Electoral uncertainty limits investment - business leaders

Traders in down town business is still low despite the relaxation of some Covid-19 containment measures. PHOTO | ALEX ESAGALA

What you need to know:

  • A lot of uncertainty is now hanging over the economy ahead of next week’s election.

Investors are taking a ‘wait and see’ approach as they put off key investment decisions ahead of the general election next week. Most investors are keeping their purse closed until after elections when they are certain about the future and the direction of the country.
 
According to the private sector apex body in the country, investors— both local and international - have gone through hard times in 2020, due to the Covid-19 pandemic and the resultant containment measures instituted by the government since March last year.

This has resulted into scaling down investments that would have been injected into the economy. But the biggest concern holding investors from opening their wallets is the looming general election, just a week away.

In an interview with several business association leaders in the country, it emerged that the economic future will largely depend on how the country emerges from the electoral exercise that has since been characterised with some violence and deaths.   
 
“The year 2020 has been a tough one for families, customers, businesses and the economy, largely on account of Covid-19 and the political environment. As a result, we have seen extremely low investments in several sectors save for construction, transport, manufacturing and agriculture,” the executive director, Private Sector Foundation (PSFU), Mr Gideon Badagawa, said when contacted.

He continued: “Getting into the New Year, we need to see safety of lives and properties. As we wish one another a happy new year, we must remind ourselves that the primary responsibility of keeping ourselves and our businesses alive rests on our shoulders and not the government per se.”
Manufacturers
Mr Daniel Birungi, the executive director, Uganda Manufacturers Association (UMA), reinforces similar concerns.

“The year 2020 was challenging for most manufacturers because of the supply chain disruptions caused by Covid-19 and the resultant containment measures. This eventually started affecting sales although we were beginning to see some signs of recovery, the fact is the environment hasn’t been perfect for business,” said Mr Birungi
As for this New Year, he said manufacturers are hoping to see improvement, but first, “… we are expecting that the upcoming election that is going to be held soon will be calm.”

Once the election ends, Mr Birungi urges the government to desist from introducing new tax measures this year but instead offer more incentives to support businesses that are taking a hit from the pandemic and enhance the population’s disposal income.
 
Revenue projections
In his message, the Uganda Revenue Authority (URA) Commissioner General, Mr John Rujoki Musinguzi, noted that efforts to collect as much revenue as possible are underway with a view to liberate the country from donor dependency.  

“We started Financial Year 2020/21 at the backdrop of a Covid-19 economic slump characterised by revenue shortfalls in April, May and June 2020. It has been very challenging both for the taxpayers and URA.  Nonetheless, we are steadfastly moving towards our annual target. Despite the significant revenue decline in April, May and June 2020 mainly due to the lockdown characterised by a slowdown in economic activities, we saw signs of recovery and improvement from July to November 2020.”
“We are looking at doing our best to collect the revenue target for the second half of the FY 2020/21 (January to June 2021) which is  slightly above Shs12.2 trillion, representing  62  per cent of  the annual target of 2020/21.

Trade
For the Executive Director, Federation of Small and Medium Enterprises-Uganda (FSME), Mr John Kakungulu Walugembe, SMEs need the most help and for that all incentives should be geared towards lifting them from the brink of collapse that they have been pushed into as a result of the disruptions caused by the pandemic.

When contacted, Chairman of Kampala City Traders Association as well as the Association of Uganda Tour Operators, Mr Everest Kayondo, noted that even with the relaxation of containment measures, business is still low and tourists are not travelling yet.
His prayer is that government ensures that the Covid-19 vaccine reaches this part of world.