Hope for new businesses in West Nile. But a lot still lies ahead.

todaySeptember 23, 2022

By Ronald Orachwun.

For the past five to ten years, a number of warehouses and apartments housing businesses sprang up in West Nile Sub region stretching from Adjumani, Moyo, Yumbe, Arua, Nebbi, Pakwach and Zombo districts. From a first class Super market and a branch of Leosim Hotel that have all been established along the busy Pakwach-Nebbi highway, Agu natural mineral water processing plant in Zombo district to a plant that processes beef, the Leaf Tobacco Company and other several hotels in both Arua district and the City. In Yumbe, two facilities are vivid in the district. The Mango fruit factory has commenced operations together with Bidi Laundry Soap, a facility that makes washing soap. In Madi Sub region, Pent House Inn was established in Moyo district recently but has in no time grown to be among the most visited recreational facilities in the region.The hotel attracts visitors as far as South Sudan due to its comparative advantage of being adjacent to the precincts of Uganda-South Sudan border.

Besides indicating an economic growth, these mushrooming establishments and others also point to a positive investment trend in the region.
But a section of players in the economic sector have expressed skepticism of a stable source of power to run the many machineries being established by the different potential entrepreneurs in the region, knowing that for any business to thrive, a stable electricity is the backbone.
Several players are questioning why a number of investors are in a scramble to establish businesses almost on a daily basis in West Nile, given the intermittent power supply and the recurrent delay by the government to extend reliable electricity to the region that has remained underdeveloped for a better part of its existence.

For instance, previously, the government had set September 30 2022, as the deadline for connecting the Sub-region to the national grid, but it has now been postponed to March next year due to incomplete works on the transmission lines and power substations.
That aside, there is still some ray of hope that electricity problems will be history in just the near future to facilitate the region’s industrialization agenda that locals have waited for decades. Also, for those who have ever had a feel of cross border transactions perhaps with traders from both South Sudan and the Democratic Republic of Congo will unquestionably know that West Nile Sub region is a ripe market for products from the two neighboring countries and vice versa.

Needless to talk about the biting unemployment in the country, several locals in the region who are skilled and semi-skilled have been absorbed in the many mushrooming business establishments the region is currently witnessing. For instance, Oyera Job, proprietor of the multi-million Bob Filling station in the heart of Nebbi town just like other establishments such as Leosim Hotel in both Nebbi and Pakwach districts and Pent House Inn in Moyo district says a better part of the employees at the station are all youth. The facility is also well placed to snatch traders en route to both South Sudan and DR Congo due to its strategic location along the destination routes to the two countries.

A staff at Moyo Bookshop in Moyo town who preferred anonymity says: “We realized there are few bookshops in this town and yet so many people are traveling on a daily basis. We have several foreigners especially those from South Sudan who come to Moyo town and need secretarial services. To us, it was an opportunity. A bookshop as a business has the potential to make money, it only depends on where you establish it and how you relate with both the local and foreign clients. Otherwise a proprietor who is strategic can reap from this business within a shorter time”, he said.
Adding: “In the very near future, we are looking at enrolling a short computer training program for both members of the refugee and the host communities. We feel we can take advantage of this since not many people are offering this service and few people are well versed with computer knowledge in this fast changing technological world”.

There is still general progress for the business community to widen their scope of investments and currently or in just the near future, chances of learning more skills are high especially in technology and value addition to raw products specifically those in the agricultural sector. With those who invest in these skills of especially value addition will reap more in the near future.
This is because parts of DR Congo and South Sudan are currently depending on Ugandan products such as agricultural products and general merchandise.

But what went wrong?
West Nile Sub region has had commendable investment progresses. But much as we are currently witnessing establishment of several new businesses, the region has also had a fair share of investments that have crumbled or shut down their operations over the past five to ten years.
Over the same period, efforts to sustain some entities have been futile. A case in point is Ayuda Coffee Factory in Zombo district whose survival relied solely on reliable electricity supply, but was brought to a screeching halt due to power challenges. Also among the entities whose operations were altered were Parombo Cotton Ginnery in Nebbi district, Nile Foam Mattress and others.

