a whole. Despite its dominance in the economy, experience indicates that it has been poorly regulated and a strong and competitive retail sector demands a proactive approach in planning, listening carefully to the messages from both the retail sector and communities and responding appropriately in managing and reshaping the industry.

The Ugandan retail market is considered one of the fastest growing markets in the region. The fact that many international retail groups entered the market has opened good opportunities for consumers, but created intense competitive challenges for domestic companies as well.

Retailers and wholesalers are sometimes perceived as middlemen (rather than complementary or agents of product manufacturers). The profit motive is often viewed as incongruent with responsible business principles. Because of this, authorities may be reluctant to recognize the role played by the retail sector in their legislation or in the trade plans and strategies developed. Retailers serving low-income communities are often not captured in national data, as the incidence of many informal small scale retailers is relatively high compared to large-scale retailers. Others choose to remain unregistered and thus not under the purview of local authorities, due to the existence of legal, license and taxation hurdles that may hamper their operations. This may raise issues relating to quality of products, especially for poor communities where consumers predominantly buy from unregistered shops and have no legal or regulatory protection.

The Retail/PPP Framework is underpinned by the following assumptions and observations:

There are benefits from a diverse, competitive and innovative retail sector which has proved resilient during economic difficulties. It includes multinational companies, stable retailers and innovative wholesalers/importers, but also many retailers are struggling to survive in an extremely competitive environment - with rapidly changing consumer needs and behavior.

Retail operates in every location of the country. It is the link between producer and consumer, influencing supply and demand, and is a valuable route to market for manufacturers. Retail sales are indicators of the wider economy and of consumer confidence. The sector plays a vital role in our communities as a provider of employment, of the goods and services people want and need, and as a force for social cohesion.

Retail is important to the economy, with turnover in billions of shillings. Retail industry is fiercely competitive at the local, national and global level. It is not dependent on government for financial support but is affected by a wide range of government policy and regulation - which impacts more on retail than, arguably, any other industry sector.

There are difficult economic climate, there are fundamental shifts in the retailer/customer relationship, and there are great opportunities but also dangers for retailers of all sizes and types, in all locations.

Traditional business models based in physical buildings shops are evolving. Increasingly retailers are moving to "multichannel" operations - their sales channels include in-store, e-commerce, m-(mobile) commerce, mobile money, e-payments, and other forms of distance selling. Many are taking this still further, re-engineering their businesses to integrate all of the various sales channels into a seamless, integrated and flexible experience for customers.

The customer experience, however, remains the most vital thing to get right – be it physical, virtual, or any and all points between. The challenge for retailers is to be prepared, be flexible, and be smart – and to know when to collaborate, as well as to compete. The challenge for government is to provide certainty where it can, provide help where it needs to, and to work in partnership with retailers to deliver both.

Strategy for the Retail Industry

The government considers the retail sector to be central to the economic and social wellbeing of the nation, and also a key partner in delivering policy. This is why URWA is working out the PPP Retail Strategy. This focuses on the potential for government and retail industry to work in partnership to support retail growth and performance.

This strategy builds on these foundations, taking into account emerging issues and policies that impact the retail sector - including evidence provided to retail business and skills committees and helping the sector prepare for whatever the future brings.

The future for the retail sector as a whole depends on the wider economic climate, and the preferences and confidence of consumers – for which there are no simple solutions. Whilst recognizing this, there are also many areas which, whilst not transformational in themselves, when taken together will help make the business environment better for the retail sector, and will help Ugandan retailers fulfill their potential.

Delivery of this strategy is a true partnership – the actions will be jointly owned by the government and the retail sector. The set of actions were developed by the Uganda Retailers and Wholesalers Association (URWA). Individual actions have also been identified from key partners and stakeholders in the public, private and third sectors.

The actions were chosen because they:

a) Would benefit a broad cross-section of the retail sector at a local, national, African or global level;

b) Could be delivered through partnership working between the retail sector, URWA,l retail subsector associations and relevant government departments; and

c) Have a reasonable chance of success. There needed to be broad agreement across the sector – no matter what size or type of business - on the direction of travel. The strategy does not seek to capture every issue with an impact on retail, or to address issues that are already being addressed elsewhere in government. Our ambitions will bring tangible benefits in these areas:

Understanding retail: driving partnership working across Government: There is lack of right information about the retail sector, its needs and its concerns to government decision makers, to enable better policymaking, better strategy, and to promote greater partnership working.

Influencing Policy: reduce burdens on retail, and foster greater collaboration: Work in partnership with Ugandan retailers and other government departments to influence regional activities, presenting evidence and representing concerns. We need to focus on championing better regulation and maximizing the opportunities provided by Ugandan retail businesses.

Supporting consumers: We will use retailers’ consumer insights and market knowledge to help government develop - or enhance - policies that will empower and protect consumers, whilst avoiding unintended impacts on retailers. With public, private and third sector partners, we will help retailers realize benefits from the growing number of youth consumers, promoting ways to make the customer journey easier.

Business Opportunities: helping Ugandan retailers succeed in the marketplace, including through digital channels. We will work side by side with the retail sector to support growth of Ugandan Retail industry through the URWA Retail Action Plan. This will focus on helping retailers access markets, and gather retail-specific evidence that will help address barriers to retail trade and investment.

Working Smarter Locally: We will identify and promote the best practices in local policy delivery - and show how this affects retailers’ performance, growth, and investment decisions – so that retailers across the country can benefit from a more supportive and enabling local business environment. We will make it easier and less burdensome for retailers when dealing with local regulation, inspection and enforcement. We will promote local enterprise and local authorities partnerships with the important role of retail in local and regional economies - so that decision makers can take retail seriously in their strategies for economic growth and performance.

Future Places and Future Retail: navigating the future landscape for retail and town centres: We will work with public, private and third sector partners to support town centres, through initiatives to enable localities to have the tools and knowledge they need to develop and deliver their strategies and activities. We will join up key players across government and industry to explore and promote the opportunities and benefits for retail and town centres from advances in multichannel retail.

Talented People: URWA and the retail sector will work together to ensure that vocational skills and qualifications initiatives and processes are right for retailers and their employees. We will work across government, the industry, and skills providers to fully understand and address the new and emerging skills landscape for multichannel retail and the world of “big data”.

Stimulating Innovation: We will help the retail sector and the Ugandan research base to maximize their R&D and innovation, through increased engagement and building a deeper, more collaborative relationship.

Local Content: Increased consideration of local products, manufacturers and labor force in the retail industry will be encouraged to enable local manufacturers sell their product in the Ugandan market and citizens to develop skills and technology to render services in the interest of the Ugandan retail industry.

Retail Charter: URWA and the National Retail Council (NRC) will develop a set of guidelines aiming at organizing Ugandan retail sector which bring about equitable benefits for Ugandan people while considering the importance of Foreign Direct Investment and shortage of appropriate skills in Uganda.

With the Retail PPP Strategy, the NRC together with the government will be passing the operational issues to the retail industry through their respective associations, while retaining and increasing its focus on core responsibilities of regulation, supervision and provision of core services such as policies and compliances, in line with directive of the National Trade Policy. On the basis of this line of argument, efficiency gain is obvious. However, this initiative has to be accompanied by equally important improvements in various management processes and systems of stakeholders on this program.