November 2020 – Prime Time Communications

News

#OutToLunch Is Kikuubo’s end as the region’s trading hub nigh?

By Denis Jjuuko There is a video circulating on whatsapp showing empty shops in some of the arcades in downtown Kampala. The shops are on the ground floor and accessible. After watching it, I called a few of my friends who work downtown to confirm availability of these shops. They told me, the story is largely true and many people are willing to sell their shops and relocate. Kikuubo and indeed downtown Kampala used to be the hub of trade for wholesalers for the entire country and beyond. Traders from all over Uganda used to flock it to buy stuff to stock their shops. Others traders came from Congo, Sudan, Rwanda, Burundi, and some even surprisingly from Kenya. Today, Kikuubo is starting to lose its influence. There are many reasons. Factory owners are sidestepping Kikuubo to deliver goods directly to traders across the country. When you drive to all major towns (some now called cities) you will find many trucks of distributors delivering merchandise to traders in those towns. So the traders no longer have to come to Kikuubo to buy stock, it is delivered to them wherever they are. Many traders are also simply buying directly from the factories, cutting out the Kikuubo middlemen. Factories are being set up outside Kampala as well. Some towns have also grown. A small town like Gayaaza now feeds traders in Ziroobwe and Kalagi. Mukono supplies traders from nearby towns. Kampala’s traffic jams mean that a trader makes a saving if he avoids shopping from Kikuubo. Nateete is booming because it is more accessible than Kikuubo for traders from the nearby towns like Nakawuka, Bulenga, and Mpigi. Also, rent is 10 times cheaper in the suburbs than in Kikuubo. One of the people I called told me that he is closing his shop in Kikuubo and is going to buy a few smaller trucks and have a delivery system. He will only maintain a store where his trucks pick up the merchandise and deliver it directly to his customers. He has been creating a database over the years but also he will be able to get new customers on the routes he will chose. He thinks he will become more profitable that way. He is basically changing from a trader to a logistics entrepreneur. I was also recently in Masaka and Mbarara and I saw that these towns are growing massively with many arcades coming up. A trader in Kyotera, which is less than 50km from Masaka will not travel to Kikuubo to buy stock when he can get it from Masaka. A trader in Bushenyi will prefer to restock from Mbarara than Kikuubo. Remember, that factories and distributors are also delivering directly to them. The same applies to Mbale, Gulu, Arua, Lira and many other towns. Because the traders from Masaka or Arua are growing, they have started flying to China, Turkey, and other countries looking for cheap bargains. Kampala traders no longer have the monopoly of flying out of the country. Don’t get me wrong. Kikuubo isn’t going to collapse today, it’s influence, it’s status as the region’s trading hub is simply going to wane. Kampala’s population is going to grow to 10 million people in the next 10 years from four million in 2014 so there will still be some business downtown but not at the rate it has been over the last few years. As small towns like Mpigi, Nakawuka, Ziroobwe, Kalagi, and Lugazi among others grow, so will Kikuubo’s decline accelerate. The real estate moguls in Kikuubo need to start thinking about these changing dynamics and find strategies that can keep their buildings relevant. Because of COVID-19 and the growth in internet and logistics, Kikuubo traders who vacated the shops for the suburbs are feeling liberated. They no longer have to keep awake wondering how to make the rent. This challenge isn’t unique for Kikuubo alone, it happens in all cities as they grow. Population growth and infrastructural developments make some areas less significant as they previously were and downtown Kampala finds itself in such a situation today and in many years to come. Some buildings may have to be repurposed, rent rates may have to be significantly cut, and Kampala Capital City Authority may have to work with the real estate entrepreneurs to create campaigns that promote Kikuubo and other places. Traders who will prefer to remain in Kikuubo can no longer wake up, open the doors and wait for buyers like they currently do. They will need to market, find innovative ways to reach retailers happy not to come to Kikuubo or downtown for anything. The writer is a communication and visibility consultant. djjuuko@gmail.com

November 2, 2020

News

#OutToLunch Is Uganda ready for vintage investments?