Much more recently, COVID 19 had a nasty experiences on especially Small and Medium Enterprises SMEs which are considered huge boosters to the economy of Uganda. They serve as the engine and driving force for growth, development, innovation, economic prosperity and wealth creation of Uganda.
For instance, findings of a 2021 analysis of the effects of COVID 19 on the operations and sustainability of SMEs by the Faculty of Economics and Management Science, Kabale University revealed that COVID-19 pandemic accounted for a significant variance in the operations and sustainability of SMEs across the country. The study confirmed the hypothesis that the effects of COVID19 pandemic have positively affected performance, operations and sustainability of SMEs.

It also recommended that the government and partners should offer appropriate liquidity intercessions to support SMEs in handling instant liquidity encounters, to avoid closures and bankruptcies.

Situations upcountry (West Nile)
Martin Idrifua of the defunct Martin Investments in Moyo town along the Moyo-Arua road said. “I used to deal in hardware materials and general merchandise four years ago. It’s unfortunate I could not cop up with the business in this area. I think mine was more to do with my dwindling working capital. I ran out of cash and if I can trace back, it was mismanagement of the funds by my family members whom I had put in charge and that forced me to shut down my business. When I closed it that was the end of it much as I still had a chance of reviving it through some 15 million shs loan from my elder brother. That’s how this business (points to the shop) ended”.

Michael Avone, a mobile money agent in Nebbi town decided to shut down business early this year because of stiff competition as several mobile money booths had been established in the area. “Mobile money is a very volatile business. I had thought of building an empire through this venture but I was wrong. Several people are closing down soon after opening. You can make either profits or losses any time especially if the person employed is not vigilant with financial figures during transactions. That’s why you find you can even close within a day if you play around with money. You can send a huge figure to a wrong number and that’s some of us are out of the business”, he said.

The figures
Close to 55 percent of Ugandans who opened up businesses in the past five years have closed them, with only less than half (21%) who say their business is still operating. The findings were released by Twaweza, Uganda Revenue Authority (URA) and Tax Justice Alliance Uganda in a brief titled Money, money, money: Citizens’ views and experience of business and the tax environment in Uganda. They are based on data from Sauti za Wananchi, Africa’s first nationally representative high-frequency mobile phone survey. The findings are based on data collected from 2,900 respondents in the first round of calls to the second Sauti za Wananchi panel, conducted between 15 January and 7 February 2022, and from 2,761 respondents in the second round, conducted between 24 April and 12 May 2022.

The most common types of currently operating businesses are in agriculture (35%), wholesale or retail trade (18%), hawking (13%), and small services such as salons (11%). Among Ugandans who have closed their business in the past five years, the most common reason mentioned is lack of capital, cited by half of former business owners. Other reasons include low demand, no market for products and service (13%); high cost of inputs (12%); and high levels of competition (11%).

Given the rates of business closure and seemingly widespread challenges around capital, it is to be expected that business owners provide mixed reviews about the state of their businesses; 4 out of 10 say their business is growing (36%) and the same proportion say it is declining (39%) while the rest say it is staying the same. However, business owners are more negative in 2022 compared to 2019 when they were more likely to say their business was growing or staying the same and less likely to say it was declining. Given the rate at which local businesses are closing operations, players in the economic sector have however expressed skepticism of how the government through Ministry of Finance will raise over 25 trillion shs to fund part of the 2022/2023 Fiscal Year budget, which money is supposed to be raised through local revenue.

Violet Alinda, Country Lead for Uganda at Twaweza said: “Some clear messages are emerging from citizens on doing business and paying tax in Uganda. Resources are the biggest challenges facing business owners, past and present. In this context of scarce capital, taxes and levies hurt even more. Given the current global livelihoods challenges, to which Uganda is not immune, government would do well to heed to the cries of the productive backbone of our economy. In this context, the high rate of business closures is also a challenge: closed businesses mean loss of jobs and less cushions for our young people to land on.”

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