The fashion industry in Uganda is a vibrant and creative sector, brimming with potential to drive economic growth, create jobs, and showcase the country’s cultural heritage on the global stage. The fashion industry has been overtaken by startups run by the youth who find it difficult to scale up because of a lot of encumbrances they face on a daily. These are mostly informal and lack enough capital to run their business which they do with passion since fashion is a passion but a big business with big opportunities. However, the transition to e-commerce a critical avenue for growth in the digital age has been slow, hampered by significant policy and infrastructure gaps. For Ugandan fashion designers, tailors, and retailers to fully harness the power of online platforms, these challenges must be addressed urgently.
This article explores the key barriers hindering e-commerce growth in Uganda’s fashion industry and proposes actionable solutions to unlock its potential.
The Promise of E-commerce for Uganda’s Fashion Industry
E-commerce offers Ugandan fashion businesses an unprecedented opportunity to reach local, regional, and international markets. By moving online, designers can showcase their creations to a global audience, reduce overhead costs associated with physical stores, and tap into the growing demand for African-inspired fashion. However, despite these advantages, the adoption of e-commerce in Uganda’s fashion industry remains low, with many businesses struggling to overcome systemic challenges.
Key Policy Gaps Hindering E-commerce Growth in the Fashion Industry in Uganda
Lack of a Comprehensive E-commerce Framework: Uganda lacks a dedicated e-commerce policy that addresses the unique needs of online businesses. This creates uncertainty for fashion entrepreneurs, who often struggle with issues like online contracts, digital payments, and consumer protection. Without clear regulations, businesses and consumers alike are hesitant to fully embrace e-commerce.
Secondly, the weak Consumer Protection Mechanisms: Trust is a cornerstone of e-commerce, yet many Ugandan consumers are wary of online shopping due to fears of fraud, counterfeit products, and poor-quality goods. The absence of robust consumer protection laws specific to e-commerce exacerbates this issue, limiting the growth of online fashion platforms. For example, how is a consumer protected if what he ordered vs what he received are not in tandem, of course, there is nowhere one can seek redress.
Thirdly, Intellectual Property (IP) Rights Challenges: The fashion industry thrives on creativity, but weak enforcement of IP laws leaves designers vulnerable to counterfeiting and brand infringement. This discourages innovation and investment in local fashion brands, as creators struggle to protect their designs in the digital space.
Unfavorable Tax Policies by the Taxman (URA): Ambiguity around taxation for e-commerce transactions, including VAT and income tax, creates confusion for businesses. Additionally, high taxes on the importation of fabric, which is currently standing at $3.5 per kg, make it difficult for small fashion businesses to compete locally and in the EAC region, where import duties are a bit lower.
Infrastructure Gaps Limiting E-commerce Potential:
Inadequate Digital Infrastructure. While internet penetration is improving, access to affordable and reliable internet remains a challenge, especially in rural areas. Slow internet speeds and frequent outages disrupt online transactions, making it difficult for fashion businesses to maintain an active online presence.
Underdeveloped Logistics and Delivery Systems: Uganda’s logistics infrastructure is underdeveloped, leading to high delivery costs and delays in shipping products. This is particularly problematic for fashion businesses targeting customers outside urban centres, where last-mile delivery services are often unavailable. Also, shipping outside of Uganda is so costly since the only available service provider for logistics is DHL which offers competitive pricing for the exporters in the fashion industry, but it is still costly for small-scale dealers.
Limited Access to Digital Payment Systems: Although mobile money is widely used, many Ugandans still lack access to formal financial services. High transaction fees and limited interoperability between payment systems further hinder seamless online transactions, limiting the growth of e-commerce.
Information asymmetry (Gap): A lot of information about opportunities is out there, but this remains in some offices and is not publicly available to everyone. Information on exhibitions by various players such as PSFU and the Ministry of Foreign Affairs is not readily available, so fashion designers can showcase their products and have access to a wider market.