By Denis Jjuuko Coming from this part of the world, for many years, I was always baffled by what some of the people in the developed world spend their money on. I am interested in world news, and once in a while, I would hear that a piece of art was sold for millions of dollars at an auction. I wondered why in the world, would anybody pay top dollars for a mere piece of art. Not that I didn’t appreciate art, but as somebody with my background, I thought it was a total waste of money. My bewilderment or naivety if you like was that some of the pieces of art that these people spend a lot of their money on are not even by Picasso or Michelangelo. Many were made by ordinary painters though their owners had kept them in good shape for many decades. I decided to read more about this crazy arts business. I realized it wasn’t just art. Watches, guitars, whiskey, wines, books and many other such items were sold at crazy amounts. Only in August this year, basketball legend Michael Jordan’s game-worn sneakers sold for US$615,000. Jordan had won the pair in a game in 1985. Yes, a pair of shoes slightly order than NRM has been in power sold for a whooping Shs2.2 billion. As an ordinary Ugandan, you probably now understand why I was always puzzled by what folks in the developed world spend their money on. As I read more about this weird behaviour of spending a lot of money on ‘non-essentials’, I came to understand that art, vintage cars, and such others relics were mainly investment vehicles for the wealthy. The person who bought the Jordan Nikes will make a lot of money in 10 or 20 years. All that they need to do is simply keep them safe and in the conditions they are. These particular Nikes are already making the owner money same ways Ugandans invest in land or buy treasury bills. At one stage, somebody else will buy them at a lot more money and the cycle continues. In Uganda, given the size of our economy, we may not have grown to a level where we can buy paintings or even shoes expensively even though we can participate in this global business. South African president Cyril Ramaphosa was fascinated by the Ankole cows and bought some of them. At an auction in South Africa, Ramaphosa sold an Ankole bull at ZAR640,000 or Shs143.8m! A well-bred Ankole bull in western Uganda is sold at less than Shs3m. It can be worthless during a severe drought. So imagine if one had Akii Bua’s shoes he used when winning his famous gold medal, somebody would buy them today at an astonishing price. Joshua Cheptegei simply needs to keep his shoes and vests; one day long after he has stopped breaking world records on the track, he might be making millions of money from his sportswear. However, there are some Ugandans already making money from this industry. They mainly concentrate on vintage cars. One of my friends has a BMW, which is about 30 years old, he drives it mainly on Sundays and many people stop him offering him crazy money. He always smiles and continues to drive. I have another friend who specializes in old Mercedes Benzes. Anywhere there is an old Merc on sale, he will buy it. If it needs restoration, he will put in money and turn into a unit that turns necks in Kampala. He gets good money whenever he decides to sell. The Kingdom of Buganda has been relentless in their pursuit for the government to return its old Rolls Royces one of which was recently returned, 54 years after it was taken away during the attack on the palace. Although the Kingdom may never put it on the market, when fully restored, it would cost more than a brand new one. And since we are willing to buy old cars expensively, we could be able to buy other old stuff too. So a business model based on vintage stuff could bring a lot of returns to those willing to invest. Old houses, for example, that have been restored could be of interest to the growing ‘middle class.’ I know we have destroyed many of them for shapeless apartments and arcades, but I believe if you found one and restored it, it would bring a good return on investment. The writer is a communication and visibility consultant. djjuuko@gmail.com

November 2, 2020

News

#OutToLunch The car industry is ready for the taking

By Denis Jjuuko Cars are the second-highest value import in Uganda after petroleum products. It goes without saying that the majority of the petroleum products imported are used in cars, making the automotive industry one of the biggest in the country. In many countries, the automotive industry is a key actor in the economy where many independent small and large enterprises supply parts that put together to make a car. Cars also naturally use a lot of consumables once they are off the assembly lines — fuel and oil to grease the parts of internal combustion engines and many other parts. We saw during the 2008 economic meltdown that the United States moved swiftly to bail out their auto industries as they create millions of jobs directly and indirectly. With poor infrastructure and lack of reliable public mass transport, the automotive industry has enormous potential. Once many people in Uganda get a somewhat meaningful job, one of the first assets they spend their money on is a car — many times a fifth hand they spend more time under repairing than inside enjoying it. A few years ago, I witnessed a transaction that amused me where somebody bought a very old car. The transaction took place in a famous restaurant in Kampala in the evening. The buyer came with about five friends and once he received the car logbook and keys, the party started. His friends high-fived and hugged him and all admired the car after which several drinks were opened and enjoyed. The buyer sat in the middle cross-legged, like a prince. You could tell his friends admired him immensely wondering when they will be able to achieve as much as him. One of their own had become “middle class,” he was now a “my car.” Young men tell me that these days girls of their dreams first inquire whether they have cars before they decide whether to date them or not. Once they own a car, the question of which car is also asked. I don’t know why one would be so interested in a car that doesn’t belong to them but I think I have heard that it is easier to cry in a car than some ramshackle bicycle! A car isn’t just a means of transport; it is a status symbol. You may argue that we are exchanging values for possessions but that is the reality today. You have heard about washing bay workers in Wandegeya crashing their clients’ cars around hostels where female university students reside or those who thought they had landed on a young millionaire just because he had access to car keys. I remember during my university days, a young man who bought a car key and dropped it on the table the moment he sat down to create an impression that he had a car whereas he didn’t even know what a gear lever was. We always laughed at his theatrics. As long as people migrate from rural to urban areas to escape poverty and the cities or towns remain with poor public transport, a car will be one of the most important assets people will ever buy. We won’t be like in some countries in Scandinavia where a prime minister rides a bicycle to office. Ugandans also love buying and building their own houses which are now located 20km or more from their workplaces. Those who are joining universities today will live further away from the city. They will need cars to ease their mobility unless significant investments are made in public mass transport. The majority of the imported vehicles are very old and susceptible to frequent breakdowns, which creates massive opportunities. Uganda is also developing its automotive industry with the construction of a plant in Jinja nearing completion. With poor or non-existent public transport as mentioned above, Uganda’s automotive industry potential is enormous and due for disruption. Technology advancements in 3D printing and availability of machinery on the world market mean that an entrepreneur can start looking for opportunities to make some of the parts right here in the country. We have the raw materials and a market that is so huge and ready for disruption. What one needs is to think of ways to disrupt the industry as it is ready for taking. The writer is a communication and visibility consultant. djjuuko@gmail.com

