It was never certain where the economy was heading to. SAMUEL MUHINDO brings you the highlights that made 2021 a rollercoaster ride for the business community.
JANUARY
Uganda’s youthful population went to bed on the night of January 13 with their phones downgraded to simply receiving, making, and sending messages – taking them back more than a decade back – after government shut down the internet ahead of heated general elections.
Add other lockdown measures such as curfew and the youths’ misery was complete. The shutting down of the internet, which stretched to nearly a week, did not just pepper down social media addicts, but it disrupted businesses that depend on online services.
It was a double-edged sword because online tax filings, which happen on the 15th of every month, could also not take place.
Businesses that had gone hybrid with a work-from-home strategy were left counting losses. Industry experts projected that the shutdown of the internet cost the Ugandan economy Shs 32.9 billion.
The highly publicized election violence in Uganda attracted bad publicity on the country, scaring away potential tourists, who are one of the major sources of revenue for the country.
FEBRUARY
For the first time, the Bank of Uganda policy statement for February 2021 tied the recovery of Uganda’s economy to the success of the country’s mass vaccination campaign against Covid-19.
The report adds that vaccination is one of the possible means through which tourism, one of the major foreign exchange earners for Uganda, could rebound. The report highlighted the adverse effects of the pandemic on Uganda’s economic growth.
MARCH
Kenya imposes a ban on Ugandan maize on grounds that the grain did not meet national standards as it contained mycotoxins. The Ugandan maize is expected on the Kenyan market with aflatoxin levels not exceeding 10 per cent. Before the maize, Kenya had banned the importation of Lato milk products, poultry and eggs from Uganda.
The ban from Kenya would later set the stage for a counter reaction in which Uganda would pay back its neighbour in the same currency.
That reaction came eight months later as Uganda proposed a ban on Kenya’s agricultural products. The ministry of finance gazettes the National Payment Systems Regulations (2021) paving way for the implementation of the National Payment Systems Act (2020).
The regulations would help in the licensing, regulation and supervision of emerging payment systems like mobile money for both the service providers and the users with the rights of regulation under the central bank. This called for the separation of traditional telecoms from mobile money although they had been providing it.
It is hoped that with the regulations now in place, there shall be enhanced financial inclusion in the country. Arguably the largest bank in Uganda, Stanbic bank – the financial institution that acts as a key indicator for the health of the financial sector – released their 2020 results in which loans and advances grew by 27 per cent to Shs 3.6 trillion from 2019 to 2020.
There was a 15 per cent increase in customer deposits to Shs 5.4 trillion in 2020 from Shs 4.7 trillion in 2019, a reasonable growth considering the effects of the pandemic.
Although the bank’s profit after tax was Shs 242 billion in 2020, a slight drop from the Shs 259 billion in 2019, the bank still performed well under the circumstances.
APRIL
Uganda, the two oil companies TotalEnergies of France and China’s Cnooc and Tanzania signed the EACOP tripartite project agreements on April 11 at State House Entebbe.
The agreements pave way for the construction of the 1,443km crude oil pipeline from Hoima, Uganda to Tanga, Tanzania. The signing of the agreements was the clearest sign that any barriers to progressing the oil pipeline project had been dealt with.
MAY
LycaMobile gets a national telecoms operator licence. Although the mother company, Tangerine Company Limited, has been in Uganda since 2008, LycaMobile broadened the boundaries of competition in the data space by venturing into a market that others had left.
LycaMobile is headed for an uphill task of satisfying the expectations of Ugandans with their affordable data bundles. As customer numbers grow, there are questions over its reach and quality of its service.
Bank of Uganda issues licenses to MTN Mobile Money Uganda Limited, Airtel Mobile Commercial Limited. M/S Wave Transfer Limited is also cleared by the central bank to operate under the Regulatory Sandbox framework in respect to section 26 of the NPS Act, 2020.
Raxio data center launches in Uganda. The first tier 3 data center in Uganda brings a metro-edge data center model to the continent, allowing for the exchange of data traffic in facilities located close to urban centers.
JUNE
Uganda introduce the annual budget with new tax measures. The budget adopted the increase in excise duty on fuel by Shs 100. The budget also introduced a 12 per cent levy on internet services.
A week after the budget was read, with Uganda experiencing a second wave of coronavirus infections, government instituted another intense lockdown for 42 days. There was another drop in business activity with the tourism industry yet against facing the biggest brunt of the disruption.
Businesses such as schools, which were in financial distress, sold off assets like land and buildings. President Yoweri Museveni and his counterpart, Felix Tshisekedi of the Democratic Republic of the Congo, presided over the ground-breaking ceremony for the construction of three Uganda-funded roads in the DRC at Mpondwe in Kasese.
The project is undertaken by Uganda’s Dott Services Ltd. in which Uganda shall contribute 20 per cent of the total cost of the roads and the contractor shall fund the rest. Since the civil war broke out in South Sudan, DRC is Uganda’s alternative frontier market.
According to Ubos statistics, informal exports to DRC from Uganda amounted to $329.8 million in 2019. The roads are expected to increase trade between Uganda and Congo, most especially in the eastern part.
JULY
Effective July 1st, government slapped a five per cent tax on processed gold and a 10 per cent tax on unprocessed gold exports from Uganda. The tax rubbed gold exporters the wrong way.
Although gold is Uganda’s top export, statistics from the central bank reflected no trace of gold exports for July and August. Government stuck to its tax measures and there was no indication that it would relax its enforcement.
AUGUST-SEPTEMBER
Different supermarket retail chains announced they would be leaving the Ugandan market. Shoprite, Game and Pep cited the unfavourable economy that could not encourage their businesses to flourish, worsened by the pandemic and several lockdown measures.
This left several suppliers out of business with the departure of the supermarket giants. In September, Africell announced they would also be leaving the Ugandan market, ceasing operations by October 7.
Africell entered the Ugandan market in 2014 after taking over from Orange Telecom. Africell was known for its affordable internet bundles. Smart Telecom had also announced they were leaving the Ugandan market after failing to realize their business objectives.
OCTOBER
MTN Uganda floated 20 per cent of its shares to the public. After six weeks, the Initial Public Offer did not attract enough demand and, therefore, became the first undersubscribed IPO in the market.
The undersubscribed IPO faced severe criticism, litigation by maverick lawyer Male Mabirizi and ignorance from the public about the MTN-IPO.
At the secondary offer, 2.9 billion shares of the 4.5 billion offered shares were allotted. The stake of MTN Mauritius International in MTN Uganda was cut from 96 per cent to 83.05 per cent.
NOVEMBER
Cnooc takes final investment decision for the Kingfisher oil field. The decision by Cnooc paves way for progress on the award of contracts to develop the field.
Cnooc is also expected to establish a central processing facility. The field is expected to have 20 production wells and 11 water projection wells. It shall produce 40,000 barrels per day when performing at full capacity.
DECEMBER
Parliament approves the special amendment for the Public Finance Management Amendment Bill 2021. The bill reconciles the existing laws with new legislation signed to support the oil projects that Uganda intends to develop.
