By John Vianney Nsimbe
Ten years ago, John Gakibayo had a dream to become one
of the richest Ugandans by selling used cars from Japan.
His dream was perhaps influenced by the thriving market
for reconditioned cars in Uganda and neighbouring countries.
But ten years into the trade, this dream is still elusive.
“I am letting go of this business because I have realized
it is hard for me to get my way around it,” said Gakibayo
Gakibayo says a powerful group of business people from
Pakistan, with financial ability to import more vehicles
has created a price war that is driving financially weak
traders out of business.
“I have realized I just can’t compete with
these people,” he said.
Gakibayo represents the growing number of Ugandans who cannot
cope with the cut-throat competition, which some claim involves
price undercutting by the foreign investors seeking to take
Local dealers are suspicious of the huge car imports by
their competitors from Pakistan. “There is a danger
in this used car trade… and government must become
very vigilant because you may find an influx of used stolen
cars. It is very unusual how such dealers can import cars
from the same market we do but then sell them at the price
we buy them,” says Gakibayo .
The stiff competition in the business has been caused by
the burgeoning corporate sector which buys vehicles through
hire purchase arrangement. This competition has also been
fueled by commercial banks enticing salaried employees,
earning as little as Shs 500,000 per month, to sign up for
Commercial banks have partnered with car dealers where
a salaried employee can own a car after paying 20% of the
value of the car upfront.
This strategy by commercial banks of targeting bigger car
dealers against the smaller importers (many of whom are
local), could also be the reason for the lower prices quoted
by foreign importers.
Timothy Kalibala, a used car dealer, said that because
the foreign business men import a lot of cars, they are
able to set their own prices.
“In the event that I import five cars, the financial
muscle of the foreign businessman allows him to buy at least
100 vehicles at a go, which I can’t afford and as
such I wouldn’t be able to sustain my business,”
Kalibala added that “a car that would normally cost
Shs 15 million, the Pakistan businessman would sell it at
Shs 12m and he would not feel the pinch.”
Khurram Abbas, the operations manager of Al-Malik Group
says that they are relatively cheaper because his company
has its own agents in Japan who buy cars from first owners.
He said they do not go through middlemen to buy cars from
like the local traders do.
And to make matters worse most of the bonded houses where
these traders keep their cars before they are cleared by
Uganda Revenue Authority (URA) are owned and managed by
Pakistanis. The traders are charged Shs 2,500 per day for
keeping their cars at bonded houses.
But Hentie Stemmet, Stanbic Bank’s Head of Vehicle
and Asset Financing defended his bank’s partnership
with foreign owned firms like Yuasa, Al Malik, Cosmos, explaining
that “these dealers offer customers guarantee on the
quality of imported vehicles and that they come onto the
market legally with genuine parts and engines.
Yet, while the likes of Kalibala complain, their Asian
counterparts say that they are doing a service to the economy
by creating employment for Ugandans. Khurram Abbas, the
operations manager of Al-Malik Group, dealers in Japanese
used cars said, “We have 150 workers, most of whom
are Ugandans that work at the warehouse and transport the
Also URA is basking in the joy of beating its revenue collection
targets partly because fees from import taxes are more than
those from domestic taxes. Currently, new or used cars are
charged 54% depending on their value. On the other hand,
imported cars that are eight years and above old are taxed
an extra 10% environment levy.
But Gordon Wavamunno, Uganda’s longest surviving
car dealer, believes government is shortsighted to let foreigners
dominate the car industry. He said that the economy stands
to lose a lot when foreigners repatriate profits to their
“It is so unfair that Pakistanis continue to have
the lion’s share in this business,” said Wavamunno,
who imports Mercedes Benz, Jeep Cherokees and Daimler Chryslers,
adding that “most nations have a policy to protect
their people especially when their job opportunities are
encroached on, unfortunately this is not done in Uganda.”
Wavamunno, who was lost to a foreign company, Motorcare,
to a multi-million dollar deal to supply cars for the Commonwealth
Heads of Government Meeting (CHOGM), explained that while
the Pakistanis might pay more taxes their businesses here
might lead to “capital flight and also less job opportunities
It is a view that Gakibayo might agree with. For the moment,
there is no love lost between Ugandans and their Pakistani