Factors Hindering Ugandan Companies from Internationalising: A Case Study of the Agro Processing Sub Sector

Internationalization became a concept of interest in Uganda, after the Government set up a special committee in 2021, the Presidential Advisory Committee on Exports and Industrial Development (PACEID), charged with increasing the country’s exports (merchandise) from the current $6 billion annually to $12 billion by 2027 and to $100 billion by 2062. The objective of the study was to find out the factors that are hindering Ugandan agro-processing companies from internationalizing and what can be done do eliminate them. My inspiration for this study came from a paper published in the Thunderbird International Business Review about the Internationalization of African Firms: Opportunities, Challenges and Risks. In the paper, I discovered that South African companies had accelerated their international growth on the African continent; Telkom operating in 38 countries, MTN in 24, Standard Bank in 20, and Shoprite in 17; Togo’s Ecobank (40 countries); Nigeria's UBA (20) and Dangote (15); and Mali's Bank of Africa (18), while my country, Uganda, didn’t have any company operating at the continental level. The study reviews the existing theoretical work, understanding the internationalization concept in international business and its theories particularly OLI paradigm and Porter’s Diamond model and how they are relevant to the internationalization of Ugandan companies; looks at how the Ugandan companies that moved into Southern Sudan in 2005 exploited the advantages of location using the OLI paradigm, and how the Ugandan agro-processing companies can take advantage of their location and factor conditions in Porter’s Demand model to move into the Kenyan and Democratic Republic of Congo markets that largely rely on food imports. Qualitative research method was employed to have deeper understanding of the problem and data was collected using structured interview method from 45 companies licensed as exporters in Uganda. Data was coded using Inductive coding and analysed by content analysis using Atlas.ti to identify and categorize the key themes and concepts in the data. The major factors hindering Ugandan companies were discovered to be insecurity, high business costs, limited finance, low quality products, stringent market access requirements, unfavorable prices, logistical challenges, poor negotiation, presence of non-tariff barriers, and unfavorable tax environment. While the main strategies proposed to eliminate the hinderances were improving access and affordability of finance, improving tax environment, negotiating for specific preferences on market entry, offering subsidies, easing the process of acquiring licenses, reducing government red-tape, providing special concessions on agro-processing, providing special exemption on Value Added Tax, providing tax rebates on importation of raw materials, capacity-building for government agencies. The results will inform the companies in Uganda and the East African Community about the factors that are hindering them from internationalizing, guide political leaders, government officials, policy makers, development partners and the business community on the necessary steps and actions that can be undertaken to ensure that companies in Uganda successfully internationalize, and contribute to the existing literature about the OLI paradigm and the Porter’s Demand model.