Uganda Is Currently Running A Betting, Bar , Rolex And Boda-boda Economy
Last week a 26 trillion shilling budget was readout to Ugandans with the usual prioritization of infrastructure (roads and power ) peace and stability forming some of the the core objectives -priorities.
It was, however, not clear which sector contributed most to the gross national product.
For so many years , Uganda was thriving as an agricultural based economy to an extent of contributing 80% or more to its gross domestic product (GDP).
Never mind that the country had the potential of thriving on tourism that cuts across the country or even from mining (we had copper at kilembe mines ).
At that time (post independence era) the Ugandan economy was about three Cs, coffee, cotton and copper as the main foreign exchange earners.
Its however not clear whether the three Cs-driven economy was footing Uganda\s recurrent and development budget.
The open truth is that post independence Uganda's budget was funded by donors.
With over ten major national parks and several animal species together with the various flora and fauna ,the tourism sector could have been the driver of our economy.
But sustained insecurity and political instability right from 1966 accounted for the slow but systematic collapse of the tourism sector.
Although Uganda is fairly peaceful on the surface at the moment and President Museveni assures everyone who cares to listen that 'no one can disturb Uganda's peace at the moment', there is looming political suspense that is driving away investors and tourists in big numbers.
And that largely explains the poor state of Uganda's economy at the moment.
The recent attacks on military installations in several parts of the country like Kasese, Mubende and Gulu is not doing the country any good.
A SUPER MARKET ECONOMY?
President Yoweri Museveni recently lamented during the state of the nation address that he is not interested in overseeing a super market economy.
His lamentations seem to reflect the stagnation that has bedeviled the Ugandan economy.
we cannot manufacture neither can we add value to our agricultural products through an aggro processing dimension.
Today the the economy operates on three Bs,; bars, boda-boda and betting.
The recent trends show that the economy has changed its complexion not only to a super market economy , as suggested by president Museveni , but to a gambling ,boda-boda and alcohol driven economy.
LISTEN TO THIS;In the old days Ugandans used to migrate from rural areas to urban areas halfheartedly without selling their land because agriculture provided the base for income generation
Today a typical Ugandan is abandoning the village by selling off all the land , including the graves of his ancestors and entering the urban areas.
And because of the inelastic nature of the economy ,whereby its difficult to start business and break even, the rural to urban migrant is investing the money he sold from his village land to either start a bar, operate a boda-boda or even gamble the money in what is popularly known as betting.
Popularly known as the boda-boda , the motor cycle is one of the few immediate business options which can make a decent living in Uganda.
A big number of youths are picking loans to buy motor bikes so that they can venture into the bod-boda business.
There is enough evidence to show that this boda-boda business is one of the fastest growing income generating ventures in the country.
And the reasons why its thriving are many.
Tax Evasion Phenomenon
One is that the boda-boda businesses not regulated at all, meaning the proprietors of the bod-boda business don't pay taxes.
Yet government is very vigilant at taxing other businesses ventures like shops, saloons, hotels, clinics etc.
This tough tax regime has restricted business in Uganda.
Likewise , many Ugandans invest in bars because they can easily dodge paying taxes , since bars open at night when the authorities are not active
Government should have been very generous at business start ups by providing them with incentives like tax holidays. once you give a tax holiday , it gives you an opportunity to register that business for future taxation.
but since such an incentive is not there to encourage Ugandan to start up businesses without fear of immediate taxation , that have resorted to tax evasion.
A lowly Ugandan who starts a small shop with capital of less than a millions shillings (400 dollars) has got to pay a license of quarter million shillings (100 dollars) to start operating.
On top of the license , you need to pay rent of three months (which most landlords in the Kampala business district charge in dollars )
Uganda runs a very tough tax regime which is normally focused on taxing success and exempts laziness. when you tax pay as you earn, value added tax, income tax,,it means you are focused on taxing the most productive citizens of society.
When you remain idle , you automatically evade those taxes and pay the consumption tax, otherwise known as VAT.
In such a situation it would have been better if the tax is very well balanced and fair to the citizens. alternatively you can also think of reviving graduated tax that is paid by every adult Ugandan. This graduated tax will compel every Uganda to find work to be able to pay this tax.
But today the focus is on taxing hard working people. its really unfair.
These unfair practices are the biggest hindrance that has led to the practical stagnation of the economy at the moment.
There is a lot of evidence to show that the Ugandan economy has shrunk in the last two years.
High Attrition rate of Business Entities
Without quoting figures , the attrition rate of big businesses is one of the biggest indicators that the economy is not doing well at all.
