The structure, conduct and performance of briquettes market in greater Kampala

Abstract

The forest cover in Uganda has declined by 21.8% between 2000 and 2015 due to unsustainable use of energy mainly for heating and cooking which calls for an alternative cheaper source of biomass like briquettes. However, briquettes and/or their benefits are little known to many biomass fuel users and limited documentation on the structure, conduct and performance of the briquettes market is available. This study was therefore undertaken to evaluate the structure, conduct and performance of the briquettes markets in greater Kampala. The specific objectives were to: describe the socio-economic characteristics of the players, analyze the business survival strategies in business, assess the profitability of briquettes and determine the factors that influence the profitability of briquettes production and marketing. To achieve this, a cross sectional survey was carried out using snowball sampling to select 113 briquettes actors in districts of Kampala, Wakiso and Mukono that were used in analysis. Data was analyzed using STATA and descriptive statistics were used. For instance, Gini coefficient and Herfindahl-Hirschman Index was used to determine the level of concentration of the briquettes market, gross margin analysis was used to determine performance while a multiple linear regression was used to determine the factors that influence the profitability of briquettes production and marketing. The study revealed that 67.7% of the players involved in briquettes production and marketing were small scale with over 50% overall being females. The results also showed that the Gini coefficient and Herfindahl-Hirschman Index was 0.877 and 2,195 respectively implying the market concentrated and there were few briquettes actors who controlled a large volume, hence an oligopolistic market. Briquettes business is profitable with the highest profit received by medium scale carbonized, large scale carbonized, non-carbonized, small-scale producers and lastly by traders. The results further showed that an increase in the years of formal education, experience in briquettes production, access to supply contract of raw materials, briquettes product means of transport used, business registration status, access to training in production, and amount of credit accessed, packaging in have a positive influence on profitability of briquettes production and marketing. Conversely, the results also showed that an increase in the age of the actor and the distance to the market, has a negative influence on the profitability of the briquettes production. Therefore, there is need to enact policies that creates favorable enabling environment to attract more actors in the briquettes market and increase awareness of briquettes use and advantages over charcoal and firewood among the household to switch to briquettes.