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Experts express mixed views on handling of Chinese retail traders
What you need to know:
- Local traders have been complaining that the Chinese traders were increasingly engaging in retail businesses ranging from building materials, clothes, shoes and home appliances such as decorations, kitchen wares, curtains and carpets, contrary to their expectations about the investors from leading world economies.
Dar es Salaam. Complaints about emerging Chinese retail traders at the Kariakoo area have attracted mixed views on what could be the best solution to the matter.
Local traders have been complaining that the Chinese traders were increasingly engaging in retail businesses ranging from building materials, clothes, shoes and home appliances such as decorations, kitchen wares, curtains and carpets, contrary to their expectations about the investors from leading world economies.
Currently, Tanzanian laws do not restrict retail businesses to be done by the foreigners. Business licence and registration certificates allow them compete with locals in retail trade.
However, the local business people say it is unfair to let such a trend unchecked, fearing lose the competition. Some economic experts are divided on what could be the best approach to address the situation that the government is cautiously handling.
Much as some people suggest demarcating the businesses for foreigners from those of the small retail traders, others see complexity in handling the matter especially at the time when countries are embracing free market economy.
Repoa executive director, Dr Donald Mmari, a research think tank, suggested two ways in which the government can handle the Kariakoo crisis, which also has diplomatic implications.
“One of the ways is to review the economic empowerment policy and differentiate businesses for foreigners from those which only locals can do,” said Dr Mmari, adding that some countries have applied such approach.
The second alternative suggested by Dr Mmari is empowering the local traders with access to reasonable capital so that they can compete with the foreigners in a free market.
The first solution was echoed by other economic experts like Prof Abel Kinyondo of the University of Dar es Salaam who said the local content policy can clearly state the minimum allowable capital participation for the foreigners which will be contrary to the locals.
“Much as we think of the local content in business and economy in general, it’s also important to consider competition, which is not a bad thing,” said Prof Kinyondo.
According to him, locals might sometimes be complaining about foreign traders just because they lose in the competition for either overpricing their items or operating their businesses inefficiently.
He said the market forces can also be let to determine the prices and availability of the products until the locals cope with the situation.
“I think we need to do a cost-benefit analysis on whatever decision we take about the matter to see who will exactly benefit. Do we protect the profitability of traders or millions of the consumers benefiting from the competition?” he asked.
An independent analyst, Mr Oscar Mkude, highlighted the complexity of solving the Kariakoo issue, acknowledging that there is no law which blocks foreigners from retail businesses.
He said Kariakoo has actually absorbed many people who have found employment in the retail trading, adding that it deserves to be protected for that matter.
“The government can draft a law or regulations to protect the local traders by introducing exclusivity in some areas,” said Mr Mkude.
However, the complexity comes as embracing the market economy makes it difficult to restrict other players.
“Of course, we can create some protective restrictions in some areas, but the challenge is that even most of the products in Kariakoo are from China. What exactly is the problem – Chinese or their products?” he said, adding that “we have to know what we want.”
According to him, it becomes even more difficult to restrict the foreign traders in the digital era, which allows them to trade locally without their physical presence.
He said the government needs to build capacity of the local traders to compete with their foreign counterparts anywhere. Traders proposed to be given some exclusive businesses as a way of protecting the local jobs.
“I have been in this business for five years but if we allow the foreigners to venture into retail, one day I will fail,” said Mwanaidi Aboud who sells electric lights.
“I think retail trading should be restricted for foreigners so that they concentrate on wholesale to supply us,” she added.
Her comments resemble those of the chairman of the Kariakoo Traders Association, Mr Hamisi Livembe, who also urged the government to come up with a law that separates businesses conducted by foreigners from those set as exclusive businesses for the locals.
“It has taken time and resources to advance the Kariakoo market, which has employed a significant number of people. We need to protect it by showing the foreigners the kinds of businesses they can do and leave retails for local entrepreneurs,” said Mr Livembe.
He also suggested that the government can restrict work permits to traders who seek to open retail businesses in the country.
“We have been engaging some government officials about reviewing issuance of work permits and the response has been encouraging. Some officials are actually supporting us in this endeavor and we hope something will be done,” he added.
The foreign traders themselves feel it normal to operate their businesses. When asked why they were trading in retail, one of the Chinese trader identified as Chen said: “We are just doing business like others. We don’t violate any law, why should anyone hate us?”
In his shop, there is a female attendant who welcomes customers and shows them the installed sample lights, while other men were busy supplying boxes of the products to some other shops.
