Mixed views on opportunities for traders
Kampala, Uganda | THE INDEPENDENT | How will perennial festive season spenders behave amidst slow economic recovery that has not enhanced peoples’ disposable income?
What are the chances that traders will make some money this time around given that COVID-19 lockdown measures are somewhat eased compared to last year?
These are questions that are being asked within the business community circles given the prevailing COVID-19 pandemic locks and pockets of insecurity in the country.
Most traders and business leaders interviewed by The Independent said, they are waiting to see how purchases during this festive season will be given that the economy is yet to recover from the COVID-19 hit and peoples’ disposable incomes are yet to improve.
Already, in its monetary policy report for October, Bank of Uganda appears to have skipped real projection for end of year consumption or demand performance but instead gave projections for the next financial year.
“A rebound of economic activity will be sustained by an acceleration in private consumption, strong growth in external demand, a gradual return of tourism and foreign and private domestic investment in the oil sector,” Central Bank Governor Emmanuel T. Mutebile said in October.
However, Mutebile said, as vaccination rates increase further and the health-
related restrictions are released, the economy is expected to bounce back strongly to 5.5% – 6% in FY2022/23, increasing to 6.5-7.5% in the medium term (2-3 years) up from 3-3.5% level for FY2020/2021.
As the government plans to reopen the country fully in January next year, economic experts say, not much in terms of demand for goods and services will be realized by the business community.
In addition, parents will be spending cautiously given that they have to prioritise expenditure on back to school and not on festive season bonanzas. But other business leaders are expressing mixed views.
“We still see substantial opportunities for private sector players,” said Francis Kasirinyi, the acting executive director at the Private Sector Foundation Uganda.
Because of social distancing, Kasirinyi said, some people will still buy gifts and share with friends and family which means traders will be in business.
He also said, travel opportunities will also come with opportunities for those engaged in transport business unlike the year before when restrictions were tighter.
In terms of security, Kasirinyi said, traders and everybody have to be vigilant to avoid being exposed to criminals.
He is optimistic that traders will reap something from people that must spend on either back to school goods or on festive season items and services.
“Shopping this time round will be much enhanced compared to last year,” he said.
Richard Kimera, team leader at Consumer Centre, said, any kind of festive season spending bonanza might be linked to borrowed funds which is not good practice.
“Any consumption should be with caution,” he said, “There are other priorities like back to school.”
He also advises consumers to be very cautious with who they deal with in terms of digital transactions given that some criminals are looking for any form of survival in this COVID-19 era.
“Everybody is hungry for money. Live within your means,” he said.
He added that demand for goods and services could be boosted once the government releases more money for its suppliers. “If it does not, then spending even beyond the festive season might not be that big,” he said.
Abel Mwesigye, the chief executive officer for Kampala City Traders Association said his members have stocked enough while knowing the current economic conditions in Uganda and beyond.
“Of course, spending will not be the same as it used to be before COVID-19,” he said, adding, “Purchasing power from clients is low.”
He also said, prices of goods have gone up partly because of COVID-19 related factors that have impacted big trading partners for Uganda like China.
Mwesigye, who also deals in footwear and clothes say, in case of any opportunity, he would want to maximise sales in the festive season given that not many buyers will prioritise spending on luxuries.
With schools reopening in January, Mwesigye said, there will be opportunities for his members to make some good returns on back to school items and services as they hope for things to get better in 2022.