Cross-Border Trade Barriers: Complex customs procedures and high tariffs hinder cross-border e-commerce, limiting the ability of Ugandan fashion brands to access regional and international markets. This is particularly problematic given the growing demand for African fashion globally. Additionally, Uganda’s fashion industry is competing with other materials like the Khanga and Kikoyi from Kenya and Tanzania, yet we have a unique material known as bark cloth (Olubugo). Furthermore, there is competition from the used clothes know as mivumba which are cheaper for the population, it has been noted that over 3500 tonnes of second-hand clothes is imported into Uganda annually and all this money is being donated outside instead of supporting our own.
What Must Be Done to Fix These Gaps?
To unlock the potential of e-commerce in Uganda’s fashion industry, a multi-faceted approach is needed, involving government intervention, private sector collaboration, and capacity-building initiatives. Here are some actionable solutions:
Develop a National E-commerce Strategy: The government should create a comprehensive e-commerce policy that addresses issues like consumer protection, taxation, cross-border trade, and data privacy. This will provide clarity and confidence for businesses and consumers, fostering a conducive environment for e-commerce growth.
Strengthen Consumer Protection and Cybersecurity: Robust consumer protection laws and cybersecurity regulations must be enforced to build trust in e-commerce. Awareness campaigns should also be launched to educate consumers about safe online shopping practices.
Invest in Digital Infrastructure: the government should strive to expand affordable and reliable internet access, especially in rural areas, is critical. Public-private partnerships can help improve internet connectivity and promote the adoption of 4G and 5G networks.
Improve Logistics and Delivery Systems: Investments in road networks and last-mile delivery services are needed to reduce shipping costs and delivery times. Encouraging private sector participation in logistics can also enhance efficiency. Such as collaboration with logistics companies such as DHL, JUMIA, and many more to provide cheap last-mile delivery.
Promote Digital Financial Inclusion: Expanding access to affordable digital payment systems and reducing transaction fees will encourage more people to use e-commerce platforms. Enhancing interoperability between mobile money platforms and other payment systems is also essential.
Support SMEs in the fashion Industry: As already alluded to earlier in the challenges, the fashion industry is very informal and fragmented and lacks access to enough patient and affordable capital to scale up and as well satisfy the local, regional and global market. There is a need for financial assistance for the fashion industry to grow since it complements sectors such as Tourism, Trade and the service industry.
Market access: The Uganda government, through its program of commercial diplomacy, should collaborate with Uganda fashion designers to showcase Uganda’s fashion designs, such as Bark cloth (Olubugo), the Kikoyi designs and Kitenge designs. Secondly, the government and other corporate institutions should make a deliberate effort to celebrate local fashions such as Kitenge and bark cloth designs by dedicating a day in a week such as a Friday as an “African wear” day as it is done at the EAC secretariat. This will increase awareness and appreciation for the local fashion industry but also increase demand for locally made garments.
Collaboration and partnerships in the fashion industry. The players in Uganda’s fashion industry should collaborate by forming associations, and innovation hubs such as which can then subscribe
Foster Regional and International Collaboration: Aligning Uganda’s e-commerce policies with regional trade agreements like the African Continental Free Trade Area (AfCFTA) will facilitate cross-border e-commerce. Streamlining customs procedures and reducing trade barriers can also boost international trade. Secondly, there is so much need for sensitization about the Simplified Trade Regime where a local fashion designer can sell across the EAC market under the STR where they can export products from Uganda to either Kenya or Tanzania, Rwanda and don’t incur high costs because of the tariff if they so satisfy the originality of their garments originating from Uganda.
In a nutshell, the fashion industry in Uganda has immense potential to thrive in the digital economy, but this can only be realized if the existing policy and infrastructure gaps are addressed. By developing a supportive regulatory framework, investing in digital and physical infrastructure, and empowering fashion entrepreneurs with the skills and tools they need, Uganda can position itself as a hub for e-commerce in Africa. The time to act is now by bridging these gaps, we can unlock the full potential of e-commerce and pave the way for a vibrant, globally competitive fashion industry in Uganda.
Article written by Collins Agaba: Sector Coordinator for Trade, Transport and Logistics at Private Sector Foundation Uganda (PSFU)
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