Tuesday February 28 2012

Small scale artisans demand share in budget

An artisan in Katwe. Photo  by Lydia Namono

An artisan in Katwe. Photo by Lydia Namono 

By Lydia Namono

Some have labeled them casual labourers, others— their own bosses, yet they are fighting the same battle: making ends meet. Metal fabricators— a thriving class of artisans who operate in makeshift workshops could boost Uganda’s economy if they are strengthened. With about 800,000 micro, small and medium sized enterprises in Uganda the informal economy growing at about 25 per cent annually employs about 2.5 million people.

Using recycled materials- everything from old aluminum car parts, these artisans contribute 25 per cent to this country’s Gross Domestic Product (GDP)- a measure of the economy’s performance. This section of the informal sector captures more than half of this country’s population that scrambles for a significant percentage of the wealth yet they still feel left out in enjoying a share of the national cake.

But with few local artisans dotted on the international market, there is still so much the government could do to boost such innovators.

Trade Minister Amelia Kyambadde, believes that industrialising an economy starts by boosting small scale artisans. “Without innovations, we are not going anywhere. But when I hear a car engine made by a Ugandan running, my heart leaps with joy,” said Ms Kyambadde while handing over a 4.5 acre plot of land in Makindye along Salama road to Katwe small scale artisans.

Katwe Metal Fabricators Cluster (FMFC) chairman, Mulangira Juma Kayima asks government to include them in the next financial year’s budget (2012/2013) if the country is to produce more local investors compared to the foreign ones who repatriate the profits back to their countries. “The government should commend us to be our own investors because we are passionate about improving this country,” Mr Kayima says.

Private Sector Foundation Executive Director, Gideon Badagawa, says that these entities are choked by low financial literacy causing some to enthusiastically spring up while others start and die out mid-way.

“Without well thought out business plans and financial projections many have embraced the entrepreneurial attitude but we don’t know how many are flourishing,” Mr Badagawa says.

Hurdles
In a country widowed by economic uncertainty, where high interest rates are taking on a new name –our tradition, it is clear that small scale artisans are navigating through difficult waters.

Characterised by low credit access, dilapidated structures, poor market and low adaptation of advanced technology fabricators’ cry is one: poor working conditions.

“I now look 50 yet I’m only 29 because the nature of this work has forced me to look that way,” distressed Mohammed Ssansa, a metal fabricator in Katwe says.

This has forced the fabricators to push rusted metal prices up by Shs60,000 to Shs80,000 up from Shs20,000. And the flipside is this: “consumers are now complaining that we are cheating them with rusted window frames. Yet we purchase the scrap at exorbitant prices and later sell at a lower price,” Huzairu Lukenge, another metal fabricator in Katwe explains.

The time taken to pull off, say a gate is close to one week and yet these dealers are pushed to ask for less money than they had anticipated for one reason— to survive.

“Sometimes people bring me work that I ought to charge much higher. But what happens is that I end up stating a lower price and I take home what—nothing. It’s like I’m working hard just to eat,” a frustrated Dennis Manyengo says.

At times, there are no customers. “Our window frames rust from here and when buyers come, they complain that we are giving them poor quality products. And now that everything is expensive, we can’t take home more than Shs250,000 in profit monthly,” says Mr Manyengo who could previously bag about Shs450,000 in a good month.

By all accounts, the bank does what it says – it lends to people. Yet interest rates banks give today are not exactly a gift to them. “If you decide to run to the bank for capital, you end up servicing a loan for years yet that money would have helped you develop your business,” Mr Lukenge complains.

Yet that is nothing next to the solution, if anything, it is very far from it. But if only government saluted their resilience and stimulated their entrepreneurial spirit, things would be better.

Value Added Tax—a fee levied on products is the biggest challenge for metal fabricators. Using informal settlements as a scapegoat, these businessmen shun taxation, leaving government at a loss since it has no record of their daily or monthly income. “What I don’t understand is how the government comes up to tax me yet I started this business without its help,” Mr Ssansa wonders.

This financial year’s (2011/2012) PricewaterhouseCoopers (PwC) report projects Uganda Revenue Authority’s (URA) tax revenues at Shs6,170 billion with VAT contributing Shs2,006 billion— a 19 per cent increase from the fiscal year 2010/2011.

The taxman’s contribution is meant to rope in government revenue. But now that formal employees’ incomes are stagnated and their purchasing power dipping, there is not much they can count on to save. Yet their counter parts in the informal sector pocket large sums of money that may go untaxed. The catch is: they may be wealthier than the formal employees.

Strengthening artisans
A chorus of analysts points out that this sector ought to be regulated; lest, the economy loses huge revenue annually.

Policy Research Officer at Uganda National Chamber of Commerce Allan Katwere advises the government to promote more practical intervention in ways that will not only create employment but also enhance job quality.

Additionally, URA should consider using simpler tax regulations so that businessmen understand how taxes are levied. “URA should go out to informal businesses and explain what a tax means to them. It is not enough to criticize them when they fail to adhere,” Mr Katwere told Prosper during an interview adding: “The higher the share of tax in government revenue and the larger the tax base, the more conducive it is for the emergence of a rights holder and duty bearer relationship between the governments and the people.”

The government should also make the procedure of staring business more straight forward than what it is now. In the 2012 World Bank’s edition of Ease of Doing Business, Uganda’s ranking fell to 123 out of 183 countries surveyed globally—a four-point drop from 119 in 2011. The report emphasises on how easy or difficult it is for an entrepreneur to open and run a small to medium-size business when conforming to stipulated regulations.

The document also measures and tracks changes in regulations affecting 10 areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

If these artisans can partner with the government, their staggering problems could be wiped out.

Utility: Metal fabrication in uganda
Back into the late 1800s, sounds of metal clanging were heard when the Kabaka of Buganda who reigned then gave his blacksmiths a chunk of land next to the Lubiri (palace) from which to operate. Here, they would make wares for the palace such as pans, spears for hunting, knives, among others.

lnamono@ug.nationmedia.com

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