People go about their businesses in Kikuubo, Kampala in 2023. PHOTO/SYLVIA KATUSHABE
Kampala City businesspeople have identified impatience, ignorance of business management, copying businesses, indiscipline, and dishonesty as the major killers of businesses in the country.
Businessman Godfrey Kirumira, who also trades in real estate, says Ugandans will rush to open big factories and large businesses when they have never traded anything.
He says for any business to succeed, it should start small, like a retail shop until it starts to generate profits and grows organically.
“Depending on what you choose to venture into, stick to that business. If you are doing retail business in Kikuubo, stick to it, especially if you are earning profits. It is good to start as a retail trader to gain experience of running a business. Even if you want to open a factory, first get the knowledge of trading,” he says.
Kirumira says business growth is like education, which starts from kindergarten, grows to primary school, then secondary, and onto tertiary or university education.
Dr Ezra Rubanda, the executive director of Uganda Manufacturers Association, says Ugandans open businesses with any entrepreneurial readiness. He says once Ugandans with some money see someone thriving in a business, they just dive into the business not knowing how much time has been invested into putting up such a venture.
“You have to look at the flow of raw materials, the capital, consistency of demand and production. We have people who get ready ideally while others get ready internally within their businesses. You cannot start a business in Uganda and become a monopoly business,” he says.
Citing the kombucha drink, he says when the drink became popular in western Uganda, many Ugandans rushed to produce it but when the world suddenly changed its attitude towards sugar consumption, market for the drink faltered.
Ms Connie Kakihembo, the executive director of Uganda Women’s Entrepreneurs League (UWEAL), says globally more women entrepreneurs are entering and exiting businesses because most of those who join business, think it is a walk in the park.
“Businesses need incubation. People enter business without any experience. You open a shop today and you want to start earning profits in the evening. Some people spend even a year without realising any profits. Being a businessperson is like being a lawyer. You don’t represent a client in court until after undergoing training,” she says.
Ms Kakihembo says the government should create a mechanism of nurturing young businesses and handholding them from infancy until maturity. She notes that whenever people lose their jobs, they think that the safest place for them is the business environment and yet they do not have skills, are not conversant with the taxes, and do not know how to manage the money they borrowed to start the business.
Sudhir Ruparelia and his wife Jyotsna
Mr Sudhir Ruparelia, the chairman and majority shareholder in the Ruparelia Group, with investments in banking, insurance, education, broadcasting, real estate, floriculture, hotels, and resorts, says impatience kills opportunity for growth and innovation which are key to success.
“The path to business success is dynamic and requires a combination of quick decision making, patience and hard work. For any successful business, a customer-centric thinking is key. People who have created business ideas that solve a problem, normally start small and eventually grow big,” Mr Ruparelia says.
He also says: “My most important consideration is, how much income I will get from the investment and not its worth. That’s more important and the proceeds can be reinvested to grow the business.”
Ms Rosemary Mutyabule, the deputy executive director of Enterprise Uganda, says typical Ugandan businesses are micro and small. The owners start them for survival, they lack capital, and they never grow. The profits that should be injected into expansion go into paying school fees, house rent and other pressing needs.
She says yesterday in Soroti central market, for instance, the traders told her they depend on Shs300,000 daily loans they borrow to stock their stalls and pay back the money in the evening to loan sharks at 20 percent interest rate.
She says the situation is so dire that the women are now depending on daily loans to make profits to pay for medical bills, school fees, feeding and all the other incidentals.
Mr Thaddeus Nagenda Musoke, the chairman of Kampala City Traders Association, blames the state of affairs on the narrow-mindedness of Ugandan traders who keep creating narrow business environments.
Citing Kampala City, he says the traders like competing with each other, and once one opens a boutique in an area, suddenly, others open the same shop dealership in the same area.
He says that is why businesses such as mobile money, and bank agencies tend to crowd themselves and narrow their profit margins and make banks start behaving like money lenders that are collapsing businesses.
He says instead of businesses crowding each other, traders should learn to pool resources and run joint ventures to increase their profit margins.
Mr Charles Mbire, the chairman of MTN Uganda, attributes the high business mortalities to failure by the businesses to appreciate the value of comparative advantage. He says many people join business and only look at demand but forget effective demand.
He says without cash flows, businesses collapse and it is worse when businesspeople lack honesty and integrity because it is collateral for banks.
Real estate businessman Ben Kavuya, UNCCI president Olive Kigongo, MTN chairman Charles Mbire, Indian businessman Rajesh Kumat. Bottom corner is UHOA president Susan Muhwezi and busineman Godfrey Kirumira. PHOTO/COMBO
Ms Susan Muhwezi, the president of Uganda Hotel Owners ‘Association, says most people in business don’t have the concept of the market and do not have the patience and consistency to run the business and understand it fully, forgetting that even those who are successful, have disappointments.
“When people start business and don’t get immediate returns, they abandon the businesses and yet patience and consistency are basic principles in trade. When you borrow from banks, the interest rates are high and the grace periods are short. Once you are in trade, you cannot avoid taxes. If you didn’t have a good business plan, this is the beginning of setbacks,” she said.
Ms Olive Kigongo, the chairperson of Uganda National Chamber of Commerce and Industry, notes that most SMEs don’t last because of a lack of knowledge of managing money, especially when it is a loan.
She says anyone who runs a business and doesn’t know how to manage money, has no business running one because businesses run on money and the cost of borrowing money is too high and it requires professionals to manage it.
What they say
Ben Kavuya, Real Estate: The government should create industrial hubs to support individuals with entrepreneurial ideas. It is very wrong to give a person with a good entrepreneurial idea money to run a business and yet he doesn’t know how to manage money.
Susan Muhwezi, President of UHOA: First, understand the business you are going into, always have a business plan, and know the market. Instead of copying businesses, learn to have patience and consistency. People think you will make profits immediately yet many successful people still struggle.
Charles Mbire, Chairman MTN:
You should always ask yourself what your comparative advantage is. That is where the real cost of business is. People go into business looking at demand, not the effective demand. Can people pay for the service?
Olive Kigongo, President of UNCCI:
We keep hearing that the cost of finance is restrictive and these are the usual complaints. Giving money to someone who does not know how to manage a business is very dangerous. We shouldn’t pretend, we see this every day. Let us learn how to run businesses first.
Rajesh Kumar, Indian Business Forum: Some of the bottlenecks come in the form of high power tariffs and interest rates which inflate the costs of inputs. There is also wrong information flow between URA and the traders, which creates technical challenges. The traders are poorer.
Godfrey Kirumira, Businessman:
It would be best to venture into areas where you are very conversant. Start small if you are doing industry or want to venture into manufacturing. That will show you what to manufacture. It is like going to school to get knowledge.
