Uganda - Retreading Industry Developing

As the aircraft approached Entebbe international airport, I peeped out of the window to have a first glimpse of the country that was to host me for the following three nights. Lake Victoria flows on one side and the greenery around the airport soothes my eyes. There was also a sigh of relief that the long journey was over. It was a smooth entry through immigration as the officer just looked into my eyes for a while as I had mentioned on the entry form the purpose of my visit - "to write a feature on the retreading industry of Uganda." The officer looked at me with awe as most of the people arriving into the country are United Nations representatives for various projects and Americans and European visiting Uganda's national parks. This correspondent had also seen lot of Indians arriving from other flights, which indicates that they are in a sizeable number in this country

It is not a big surprise that the "greenback" is the most preferred currency. Taxi drivers preferred to be paid in US dollars over the local Shilling, which is highly devalued as One US dollar is equivalent to almost 2,240 Shillings. The local currency is offered in awkward denominations like in single notes of 10,000, 20,000, 50,000 & 100,000. "The local currency was at its best around 1,850 Shillings against One US dollar around two years ago. The present government came into power around 1986 and gave much needed political stability to this country. The Shilling has become once again weaker mainly due to a fall driven by the global economic crisis," believes Mr Harjit Singh, Director, Mansons Uganda Limited. Otherwise, Uganda was previously and notoriously known for infamous rule of Idi Amin and the famous Israeli, "Raid on Entebbe".

As usual the Indian diaspora was impressive with its presence in almost every important economic activity. We could easily conclude that the Indian business community controls the economic levers of this country. They are almost everywhere, whether it was shopping malls, banks or major industries and even in the retreading industry, every sector has an Indian presence, which originally came to this country almost a century ago. Their almost impregnable hold over various sectors of the industry has forced the present and previous governments inviting them to set up their business once again after they were forcibly uprooted by Idi Amin. Interestingly, with development all around, the retreading industry has also benefited. It is now moving into the next phase of development.

Previously, it was a question of survival and of educating people about the concept. In the second phase, retreaders are relocating their plants to strategic locations around the new by-pass in 'Busega'. Once the new by-pass is completed, trucks will not be allowed to enter the capital Kampala. Retreaders are pumping in fresh money, buying new machines, which is a positive development for the industry. Indo - Africa Tyre & Tread has already shifted to a new location and is installing machines to move into the OTR segment: K&D Tire & City Retread are moving to new locations and are adding new machines and Mansons is planning to open a whole new facility. So, it is going to be an all round development for Uganda's retreading industry.

The retreading industry is not new in Uganda as Vaculug was the first plant but the hot process plant closed a long time ago. "Vaculug traced itself back to the Idi Amin era. It was on a property owned by an Indian, run by a local Ugandan. But Idi Amin forcibly acquired the property as it belonged to the Asian but when Museveni came to power in 1986. He invited Asians back to the country and started giving them their properties back. But Vaculug never started again," recounts Mr Suresh Nair, Director, Indo African Tyre & Tread.

There was also Uganda Bandag, which was in bad shape in 2005 and the plant closed down in 2008. It was owned by a wealthy Indian, born and brought up in Uganda, who also owned many hotels in Uganda. Retreading was there in this small, land-locked and impoverished country for quite some time but has not been given a chance to prosper due to Uganda's turbulent past. It is only in the last decade that the retreading industry has progressed and found firm footing in Uganda.

Another interesting feature of this market is the moving and floating traffic between the East African countries of Uganda, Rwanda, Burundi, Kenya and Tanzania. Uganda, Rwanda and Burundi are land-locked and depend on supplies from the Mombasa and Dar-Es- Salaam ports. Therefore, a lot of traffic is moving between these countries, "We receive tyres from truck owners from Rwanda and Burundi. They drop the tyres with us for retreading and pick them on their return," said Abdullahi Ahmed, Managing Director, City Retread.

It seems that retreading industry may see a better future ahead with the abolishing of the 10 per cent import duty from July this year. "Uganda is also a member of COMESA and the abolition of the 10 per cent import duty on rubber products meant that instead of importing rubber from India, we could import rubber from Treaddirect's Nairobi unit," said Suresh Nair of Indo Africa Tyres & Tread.

Issue 2010/3