Customers check for Christmas items at one of the stalls in down town, Kampala last week. According to the traders, there are few customers spending on these items. PHOTO/MICHAEL KAKUMIRIZI
The festive season is traditionally a peak period for businesses across Uganda, with sectors such as hospitality, tourism, textiles, and car dealerships usually seeing a surge in activity. This is driven by a combination of holiday bonuses, family celebrations, and end-of-year purchases.
It is during this time that business owners craft all sorts of promotions to lure customers with a mix of holiday bonuses, and end-of-year purchases.
But this year looks different. Many traders are reporting quieter-than-expected sales a month away from December, raising questions why Ugandans are holding back on spending.
According to data from the Uganda Revenue Authority, the volume of imported goods for the last two to three months shows interesting trends.
Merchandise such as textiles, footwear, electronics, fireworks, decorations, and cars were brought into the country in large quantities, with textiles leading the pack at over 10 million kilogrammes. Other imports include 422,943 kilogrammes of footwear, 64,920 kilogrammes of electronics, 14,960 kilogrammes of fireworks, 20,227 kilogrammes of decorations, and 11,305,115 cars.
Typically, businesses in these sectors would be gearing up for a rush of customers in the lead-up to Christmas.
Issa Sekito, spokesperson for the Kampala City Traders Association (KACITA), notes that the textile and garment industries, the footwear sector, and the car dealerships all experience significant upticks in sales during this time.
"November and December are busy months for this festive season," Sekito says.
"The vehicle industry also booms as many people want to upgrade their cars or buy new ones before Christmas because people feel like they should go back home in a car as a sign of prestige."
Sekito adds that during the festive season, food items such as matooke (bananas), rice, juices, and liquors see an increase in demand, while the period just after December 31 is when sales of scholastic materials, uniforms, and textbooks take off.
However, there is a different story on the ground. Major businesses have reported quieter-than-expected tills, raising questions why Ugandans are holding back on spending.
Some traders across the capital city and downtown Kampala say they are not seeing customers, who by this time last year had already felt the feel of the festive season and started shopping.
This year, many traders across Kampala’s downtown area are reporting much slower business than the previous year.
Several top-selling businesses, usually bustling at this time of year, are now seeing significantly quieter tills than what is usually the case.
Traders’ concerns over slowdown
Many traders are feeling the pinch this holiday season.
Moureen Atulinda, a textile dealer, shares, "During the festive season, I can make a profit as high as 90 percent, but this season hasn't picked up. It is still a bit slow compared to last year when by this time, things had already started to pick up."
Johnson Kilumba , a mobile phone dealer and accessories adds, " Those who import directly and sell to us are making good profits. But for now, sales have been slow. We usually sell one to two phones a day, and that is far below what we would expect this time of year. We are hoping that things pick up by mid-December. So far, the season has not taken off."
Muhammed Zeeshan, a car dealer at Jambo Auto Mart, explains that while people are still buying cars as we approach the festive season, the trend has slowed.
"Many customers are waiting for the new number plates, which will be introduced in January," he says. "The new digital plates will make cars more expensive, so people are holding off on their purchases in anticipation of next year’s prices, but what they don't know is that cars will even be more expensive then."
Inflation is not the problem
While reduced sales have been a cause for concern, there is some good news on the economic front. Uganda's inflation rate has dropped for the third consecutive month, decreasing from 3 percent in September to 2.9 percent in October, according to recent data from the Uganda Bureau of Statistics. This decline in inflation, driven by lower prices for food crops, should have been a positive sign for traders, as it means that the cost of goods has not risen drastically.
But while inflation has fallen, Fred Muhumuza, a senior economist, believes the underlying problem is not rising prices, but stagnant income levels.
"Reduced inflation does not mean that prices have returned to their original levels," he explains. "As long as incomes don’t rise, people still can't buy as much as they used to."
Even though the price of goods has not risen significantly, many consumers are taking their time to shop for Christmas. This is a stark contrast to trends in developed countries, where shoppers begin their Christmas purchases much earlier in the year. "In Uganda, people tend to wait until the last minute," says Muhumuza. "This cultural habit of waiting until December, or even two weeks before Christmas, could explain why sales are sluggish now."
Hopes for a last-minute rush
Though business is slower than expected, there is still hope that the festive season will pick up in the coming weeks. Many traders are anticipating a rush in mid-December, and with it, price hikes. As the demand increases, businesses will likely raise prices to match the surge.
However, Issa Sekito, the spokesperson of Kampala City Traders Association (KACITA) argues that hiking prices might not be as straightforward as it seems. "It is no longer viable for anyone to simply hike prices," he says. "In a free-market economy, the forces of demand and supply will determine the final price. If products are procured in large quantities, there should not be a price increase. But if there is a shortage, prices will naturally go up."
Mr Ronald Mutyaba, a trader at his stall in down town sells Christmas items. Mr Mutyaba says the customer turn-up is still low. PHOTO BY MICHAEL KAKUMIRIZI
Despite this, one notable trend always emerges: a rise in transport fares. Bus operators usually increase their fares by December 10. This price hike is due to the higher volume of passengers traveling and the expectation that many will not be returning soon until after the holiday.
A season of caution
This year’s festive season is shaping up to be one of cautious spending and slower sales. With reduced inflation, stagnant incomes, and a cultural tendency to wait until the last minute, many traders are have expressed that business is not as brisk as they had hoped. While there is still some hope that things will pick up in mid-December, it remains to be seen if the holiday rush will materialise or if consumers will continue holding back on their spending.
As the holiday season unfolds, traders and consumers alike are preparing for what could be a less-than-typical Christmas shopping season, marked by careful spending and a slow build-up of festive excitement.
