Press Release On The Current Financial And Economic Status In The Business Community
KACITA Uganda, a multi-sectoral business support association in Uganda having been in existence since 2001, has exhibited high level of professionalism and integrity within the informal sector (Business community) where it operates.
The association has got over 3,000,000 members who range from MSMEs, manufacturers, importers and exporters, individuals, corporates, associate members, diplomatic agencies both local and internal as well as government ministries, agencies and departments.
As one of our mandate to our members and the entire economy, KACITA Uganda has been at the helm of ensuring that the economy recovers from the drastic effects caused by COVID-19 pandemic. We have held and still holding different engagements with different stakeholders including Ministries, agencies and departments alongside other business partners in the private sector on the possible direct and indirect interventions to help traders achieve a full business recovery.
However, there challenges in the business community like restructured loans, loss of borrowers property, high levels of corruption, Limited infrastructures especially in rural and Peri-Urban areas, inefficient or unimplemented government services yet Uganda maintains liberal trade and foreign exchange regime.
The economic crisis is currently affecting the entire global economy in the most severe way as compared to what was witnessed after the First World War. Although the impact of the crisis is uniform across all countries and no region of the world is unaffected; all regions are experiencing a reduction in their GDPs in the advanced economies, which still provide the main export markets for Africa.
Uganda’s economy has grown at slower pace, reducing on the impact of poverty and the economy rebounded strongly as domestic, economic conditions improved slightly following the easing of mobility restrictions after the second lockdown.
There is evident lower consumption and purchase of commodities growth due to reduce remittances limited credit and job losses poverty that has increased from 27.5 to 32.7% after the first lockdown in 2020 compared to the strong performance of the economy in the 2000’s recent economic growth has slowed considerably due to both internal and external factors.
We believe structural transformation is key for the growth of the economy and poverty reduction. The state is required to change the growth model and adapt to the new trend since times are changing.
In most cases loans are secured to sustain and maintain a business however, considering the current economic situation Loans have become bottlenecks to people in the business community leaving most of them totally bankrupt and out of business.
Loans are not very flexible- you could be paying interest on funds that you are not using. One could have trouble making monthly repayments if your customers don’t promptly make purchases causing cash flow problems.
In some cases, loans are secured against the assets of the business or your personal possessions eg your home. The interest rates for the secured loans may be lower than the unsecured ones, but most people are losing their property because of failure to pay loans leaving them with no choice but to build loan chains hence greatly affecting the entire economy.
There is another heavy tax burden which has continuously been imposed on the already limping business and this has ultimately forced many to close down and rendered unemployed. Most tax regimes introduced currently aren’t in consideration of the business environment at hand but rather is aimed at meeting financial and revenue targets. The policy makers and implementers have all the time proved to widen the tax base yet in actual sense they have concentrated on deepening the tax base where the compliant local businesses are the ones being milked at the expense of the non-compliant foreign owned businesses.
- We recommend that the special fund for traders which the president pledged be simplified to favor most businesses especially those focusing on utilizing the regional and global markets through exporting locally produced goods. This fund should this time be managed by trader’s association like especially KACITA Uganda since the association best understands the private sector members’ needs and have the best approaches to implement and manage the fund effectively.
- We do recommend for much more flexible terms and conditions from financial institutions especially banks who have continuously taken peoples properties without understanding and examining the underlying reasons behind their failure to meet their obligations. It is estimated that 75% of the loans portfolio are non performing and this originates from the COVID times where banks kept charging interest on loans while businesses were closed.
- Government can invest more in the agricultural sector; plan for irrigation because; when prices of everything escalate food prices increase for example Ugandans have resorted to importing beans and rice from Tanzania definitely making the cost high. Some food stuffs are not on the market; this makes the situation worse if people cannot afford basic needs like food.
- Uganda makes a loss of 500 million daily in jam the government can also concentrate on infrastructural improvement like the Uganda railway because of its triple capacity to carry more passengers, reduce on raw material importation costs instead on using trucks that consume a lot of fuel this will reduce the pressure on fuel prices. It can also Utilize TONDEKA or Kira Motors the government said these buses will use solar instead of fuel if this project is concentrated on it will be very fruitful to the people these strategies will help passengers, reduce on fuel demand and actually in reduce on congestion in the city.
- We appreciate allocating the stimulus package to Uganda Development Bank there is need for this to be reviewed because it has been hard to access by the beneficiaries. Business owned Ssaccos could be used as channels for these packages.
- Improve access to resources especially by local manufacturers promote and marked their products by reducing importation of the locally manufactured products as a way of promoting BUBU (Buy Uganda Build Uganda)
KACITA Uganda’s commitment
- KACITA Uganda commits to continue renegotiating with the financial institutions through Uganda Bankers’ Associations as well their line ministry, Ministry of Finance Planning and Economic Development. This is meant to develop new financial prepositions that do fit the prevailing situations since business have to grow and attain sustainability just as these banks wants their businesses to grow.
- KACITA Uganda has established a special desk at its secretariat well equipped with consultants and experts who are meant to help, support and advise our members on the best practices of business management as well as providing solutions to the rampant financial distress at hand. We therefore call upon all members with business challenges to utilize this desk as we try to rescue our own businesses.
KACITA Uganda is committed to work with the government to improve the business community and get to agreement on practical strategies and approaches towards the development of our economy.
Musoke Thadeus Nagenda