November 2, 2020

News

#OutToLunch Draft automotive industry policy opens up opportunities in car repairs

By Denis Jjuuko A week ago, my friend became the latest victim to the thuggery perpetrated by some car mechanics in connivance with the Police at Kisekka Market. As he drove along the road that connects Bombo Road to Old Kampala, he was incessantly waved down by mechanics claiming his car was in a dangerous mechanical condition and some “bearings’ had fallen out and therefore offered to repair it. The bill after fixing the ‘bearings’ was Shs3m which he objected. The mechanics refused to budge and he decided to involve the Police. Unknown to him, the Police around Kisekka Market are partners of the crooks and they were keen that he pays as much as possible. The Police advised that he pays Shs2m. He smelt a rat. How could the Police be quick to offer to mediate and significantly drop the figure by a million shillings? He ended up paying Shs0.5m and learning immediately, that his car had no problem and the “bearings’ which they claim had fallen from his car where actually of a Toyota whereas he drives a Subaru. Many people have fallen victim to these thieves and parted with substantial sums of money. At the same time as my friend was going through this ordeal, the Ministry of Science, Technology and Innovation was publicizing the draft Automotive Industry Policy, which aims at providing an enabling environment to attract value addition investments for import substitution through supply chain localization across the automotive industry value chain, enhance motor vehicle standards and environmental stewardship and regulate vehicle imports and promote export. The draft policy also aims at reducing the importation of used vehicles by 60% and increase brand new ones by 50% by the year 2030. Additionally, it proposes that by 2030, at least 10% of the cars in the country should be electric vehicles. One of the main reasons mechanics at Kisekka Market have resorted to underhand methods is because of their inability to repair newer model vehicles. For a couple of years now, Uganda capped the importation of used cars at 15 years, meaning that today you can only import a car made in 2005 or later. The majority of our mechanics have never been to any professional training school, learning their trade mainly from makeshift garages of relatives and village mates. Some have ended up excellent mechanics, but the majority have no skills beyond bolting a nut. The technology in newer model cars is so advanced that it needs some skills which the Kisekka Market lot has failed to master as many can’t read or write so they can’t teach themselves a few things off the internet. The easiest way for them to survive is to become conmen looking for people like my friend to shortchange. For many years, car repair workshops have been for the riff-raff operating mango trees. Many times, the cars are repaid based on guesswork without any devices or deployment of technology to confirm what could be wrong. Some get it right some times while many times, the guesswork leave many car owners frustrated. The garages that belong to brand new car dealerships are unaffordable to the majority of Ugandans who buy cars that were made when they were babies. This new automotive industry policy, if passed and implemented, it will put many of the current mechanics who don’t want to learn anything out of jobs. However, it will create a new type of car repair workshop or garage as we prefer to call them. The future car owner in Uganda knows how to read and with the internet can quickly source parts from anywhere in the world. Before they take a car to a garage for anything, they would have read about it and only need somebody who can fix it. Diagnosis kits are going to be necessary for a mechanic to own —continuous learning of how technology in cars works will be priceless. Many electric and even internal combustion engines are going to be updated the same way we update the apps on our smartphones. Some of the stuff that previously required a mechanic will now be repaired through app and system upgrades. The garage under the mango tree is also over. Somebody isn’t going to take their fancy car to a guy who can’t spell their name anymore. Fancy garages are going to replace those under the mango tree same way electric hair clippers eliminated the guys who operated under a tree shade. I have seen some entrepreneurs coming up with such fancy garage along the Kiwatuule-Najjeera Road and to say that they are swamped is an understatement. The writer is a communication and visibility consultant. djjuuko@gmail.com

November 2, 2020