Carrefour’s Uganda losses expose the gap between growth and spending power

Only one percent of working Ugandans earn more than Shs1 million, according to a Bank of Uganda figure cited in Daily Monitor Uganda. That narrow base of higher earners helps explain a striking retail problem: an economy growing at an average of six percent has struggled to sustain major supermarket chains. For retailers, the challenge is turning national growth into purchases at the checkout.

Carrefour opened its first Kampala store in 2019 and has accumulated losses, according to a September financial statement cited by Daily Monitor Uganda. The source does not specify the statement’s year or the size of those losses. Its difficulties follow a series of setbacks for other chains. Shoprite, which entered Uganda in 2000, later withdrew. Nakumatt, Uchumi and Game also failed, the article says.

Growth without a full shopping trolley

The article’s author, journalist and former Al Jazeera Africa digital editor Mr Namiti, argues that weak purchasing power — how much people can afford to buy — is the leading explanation for supermarkets’ struggles. He acknowledges that other factors may be involved. His central point is that economic expansion and falling poverty do not necessarily leave enough households with the money needed to support large modern stores.

That contrasts with the progress highlighted by then-International Monetary Fund managing director Christine Lagarde during a January 2017 visit. She described Uganda as an African success story, pointing to a threefold rise in economic output per person over a generation and a reduction in extreme poverty to one-third of the population. She also said Uganda had more than met the United Nations goal of halving poverty.

“Uganda has experienced a threefold increase in per capita GDP over the past generation.” — Christine Lagarde, during her January 2017 visit, as cited by Daily Monitor Uganda.

Namiti’s argument is not that those gains have no value. It is that moving out of poverty does not automatically create a supermarket customer with substantial money to spend. He links shoppers’ preference for local shops principally to limited incomes. In his account, a typical supermarket visit involves a basket holding a few everyday items, rather than a trolley loaded with a large purchase.

Store size reflects the challenge

The analysis also points to the size and range of Carrefour’s stores. Namiti describes its Ugandan outlets as relatively small, with a narrower selection than the large stores found in the United Arab Emirates, Saudi Arabia and Qatar. He sees that difference as a sign of the customer base retailers can serve, rather than evidence that the same supermarket model can work unchanged across markets.

Location offers some exceptions, the article argues. Stores in Lubowa, Entebbe and central Kampala can serve foreign diplomats and expatriates, including employees of international organisations. But Namiti presents those customer groups as limited pockets of demand. Their spending does not establish that Uganda has a sufficiently broad middle class to support supermarket chains on a much larger scale.

The issue to watch is whether continued growth brings a substantial rise in household incomes. Namiti argues that supporting dozens of stores comparable in size to Carrefour’s European and Middle Eastern outlets would require growth sustained for decades, alongside much stronger earnings. For Uganda’s supermarket sector, the test is not simply whether the economy expands, but whether more shoppers can afford to fill their baskets.