Big companies are closing business at a very fast rate.
For instance in the last twelve months alone banks like Barclays bank , national bank of commerce have closed business.
President Museveni talks of super markets blossoming in Uganda , but forgets that Shop-rite which was one of the BIGGER supermarkets closed business because it was making loses.
The telecommunications sectors is not doing well eitherbecause the people cannot communicate when there is not ENOUGH business.
Uganda telecom was the first to fold. Then Warid had to amalgamate with Celtel to from Airtel to survive the wrath of a declining economy.
MTN recently announced that it had lost a very big chunk of its customer base.
And the elective politics have not done the economy any good. During the campaign phase, a lot of liquidity was poured into circulation.
This affected the financial flows because most of that money is not followed by any economic activity.
In most cases such loose money leads to inflation as a lot money that is not economically explained goes into circulation.
Thats why the Ugandan economy always slows down during election years.
And to make matters worse, government invests a lot of resources into security (they purchase expensive hi-tech weapons)
This leads to mis-prioritization and misplacement of resources.
Right now , the economy is limping. the Ugandan shilling which was depreciating in the last half of last year has now started appreciating against the foreign currencies.
VOLATILITY OF THE DOLLAR
But since ours is mostly a consumerist economy of products that we don't produce , the volatility of the dollar normally brings our economy to its knees.
Most Ugandan traders couldn't buy products from foreign markets because the dollar had appreciated STRONGLY against the Ugandan shilling.
Many Ugandan traders had to close business.
Thats why many shopping arcades are now vacant. the traders couldn't afford rent which are charged in dollars.
Matters are made worse by the mere fact that we don't have anything we can sell that can bring in dollars.
The tourism sector which is one of the biggest foreign exchange earners has been hurt by our volatile elective politics.
With this constriction of the Uganda economy, the unregulated sectors of the economy like boda-bodas , bars and prostitution are the ones thriving.
And its important to note that they are thriving because they are not regulated (they don't pay taxes)
Its therefore safe to say that Uganda is operating a boda-boda driven economy.
Otherwise, if someone can sell his land in the village and buys a motor bike and manages to live a decent life its obvious that our economy has changed from agriculture to something else.
The author Fred Daka Kamwada is a journalist and blogger
you can reach him on kamwadafred@gmail.com or 0782480121
- Uganda's Tax Regime Focuses on Taxing Hardworking Ugandans And Exempts Idle Citizens, This Calls For Reviving of Graduated Tax To Stir the Spirit of Hard work
It was, however, not clear which sector contributed most to the gross national product.
For so many years , Uganda was thriving as an agricultural based economy to an extent of contributing 80% or more to its gross domestic product (GDP).
Never mind that the country had the potential of thriving on tourism that cuts across the country or even from mining (we had copper at kilembe mines ).
At that time (post independence era) the Ugandan economy was about three Cs, coffee, cotton and copper as the main foreign exchange earners.
Its however not clear whether the three Cs-driven economy was footing Uganda\s recurrent and development budget.
The open truth is that post independence Uganda's budget was funded by donors.
With over ten major national parks and several animal species together with the various flora and fauna ,the tourism sector could have been the driver of our economy.
But sustained insecurity and political instability right from 1966 accounted for the slow but systematic collapse of the tourism sector.
Although Uganda is fairly peaceful on the surface at the moment and President Museveni assures everyone who cares to listen that 'no one can disturb Uganda's peace at the moment', there is looming political suspense that is driving away investors and tourists in big numbers.
And that largely explains the poor state of Uganda's economy at the moment.
The recent attacks on military installations in several parts of the country like Kasese, Mubende and Gulu is not doing the country any good.
A SUPER MARKET ECONOMY?
President Yoweri Museveni recently lamented during the state of the nation address that he is not interested in overseeing a super market economy.
His lamentations seem to reflect the stagnation that has bedeviled the Ugandan economy.
we cannot manufacture neither can we add value to our agricultural products through an aggro processing dimension.
Today the the economy operates on three Bs,; bars, boda-boda and betting.
The recent trends show that the economy has changed its complexion not only to a super market economy , as suggested by president Museveni , but to a gambling ,boda-boda and alcohol driven economy.
LISTEN TO THIS;In the old days Ugandans used to migrate from rural areas to urban areas halfheartedly without selling their land because agriculture provided the base for income generation
Today a typical Ugandan is abandoning the village by selling off all the land , including the graves of his ancestors and entering the urban areas.
