Uganda: How Political Unrest Hurts Economy

One hundred is the number of customers Mr Nicholas Ziwa receives daily at Adidas, a clothing and accessories shop on Kampala Road. But on Monday last week, he barely got 30 customers. That is because the day was characterised by gun shots, tear gas and caning after supporters of Mr Robert Kyagulanyi aka Bobi Wine took to the streets to protest his detention and alleged torture after an election soiled with violence in Arua District.


Protesters called for the release of Mr Kyagulanyi, a demonstration that turned chaotic, forcing traders to close shops and vacate shopping malls.

By mid-afternoon, several people had been beaten while others were arrested. The riots spread to Nasser Road, Nkrumah road, Makerere, Kireka, Mukono, Kayunga, Jinja.

Prior to that, riots in Gayaza, Kamwokya, Mukono, Jinja and Mityana paralysed business and transport just as in Kampala town.

For Mr Ziwa, sales were low as people remained locked up in buildings around the city.

"Sales retarded. When the chaos started approaching uptown, we closed shop but by the time we opened, it was no good. The afternoon, which is our busiest time was gone. We had just restocked clothing and we tried to keep in touch with some of our customers. But they said they could not come because they were scared," Mr Ziwa says.

The first places to experience the chaos were Kiseka market, Nakivubo and Nabugabo, all major trading areas.

In Kiseka market, screams were loud as people put fire blockades on roads. Soon, the security guards closed the Shamba Complex. Police in turn fired tear gas to disperse protesters before forceful eviction from the malls according to Mr Abdul Katende, a dealer in Car and motor cycle oil in Shamba Complex.

This has been the practice when strikes happen at Kiseka market.

"We have no option but to come and work regardless of threats of strikes. You may not work and they do not strike. So will you keep closing your business?" Mr Katende asks.

On a peaceful day, Mr Katende admits to making sales worth Shs6m to Shs7m. But Monday was different.

"The Bobi Wine protest started at 11am, we did not work the whole day. Even strikes that last five hours, we lose a lot because people fear coming this side after the protest."

Kiseka market sits at the slope of one of the hills in Kampala but with the stronghold of the military in the vicinity, the motor vehicle auto parts mart is most notorious for leading people into demonstrations usually against government policy.

Business gets even more difficult when it hails from Kiseka and lasts longer according to Ms Rose Ndagire, a saleswoman in an electronics shop at the mouth of the market.

Before the protest, Ms Ndagire had just cleared rent for the month. So she hardly had any cash.

"We had just paid rent the day before and then they started striking. We had only today just opened after closing for three days, an excuse you will not give the landlord to reduce the rent because they do not care about that," she says.

In addition, being a lone wolf in the business leaves her property liable to destruction when the strikes ensue.

Customers vanish

Property destruction aside, customers who would normally buy from her now move to other areas in fear of harm from the perilous acts that reign in Kiseka market.

Players in the country's economy are now saying, if the political unrest continues, there will be serious implications.

Mr Everest Kayondo, the board chairman Kampala City Traders Association (KACITA), says traders who survive on businesses around the city are now victims and count losses because of the uncertainty hovering over busy towns.

"Today (Thursday), people had been warned that business would be disrupted. So all those who were supposed to come to Kampala did not. There was no chaos but all this has a negative impact on our operations in terms of cost, so we suffer," Mr Kayondo says.

Impact of unrest

Traders like Mr Kayondo now worry that businessmen importing from Uganda could find alternative sources of goods in the wake of the unrest.

Mr Augustus Nuwagaba, a senior economist, says Uganda has over the years attracted a lot of investment. But the gains made are threatened by the current chaos.

"When you have a conflicting situation, it affects domestic and foreign direct investment (FDI)," Mr Nuwagaba says, adding: "Any investor would not want to put money in a high risk country. They want areas that are peaceful, where business climate is forthcoming and where there is a likelihood for generating profits. So, it is important that this kind of situation is resolved as quickly as possible."

Mr Basil Ajer, Uganda Investment Authority (UIA) acting executive director recognises that the political environment affects investment climate but downplays it as having a "dismal effect."

