20 November 2012

Uganda: A City in Financial Pain


This confusion is what best defines downtown Kampala. For a long time, downtown Kampala has carried a trademark of provision of cheaper products, freedom of running cost-effective businesses - generally something that an ordinary Ugandan can afford.

Places like Owino (St Balikuddembe), Kikuubo, the New and Old taxi parks plus the many shopping malls/arcades have always been the busiest. Today, all these continue to exist, and more arcades/malls are being constructed.

The human traffic also grows by the day and it's easy to think business is booming in downtown Kampala. But doing business in this city has moved from a lucrative venture to survival for the fittest.

Business is characterized by exorbitant interest rate loans, high trading licences, high rent, stiff competition and a waning customer base. This time, the pinch is on all genres of people doing business right from the hawkers/vendors, boda bodas, restaurants, mobile money, retail shops, supermarkets, to the wholesalers. In fact, many will confess that it is a miracle for someone to sustain a shop in one of Kampala's malls for more than six months.

"Most of us chose to share the same shop to minimize on the rent but still people fail. The flow of business in town has dwindled over the years," says Janat Namale, a trader at Majestic plaza.

For those that own shopping malls and arcades, the number of traders leaving is practically bigger than those booking places. For most arcades, it is only the first two floors that have serious business and the rest are unoccupied.

"Look at the new Avemar plaza; it has been open for almost two months and people are not entering, the rent is too high (Shs 4m per month) and the business environment we work in is very miserable," says Sam Kagolo, a dealer in electronics.

Many shops in Kampala are not open by 8am, something that never happens in Nairobi.

"We used to open shops by 5am, but these days even if you open at that time, the few customers we get come after 9am," explains Mukasa.

He also attributes this delay to the heavy traffic jam within Kampala. Despite opening late, many shops close business by 8pm. Some argue that this is done to save on the high electricity bills.

Then there is the simple hardship of getting transport back home after a hard day's work of toiling in town looking for a job. "These days, you cannot manage to get enough money for transport as well as take care of the family.

We, therefore, always choose to walk part of the distance and spare something for our families," says Mukasa, who works in town but earns a minimal pay. Some of those who have cars choose to park them and simply walk.

The skyrocketing fuel price - a litre of petrol goes for roughly Shs 3,700 (about $1.3) - is the main reason some resort to walking or public transport. Those with cars can hardly maintain them too.

"You realize that a customer who would do full service on car once in every three months, these days does half service in that period. Generally, people are trying every possible way to save money," said Sam Lubega, a mechanic at M&L auto garage in Makerere.

Even in the world of transportation, the boda bodas and taxi operators are also crying. "Things are getting worse by the day. These days I just take porridge and bread for lunch to be able to save what we can take home," says Jackson Matovu, a boda boda cyclist at Nakivubo.

Matovu says customers bargain a lot and distances that should cost Shs 3,000 end up at Shs 2,000. "We sometimes decide to take two passengers instead of one to try and compromise on the cost," he says.

This is the same scenario with restaurants, retail shops, hawkers and even confectioneries.

"I have been here for the past four years but you can see that turn-up is continuously lowering. Food prices have gone up and we have increased the charges but people still demand for cheap food," says Hajara Namata, who sells food in the old taxi park.

Even in Owino, where used commodities are known to be sold at a giveaway price, the traders are experiencing their own share of financial pain. "This is my tenth year in Owino but you can clearly see that the sales are going down. Used clothes and shoes used to be cheaper than new commodities but these days, new products are cheaper," says Mariam Nakato, who sells children's clothes.

She blames this on the import charges, the increase in trading licences, and a drop in the number of customers.


For the arcades owners, most of the upper floors have been transformed into residential areas, although very few people are comfortable sleeping in the city centre. At KK plaza, for instance, the place was turned into a KK trust hotel from the third floor upwards.

On the other hand, following KCCA's ban of street vendors, many of them resort to vending their stuff at night, but even the profit for this is measly. "During the day, I sell clothes in Owino and in the night I come to the streets and work up to midnight to try and raise more money," notes a vendor at Luwum street.

To survive, many people have turned to sports betting. Starting from the traders in Owino, to those in malls and boda bodas, they all spend the day perusing through newspapers and listening to local radios to get information on possible bets.

They then flock the many betting centres like Gaming, Kings sports betting, Royal, and Sports betting Africa to place their bets in anticipation for quick money.

In reality, this is done out of desperation.

"I come here and spend a full day without making any reasonable sale, but the family has to feed. That is why I go to bet and try my luck," notes Amos Kakuru, a trader at Mukwano complex.

Amid the harsh conditions, many traders have to bear the brunt of the high trading licences by KCCA. The existing trading licence system looks at business type, not size. It is, therefore a disadvantage for small business operators. For instance, all retail shops are supposed to pay Shs 240,000 per annum irrespective of the size, something that many find unjust.

Not so safe

There is now a high level of crime. Some blame this on the hard economic times. Places like Kisekka, Kafumbe Mukasa, Kisenyi and Kikuubo are a no-go areas at night.

"Some of those boys are the former street vendors, others are the luggage carriers during the day. There are many cases of theft and sometimes stabbing during the night," says Micheal Mubiru, a trader at Qualicel building.

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