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2021 Election: Tread cautiously as elections loom, businesses told
Artistes of Tubonga Naawe pose for a photo with the Head of State at Entebbe State House in 2016. PHOTO BY PPU
What you need to know:
While government is expected to ensure stability and secure investor confidence among the business community in the run-up to elections, the pre-election period is also a time to make sound business decisions. But poor business decisions might haunt your business for years with debt until it eventually collapses.
The race to the 2021 election has already started as Ugandans set their eyes on a fresh round of elections.
Elections create a chance to start new businesses, expand existing ones or set the ground for future business engagements. But they are potential causes of troubles that can undermine some businesses and even sink some.
While government is expected to ensure stability and secure investor confidence among the business community in the run-up to elections, the pre-election period is also a time to make sound business decisions.
Business analysts believe that this is a time to reap. But poor business decisions might haunt your business for years with debt until it eventually collapses after elections.
Travel advisories are usually stepped up due to insecurity perceptions during the election period. Such sentiments negatively impact key sectors of the economy such as tourism, as well as the stock market index.
The Central Bank has already indicated that growth will be moderate between 5.5 per cent and 6 per cent; this will be lower than the projected 6.5 per cent. That said, there are the opportunities in key sectors such as mining, agriculture, services, energy; tourism, exports, imports, domestic trade and hospitality.
While there may be mixed feelings among the business community, analysts believe businesses should concentrate on making strategic decisions that will enable businesses to thrive after elections.
Navigating payment
Kalema, who does printing and graphics at Printers Arcade along Nasser Road in Kampala, said he has been in this business for over seven years and was actively involved in printing services in the last general election.
‘’Yes, we do big time printing for posters; we do branding and graphic designs. I have worked with one politician who contested the Mayoral seat and another contested for the MP [Member of Parliament] seat in Mukono municipality,” he said.
He added; “The owner came, we designed and when he approved, he paid 60 per cent and the balance was paid upon delivery. The 60 per cent is a guarantee because people can be difficult to trace after elections.”
As for Mustapha* another graphics designer along Nasser Road, the printing business during the election time is good but tricky. So one has to be cautious.
“We have had incidences where people are not paid for as long as two years. In some cases, when your customers lose elections, getting the money back is a big hassle,” he said.
Most of the graphic and printers are not comfortable talking to the media over fears of Uganda Revenue Authority (URA) catching up with them,” he said.
Mustapha added; “Because of the unpredictability of politicians, we tend to do cash; I have a friend who had to look for debt collectors to get his money from a politician in Mpigi. This cuts across all businesses.”
In 2017, the ruling National Resistance Movement (NRM) party was summoned to court in what was believed to be failure to pay Shs580 million in debt for Presidential materials used in the 2016 elections by a printer.
Timothy Mukwaya, who previously worked for an events management company said the company closed because they could not pay their suppliers.
“The demand for chairs and address system was high; so we went to suppliers and took many chairs and tents on credit. But when elections were over, we failed to pay because we had no formal agreements with politicians,” he said.
Gideon Badagawa, the executive director at Private Sector Foundation Uganda (PSFU), says this is a political season and what will keep businesses afloat is being organised.
“This time there will be many opportunities for business; people will need food, accommodation, medical supplies, printing materials, clothing and tents among others. This is a time to make money,” he said.
Badagawa added; “Regardless of the elections, there are tendencies where investors hold on waiting to see what will happen. I don’t blame them.”
Charles Ocici, the executive director at Enterprise Uganda, also agrees that there will be a lot of opportunities in respect to campaign materials and those that have venues to convene such gatherings have an opportunity to make money.
“In order to exploit this, you have to secure your raw materials early so that you don’t buy when the demand is high. This will enable you to maximse the margins,” he said.
Jean Byamugisha, the executive director of the Uganda Hotel Owners Association (UHOA), said Uganda is one of the top countries that have earned from organising meetings.
“This year, we expect more investments. But we also expect a decline next year. Companies should utilise this time to reap. This can be witnessed by continuously launching of star [red] hotels,” she said.
Byamugisha said; “Uganda will still be hosting international conferences and such activities enable us to record growth. We are also seeing an increase in domestic tourism; that will be a very big opportunity.”
Uganda earned about $1.6b from tourism in the 2018/19 financial year, up from $1.45b in the 2017 financial year - an indicator that the sector is growing.
Tourism is the country’s leading foreign currency earner according to the Annual Tourism Sector Performance Report for Financial Year 2018/19.
“This year, people are taking business visibility online. This will create jobs for IT specilists because businesses are moving from traditional marketing,” she said.
However, according to Byamugisha, Uganda is very fragile; any unrest will have an impact on the tourism and hospitality industry.
Opportunities
Other opportunities according to UHOA lie in hotels that host parties and conferences. During elections, people go to villages to vote, some end up occupying and spending at different hospitality sites in the country.
Badagawa explained that while doing business with politicians, businesses need to tread carefully.
“Keep your ears on the ground. Politicians are going to need services but my caution is that one should not work on ‘cheques’ or promises, work on cash basis,” he said.
He added; “Cheques are good. But we have seen cases where cheques are bounced, people have registered losses in previous elections. So tread carefully.”
Ocici, however, cautioned that people will not mind about the quality; they will want something presentable and this is what businesses should exploit. Companies should also be ready to manage crises.
“People will be doing last minute ordering; you should be ready to deliver. But avoid debts and get reimbursements early. Debts should not go beyond six months after the elections because morale degenerates as the elections near,” he said.
Ocici said; “Do as much documentation as possible, deliveries must be acknowledged and paperwork of proof of deliveries should be in order.”
Just like others, Everest Kayondo, the chairperson at Kampala City Traders Association (Kacita), believes election time is an opportunity to do business prudently.
“People in printing and telecom companies will be busy while others will stop working. There will also be a bit of speculation,” he said.
Kayondo argues that some traders will hoard their merchandise, others will purchase less. Businesses are going on well for now.
“The economy will slow down a bit because people will be unproductive, others will be expecting free money, this will in turn increase inflation,” he said.
For musicians, it will a bit tricky for instance, an all artistes’ song “Tubonga Naawe” that praised President Museveni and NRM for the positive journey of transformation in the country brought many artistes problems; some were heckled, while others’ shows were boycotted.
Fred Muhumuza, an economist said, business should trade cautiously and always demand cash or payments before delivery.
“This election should not disrupt businesses operations; people need to sober up. If the windfall comes, take it,” he said.
Impact on economy Muhumuza said there will be movement and diversion of resources, but this time on a small scale because government does not have money.
According to Muhumuza, inflation will go up due to the poor performance in agriculture due to bad weather experienced last year. This will cause shortage of food.
