A simple guide to knowing your rent bill is about to go higher

Gradually, sales at local duukas dwindle because the new residents drive and shop in supermarkets. Their friends live across town and their taste is exotic so they have no use for the local Kafunda or its cheap beer and loud Ssuuna Ben mixes. Land prices go much higher than anybody ever imagined and everyone who isn’t in a gated residence sticks out like a sore thumb. I would also add, English enters the conversation.

That is what gentrification is. According to Google, it is “The process whereby the character of a poor urban area is changed by wealthier people moving in, improving housing, and attracting new business, often displacing current inhabitants in the process.”

Looked at in isolation, therefore, it is a good thing because it portends an upgrade in the quality of life. But the problem is with what happens to the poor inhabitants that get displaced in the process. Let us apply the same thinking to aspects of doing business. Two years ago, the International Labour Organization, revealed that Uganda’s informal sector contributes more than 50 percent of the economy while being responsible for more than 80 percent of employment.

The global figure, according to the International Monetary Fund, is about two billion workers – almost a quarter of the world’s employed population. These would, ordinarily, be people whose work is outside of the reach of the law and any contractual obligations, self-employed people or those who work for them, and people who are not on any payroll and have unpredictable and unstable, and insecure income means.

They could be skilled or unskilled, and their informality is more times systemic than it is a matter of choice. Think of the thousands of people you see streaming in and out of the city every morning and evening, the boys that work on construction sites as porters and builders, and the women who serve them porridge, posho, and beans, taxi touts, the girls who work in all those little boutiques on the roadsides, the guy from whom you buy your rolex, office cleaners, waiters, bouncers, hawkers, your gadgets repair guy, etc.

But eventually, like that neighborhood gentrification, big (foreign) players show up in all these industries and subsume everyone.  Processes become complex for locals. Let us illustrate using the construction sector. You would have the tax body, requiring that every contractor hires a registered firm to undertake a project. Then requiring the registered firm to only hire people with Tax Identification Numbers as builders, masons, porters, plumbers, etc. But that would mean the firm has to pay a little more than the Shs6,000 daily rate it pays porters to factor taxes into the equation.

To deal with the problem, the firm would then decide to find more skilled and qualified labor that it can pay a little more but extract a lot more from, than just carrying bags of cement and mixing concrete. While that would guarantee more money for the government and large construction firms, it would also precipitate catastrophe from those without the requisite skillset, or the small players who don’t have the capital to bid for large contracts because they can’t afford the available labor.

This is what keeps happening in almost every sector because we don’t have enough local capital invested. When we push for, especially foreign investment at the expense of local industry, we can only hurt ourselves in the long run. Without enough opportunities for everyone to find work, why aren’t we skilling for external markets such as Germany and Canada which are looking for skilled workers with vocational, non-academic training, or Canada, which is in the market for techies? That, instead of squeezing locals farther into the abyss.

Mr Rukwengye is the founder, Boundless Minds. @Rukwengye