Economy Yet to Benefit from the High Entrepreneurial Spirit in Uganda

 By Andrew Ekwang

The Ugandan economy has been beaming with a very informal sector growing at a high rate, yet still failing to deliver the stable economic performance that is expected. The question economic planners should be asking is when will these informal businesses formalize? Statistics don’t seem to be working in our favor at the moment, but we already have something to build on.

A World Bank funded census released by Uganda Bureau of Statistics (UBOS) revealed that 98.6% of businesses in Uganda are owned and run by Ugandans, 94% of these are informal and 80% are carried in households thus no business premises and mostly employing family members in informal jobs. At first impression you might be tempted to believe that these figures means the Ugandan households are highly active, productive and generates some income, yet looked at carefully we a rapidly creating a business system so complex if not impossible to provide formal jobs for the young and educated population let alone be taxed. This makes the matter a little worrying if it can really lead us to the destination we were expecting, more especially when 61% of these businesses is in Trade “buying and selling of goods” and manufacturing and agriculture at only 7% and 2% respectively, the independent a leading news magazine I trust called this state a country of traders.

Market venders & Shoppers in Western Uganda

Recently I met Mr. Ssentongo (not real name) for a drink in one of his favorite joints, he is a produce trader in Kampala supplying some retail traders in Nakasero, and Nakawa markets literally he is doing well far better than his employed counterparts. His actual role is to buy these food items from the rural farmers, transport and sell to the retail traders in these markets, to support his operations he now employs about 13 young men located in the different village areas to do door to door purchase of the food items, he also got a second hand truck to collect these items from the rural areas to a house turned warehouse in Kampala. Though his challenges include among others the boys disappearing with his monies, traffic bribes ones his truck is got overloading, high fuel prices and bad roads in rural areas, he has manage to make a good fortune from his business of above 500 million in turnover per financial quarter and invested heavily in real estate’s( land and rentals). Asking where he sees the business in 3 years from today he says getting another truck maybe and increasing the volumes of his business to 1 billion in turnover per quarter is his target. While I was still admiring his achievements he asked whether there was some connects I had that could get his daughter who as graduated but has been home unemployed for about a year now. I answered softly we will see, in my mind I was only thinking with 500 million as quarterly turnover expecting to grow to a billion surely Mr. Ssentongo should be in position to at least employ the daughter and some few lucky Ugandans formally.

Most businesses in Uganda at the moment however well they are doing are stuck in the informal setting and a move to formalize them is something the businessmen (traders) fear mostly due to tax associated with formal businesses and sometimes the lack of know how. And yet to boost job creation and a tax base you need Mr. Ssentongo and friends to formalize and grow these businesses to the sound SMEs this economy needs for a take off in the near feature, short of that the economy my look good but its stuck and not healthy at all.

To create the expected jobs and tax base to drive the economy in a highly un-regulated business environment like it is in Uganda is and will always be a challenge, some level of business regulation has to be effected enough to create economic order and yet not discourage the creative spirit.