Besides political environment, investors focus on a number of issues prior to investing in a country including economic environment, inflation, market, interest, profit repatriation. Citing Zimbabwe as a case study for investment in the midst of political turmoil, Mr Ajer says that the political environment takes a back seat when it comes to investment.

"Investors, among other things, took at the ease with which they can take their profits because there are countries where you make money like Ethiopia. But you cannot get it out. They look at political environment; how are political decisions made? A few of them may want to see how the country is governed but that is not a big factor, because countries like Zimbabwe have so many investors despite the fact that they have political challenges," he says.

Each and every bit is considered by the investor before making an investment in a country but the political bit of it is not very heavy.

Promising to share statistics of the first quarter of the Authority's results financial year2018/19 in September, Mr Ajer affirms that the results will indicate that politics has not really affected the country's investment climate.

Tourism sector hit

Uganda earns about $1.4b (Shs5.1 trillion) annually from tourism and the sector is not immune to the effects of rampant protests in the country.

Mr Amos Wekesa, the founder of Great lakes Safaris, says the tourism sector bleeds every time there is political unrest in the country.

"It is already affecting us. Tourism companies are refunding money and cancelling safaris. Uganda gets its tourists mainly from Germany, United Kingdom, United States and Holland," he says.

Some have taken precautionary measures already.

"UK issued a travel advisory on Uganda on Sunday last week and on Monday, insurance companies stopped issuing travel insurance to Uganda," Mr Wekesa says.

Tourism and insecurity cannot co-exist with over 197 tourist countries, Mr Wekesa says, as there are a variety of choices of touring. Consequently, this rids Uganda of its foreign exchange.

Mr Wekesa also says there are no exact numbers on the losses because the political unrest is still fresh. But tourists who booked safaris are asking for refunds and those who had interest in visiting are cancelling.

Tour companies, Great Lakes Safaris inclusive, are refunding hundreds of millions.

"We can't calculate the possible impact yet but companies are refunding in hundreds of millions including ours," he says.

Mr Kayondo, also a tours and travel businessman, says a fellow player has already refunded more than $300,000 (Shs1.1 billion) to his customers who had sent an advance payment.

On the other hand, Uganda Tourism Board is still monitoring the situation to mitigate the effects of perception, Mr Stephen

Asiimwe the chief executive officer says. He further notes that tourism areas are safe from the unrest but the Board's worry is the impact of media coverage.

"The issue is not the unrest. It is the media surrounding the unrest. That is not good. Uganda is safe and we are guaranteeing the safety of tourists," he says.

What players want

Players in the economy are now demanding for an end to the political friction between government and the arrested lawmakers including Mr Kyagulanyi, (Kyadondo East), Mr Francis Zaake (Mityana Municipality), Mr Gerald Karuhanga (Ntungamo Municipality), Mr Paul Mwiru (Jinja Municipality), former Makindye East representative Mr Mike Mabikke and Mr Kassiano Wadri.

Mr Asiimwe calls upon all the actors to have a chat because if they do not, it will affect the country.

Mr Kayondo wants politicians to make decisions with the economy in mind because the unrest does not only affect businesses but also workers in form of delayed salaries since it hurts profits.

Mr Ziwa an employee at Adidas, wants dialogue between government and citizens to allow for a conducive business environment.


President's view. In a Facebook post published on Friday, President Museveni stated that Uganda exports more goods to Kenya now.

In May 2018, Uganda exported goods worth $228m (Shs852.5b) while it only imported goods worth $132m (Shs493.5b) from Kenya.

Figures. According to the ministry of trade, industry and cooperative statistics, Uganda's exports to Kenya increased from $297.4 million (Shs1.1 trillion) in 2014 to $427 million (Shs1.6 trillion) in 2015 but slightly reduced in 2016 to $401.1 million (Shs1.5 trillion).

Uganda's exports to East African Community have slightly increased from $642.2 million (about Shs2.3 trillion) in 2014 to $711.3 million (about Shs2.5 trillion) in 2016.

Exports. Uganda mainly exports coffee, tea and spices. Other exports include Animal or vegetable fats and oils, tobacco and manufactured tobacco substitutes, iron, steel and cereals.

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