And because of the inelastic nature of the economy ,whereby its difficult to start business and break even, the rural to urban migrant is investing the money he sold from his village land to either start a bar, operate a boda-boda or even gamble the money in what is popularly known as betting.
Popularly known as the boda-boda , the motor cycle is one of the few immediate business options which can make a decent living in Uganda.
A big number of youths are picking loans to buy motor bikes so that they can venture into the bod-boda business.
There is enough evidence to show that this boda-boda business is one of the fastest growing income generating ventures in the country.
And the reasons why its thriving are many.
Tax Evasion Phenomenon
One is that the boda-boda businesses not regulated at all, meaning the proprietors of the bod-boda business don't pay taxes.
Yet government is very vigilant at taxing other businesses ventures like shops, saloons, hotels, clinics etc.
This tough tax regime has restricted business in Uganda.
Likewise , many Ugandans invest in bars because they can easily dodge paying taxes , since bars open at night when the authorities are not active
Government should have been very generous at business start ups by providing them with incentives like tax holidays. once you give a tax holiday , it gives you an opportunity to register that business for future taxation.
but since such an incentive is not there to encourage Ugandan to start up businesses without fear of immediate taxation , that have resorted to tax evasion.
A lowly Ugandan who starts a small shop with capital of less than a millions shillings (400 dollars) has got to pay a license of quarter million shillings (100 dollars) to start operating.
On top of the license , you need to pay rent of three months (which most landlords in the Kampala business district charge in dollars )
Uganda runs a very tough tax regime which is normally focused on taxing success and exempts laziness. when you tax pay as you earn, value added tax, income tax,,it means you are focused on taxing the most productive citizens of society.
When you remain idle , you automatically evade those taxes and pay the consumption tax, otherwise known as VAT.
In such a situation it would have been better if the tax is very well balanced and fair to the citizens. alternatively you can also think of reviving graduated tax that is paid by every adult Ugandan. This graduated tax will compel every Uganda to find work to be able to pay this tax.
But today the focus is on taxing hard working people. its really unfair.
These unfair practices are the biggest hindrance that has led to the practical stagnation of the economy at the moment.
There is a lot of evidence to show that the Ugandan economy has shrunk in the last two years.
High Attrition rate of Business Entities
Without quoting figures , the attrition rate of big businesses is one of the biggest indicators that the economy is not doing well at all.
Big companies are closing business at a very fast rate.
For instance in the last twelve months alone banks like Barclays bank , national bank of commerce have closed business.
President Museveni talks of super markets blossoming in Uganda , but forgets that Shop-rite which was one of the BIGGER supermarkets closed business because it was making loses.
The telecommunications sectors is not doing well eitherbecause the people cannot communicate when there is not ENOUGH business.
Uganda telecom was the first to fold. Then Warid had to amalgamate with Celtel to from Airtel to survive the wrath of a declining economy.
MTN recently announced that it had lost a very big chunk of its customer base.
And the elective politics have not done the economy any good. During the campaign phase, a lot of liquidity was poured into circulation.
This affected the financial flows because most of that money is not followed by any economic activity.
In most cases such loose money leads to inflation as a lot money that is not economically explained goes into circulation.
Thats why the Ugandan economy always slows down during election years.
And to make matters worse, government invests a lot of resources into security (they purchase expensive hi-tech weapons)
This leads to mis-prioritization and misplacement of resources.
Right now , the economy is limping. the Ugandan shilling which was depreciating in the last half of last year has now started appreciating against the foreign currencies.
VOLATILITY OF THE DOLLAR
But since ours is mostly a consumerist economy of products that we don't produce , the volatility of the dollar normally brings our economy to its knees.
Most Ugandan traders couldn't buy products from foreign markets because the dollar had appreciated STRONGLY against the Ugandan shilling.
Many Ugandan traders had to close business.
Thats why many shopping arcades are now vacant. the traders couldn't afford rent which are charged in dollars.
Matters are made worse by the mere fact that we don't have anything we can sell that can bring in dollars.
The tourism sector which is one of the biggest foreign exchange earners has been hurt by our volatile elective politics.
With this constriction of the Uganda economy, the unregulated sectors of the economy like boda-bodas , bars and prostitution are the ones thriving.
And its important to note that they are thriving because they are not regulated (they don't pay taxes)
Its therefore safe to say that Uganda is operating a boda-boda driven economy.
Otherwise, if someone can sell his land in the village and buys a motor bike and manages to live a decent life its obvious that our economy has changed from agriculture to something else.
The author Fred Daka Kamwada is a journalist and blogger
you can reach him on kamwadafred@gmail.com or 0782480121
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