The Future of Smallholder Farming in Eastern Africa - Uganda ...

4.2. Regulatory framework and marketing constraints
Regional traders were asked whether they have licenses from the relevant authorities. About
81 percent of the respondents have a license from the Trade and Industry Bureau. The
average costs of obtaining and renewing a license were birr 186 and birr 82, respectively.
About 19 percent of the regional traders have no license. About a third of the respondents are
not satisfied with the service provided by the relevant government authorities. Like the
retailers, many regional traders reported that government services in the area of transport
facilities, access to parking, security and legal services, and support of traders’ associations
are weak and have not shown improvement over time (Table 4.6). More than 80 percent of
the regional traders also reported that the current tax rate is high (Annex Table 4.6).
Table 4.6: Regional traders’ opinion about government
services
Areas of government support Improved No improvement
Transport facilities and access 18.8% 81.3%
Telephone and other
25.0% 75.0%
communication services
Security and legal services 12.5% 87.5%
Support for traders’ associations 0% 100.0%
Source: Survey, 2002.
As already noted, brokers in Addis Ababa often sell on a credit basis. The majority of
regional traders (63 percent) have faced cash shortages because it takes time for grain to be
sold and the money to be sent back to them (Annex Table 4.8). Some were forced to make no
purchases or reduce purchases owing to cash shortages (Annex Table 4.9).
Another serious problem faced by regional traders is credit sales. For example, about 41
percent of regional traders had experienced disputes with their client brokers over payments
that involved credit sales during the preceding three years. Regional traders reported having
lost on average birr 2,779 as a result of default. About 85 percent of the respondents affected
said that they did nothing to get their money back. Peer pressure is used, but it does not seem
to be very effective since regional traders do not have direct contact with the buyers in Addis
Ababa (Table 4.7). There is no way for the grain market to develop and expand as long as the
legal and regulatory framework provides no protection to exchange transactions.