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Businesses hope for better 2023 even as Russia-Ukraine war persists

For many businesses, the pain and distress from the spike in fuel prices, the Russia-Ukraine war and the subsequent announcement of an Ebola outbreak, were visible in their financial books.

It wasn’t all gloomy as several banks registered a slight increase in sales and profits in downtown Kampala – the pulse of retail trade market – pointing to signs of economic recovery. That notwithstanding, companies continued to slash jobs to remain afloat.

With 2023 underway, SAMUEL MUHINDO talked to experts to see whether the gloom of last year will be replaced with a business boom this year.

Abdul Kibuuka, Council Member, Uganda Chamber of Mines and Petroleum

For the oil and gas sector, 2022 has been a very good year. The much-awaited Financial Investment Decision into the oil and gas sector was announced this year, paving way for the road to 2025 when we expect first oil.

Also, construction works for the Tilenga upstream project, the Kingfisher upstream project and the East African crude oil pipeline are underway. We just had a slight slowdown in mobilization and construction due to the Ebola outbreak.

With the country declared Ebola-free, we are positive that 2023 shall be a better year. More mobilization for construction shall take place.

Issa Ssekitto, Spokesperson, Kampala City Traders Association

The year 2022 had mixed fortunes for the traders. Traders dealing in fresh foods and grains like maize enjoyed a good year of business. The reopening of schools provided a ready market for these farm produce at a good price.

On the other, the shelved government proposal to introduce a tax against every kilogram of textile imported caused severe uncertainty in the sector. This uncertainty pushed some traders out of business because the new tax would have been unbearable for them to keep in business.

We are still engaging the government to shelve this taxation model on textiles. The situation was made worse by the banks to which most of our traders lost their businesses for failure to pay loans.

The interest rate on credit from most banks remains high. The year 2023 spells further doom for the sector. There are no signs of a quicker recovery since the proposed fiscal policy by the government isn’t friendly for businesses. We are very sceptical of what the year ahead promises.

Jim Mugunga, Spokesperson, Ministry of Finance, Planning & Econ Dev’t

The year 2022 was very difficult, characterised by mudslides, floods, Covid-19 and Ebola. These challenges were not easily projectable. These ate into the country’s revenue receipts since the business community, which is the major source of revenue, was affected.

On a positive note, Ugandans didn’t struggle with every commodity compared with other countries in the region. Our agility cushioned us from the brunt of the high commodity prices. We opted for local alternatives to cater for the scarce commodities.

If all factors remain constant, we hope to move on from both Ebola and Covid-19 in 2023 as the economy continues to recover. We hope to grow the tax base, most especially on the petroleum front. More infrastructure shall be launched this year to meet the rising demand.

Patrick Kaboyo, General Secretary, Federation of Non-State Education Institutions

It has been a trying year for both private and public schools. The increase in the cost of commodities affected the food sector on which schools are most reliant. The prices of posho increased from Shs 2,900 to about Shs 5,000 a kilogram by the time the term closed. This is an indicator of poor feeding on the side of learners.

The high interest rate on loans from commercial banks pushed the school owners into getting loans from moneylenders. Some schools were eventually taken by the moneylenders when the loans could no longer be serviced by the school owners.

Although the government maintains that Uganda’s economy is private sector-led, there is no commitment to supporting the private sector through Uganda Development Bank to save the schools.

For 2023, the education sector shall be starting a recovery process. The few school proprietors trying to cope shall keep the systems running. Although we have witnessed an increase in local students, we have lost a reasonable margin of international students. Most of the international students were sent back during the lockdowns and they have opted to join their home schools.

We have to be deliberate in attracting them back in 2023. Learning efforts in both private and public schools towards digitization should be supported.



Elly Twineyo Kamugisha, CEO of Uganda Export Promotion Board

Since 2000, Uganda’s exports have been growing. In 2021, exports were estimated at approximately $4.5 billion. Although the computation for 2022 is ongoing, we anticipate registering the same figure.

This figure could have already crossed the $5 billion mark but has been pulled back by the continuing effects of the Covid-19 pandemic, global challenges in the big markets, imported inflation, war in Ukraine with Russia, and domestic effects caused by climate and weather issues affecting agriculture.

Exports will grow as the economy grows and expands in the coming years. To increase exports, we propose to commercialize agriculture under a market-led production orientation to be pushed by the board. We intend to increase the monetization and production of the economy supported by the Parish Development Model, Operation Wealth Creation efforts, and Uganda Coffee Development Authority for coffee.

Ruth Nankabirwa, Minister for Energy and Mineral Development

For the electricity sub-sector, we have registered significant progress. All the legislations are 99 per cent done. We are waiting for the bill on energy efficiency and the new policy on electricity. We also started the operationalization of the Electricity Amendment Act of 2022 on June 14, 2022.

The law opens up avenues for private investment in the transmission and the direct purchase of electricity generated. In the same period, we encountered challenges.

Covid-19 and Ebola stalled some of our activities. The rising cost of fuel affected us because we deal in dollars. Whenever the
shilling depreciates, the sector suffers.

Also, vandals have continued to cut down our pylons, which is affecting electricity distribution. In 2023, Karuma hydro power project will be launched, bringing in 600MW to the national grid. After this, the West Nile region shall be connected to the national grid. As the demand for more electricity increases, we anticipate more investment in power generation into projects like i.e Ayago 840MW, Oriang 392MW, etc.

Judy Rugasira Kyanda, Managing Director, Knight Frank Uganda (Extract from H1, 2022)

For the office sector, inquiries increased, driven by the full reopening of the economy, increased start-up funding, improved activity in the services sector and the signing of the final investment decision in the oil sector in early February 2022.

The demand was from several sectors like telecoms, oil and gas, government agencies, startups, etc. These were either new entrants or existing firms that were expanding or relocating.

Take-up was also registered from occupiers who had previously downsized at the onset of the pandemic and are currently seeking to reoccupy the spaces they had relinquished.

Compared to the same period in 2021, Grade A office occupancies were up by 11 per cent, while grade AB occupancies improved slightly by two per cent in the same period, largely attributed to existing occupiers increasing their space take-up. Despite the positive trend in uptake, several landlords were cautious, opting to maintain prevailing rents.

The general outlook for the office market is positive for the short – mid-term, thanks to oil and gas activity and the resurgence of the activities in the services sector.

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