Businesses reap big in election fiesta as experts warn of crisis

Supporters hold posters of Amama Mbabazi. Businesses are cashing in on the election activities. PHOTO BY RACHEL MABALA

What you need to know:

Problem. Economists say over-spending will lead to inflation.

Kampala. Life is not the same now on Nasser Road. Just like other parts of Kampala city, Nasser Road has a reputation for harbouring all sorts of traders, including “hustlers” who are prepared to do anything to earn a quick shilling.
It is here that you can be made to believe that colour black is white and if not so, at least they are both the same.
Lately, however, this part of the city has been bustling with businesses, thanks to the political calendar declaring that after every five years, particularly about this time, all political positions in the country are vied for.
Unlike in 2011 presidential and parliamentary elections, this time traders, especially those in printing and branding, have noticed increased business deals.

When interviewed for this article last week, Mr Juma Ismail, a graphic designer at Nasser Road, said compared to the last presidential and parliamentary campaign period, this time round, the orders for election materials are not only bigger in terms of quantity but value as well.
He said the orders that are being made for campaign posters are double if not triple compared to the 2011 election orders.

The same was echoed by Mr Eddie Kasasa, also a trader, considered by many as an opinion leader at the always busy business hub in Kampala. He said: “So many of the campaign posters and materials are being made from here.”
He continued: “I have been seeing the ones for the Movement candidates, including their manifestoes being printed here. I have also seen the ones for Mr Amama Mbabazi being printed. Just walk around you will see what I am talking about.”
Although both Mr Juma and Mr Kasasa have observed and done more work this time round compared to 2011 where the likes of Ms Cecilia Arionget and Mr Ddumba Musoke, both owners of printing presses on Nasser Road who were some of the lucky ones, it appears this time there is something for everybody.

Curiously though, those interviewed for this article said there is a mismatch in terms of orders for campaign materials between those vying to represent the ruling party, National Resistant Movement Organisation and those contesting against it - the Opposition combined.
Despite making money in this period, it is widely believed the candidates involved in the elections are importing more materials that could be made locally in the country. This, according to analysts, means donating jobs to foreign economies that should have been created here, let alone contributing to worsening foreign exchange volatility.

Experts warn of looming crisis
According to economic analyst Fred Muhumuza, other sectors beside printing and branding, for example agriculture (particularly food/catering) and transport, will also be part of the industries that will earn from this period.
He said: “It is obvious that some sectors will benefit because there is no much choice available. For example, you may have to advertise, print a few materials for your campaigns, buy food and move (transport) - these industries will certainly make some money.”
He continued: “But ultimately, all these gains will be eroded because after the election, we will be hit by the same inflation that we are still recovering from since 2011 election.”

Mr Muhumuza explains that the effect of the unwarranted spending in 2011 that catapulted inflation to 30 per cent has not been recovered from yet and sadly the political situation leading to the election of the office bearers of the top job in the land is set to see a repeat of the same inflationary shocks.
His fear is based on what he describes as too much politics which he says always hurts the economy. He argues that too much spending in election periods is not the answer because it destabilises the economy rather than help it.
And worse still, the expenditures are normally outside the Budget and consumptive rather than productive.

The executive director Private Sector Foundation Uganda, Mr Gideon Badagawa, is also of the view that the gains that sectors such as agriculture, transport, printing and branding could register will come at a great expense of other crucial sectors, among them tourism.
He said: “The tourism industry will not be the same until after election. Most tourists are watching what is happening in the country and not until they are sure they will not come. And so is direct foreign investment. It will not trickle in until many months after election. All this will suffer because of election campaigns because both tourism and FDI thrive in a situation of certainty.”

Warning on inflation

Resulting inflation. The KPMG country leader, Mr Benson Ndung’u, whose speciality is on audit and advisory services, said once inflation shows its ugly head, nobody will be spared including the consumers. And for that, he said small and medium enterprises should analyse the situation now so that after the election they shouldn’t be caught between a rock and a hard place.
“Businesses should begin to take interest in what is happening in the country now and plan ahead, because even though the shocks could be temporary those who haven’t planned will be hit hardest,” Mr Ndung’u said last week in a sideline interview in Kampala.

He added: “This is the time to prepare your stocks, look at your debt and properly manage your capital. If you do that well you will be able to hedge against the shocks.”
In a recent meeting between Central Bank deputy governor Louis Kasekende and the private sector in Kampala, the industry captains raised concerns over excessive spending during election period saying it erodes the economy’s competitiveness both regionally and globally.
Mr Kasekende said the central bank will continue to use tools within its means to deal inflation with inflation, with one such means being raising lending rates. He, however, said the Central Bank has no role in excessive spending during election time as they endeavour to play by the rules. He said all expenditures are per the Budget.


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