You only have to look at how Uganda has grown bigger in people, towns and communities to understand the dilemma any business faces when you think of growth and business in the same sentence. Uganda is witnessing a huge rural to urban migration, while at the same time the rural to peri-urban development seems to be the driving force for decentralized business models and the boldest companies are taking this head-on, and in the process getting pleasantly surprised at the benefits to this gamble they’ve taken.
With Uganda now actively pursuing an ambitious plan to become middle-income country in less than five years, the significance of a fairer distribution of basic services cannot be overstated. And with that comes the role of the private sector, in a market economy like Uganda’s.
For a lot of businesses, the bold defining step to out of the centre (capital city) has been one fraught with indecision and often lacklustre execution. This has largely left people who are not at the centre unable to experience certain events, activities and benefits, promotions, and services.
You get the feeling that there has to be a deliberate private-sector led initiative to extend services beyond the major cities and urban centers.
The energy sector has, over the years, led the initiative, with Shell – the country’s leading Petroleum and gas company – constantly delivering very essential services to customers in virtually any part of the country. They seem to have understood the simple fact that their core customers travel everywhere, and need services from time to time, irrespective of their distance from the Capital City. This spirit virtually delivers real economic transformation and play into government’s ambitions if it was to be adopted by more companies.
Playing ahead of the curve, Shell has taken this depth a notch higher and developed a one-stop solution to the customer in various out-of-town locations, with an aim of potentially being able to tap into behavior patterns of customers.
It is a big gamble given the fact that as much as you have a rural to urban migration the motivations are not necessarily around luxury, rather essentials that are basic, every day and life or death.
As Economist Rukundo Nshakira notes, “company expansion shows that there is increase in disposable incomes and consumption within the company. However, there is need for careful studies on purchasing power in the population. Expansion means that the company sinks so much of its capital into fixed asset and expect to recoup this investment as years go by. If the purchasing power is low, then the company may struggle to recover these investments.”
“With the current somewhat volatile macroeconomic conditions, any company adopting an expansive business strategy would be exhibiting remarkable confidence in the country,” Rukundo observed.
Interestingly, this was a sentiment expressed by Shell’s Group Chief Executive Officer Christian Chammas in reaffirming why the company is extending certain services to Jinja.
Chammas was quite adamant that Uganda should be grateful because they are growing at a rate faster than their peers in the developed economies. “The growth rate is healthy, solid and provides a good basis for what in Uganda one would call incremental development,” he said.
“Our aim is to provide an exceptional retail experience at each of our sites, reaching more people with better products and services wherever we do business. We are investing significantly to make this ambition a reality.”
The bottom-up development then helps feed the societal ecosystem through consumption provided by companies across the spectrum looking to grow.
A company can now see opportunity in a small, urban town in the East or North, can now take the step to have some presence, enough to influence consumer behavior.
It means decentralized investment outside Kampala is not the preserve of a Coca-Cola or a Movit. Shell has is taking a bold step forward to ensure depth of service, thereby becoming a centre of gravity for everyday consumer needs, whether food, finance, medicine and whatnot. It is a kind of fuel for development.