November 2022 – Prime Time Communications

News

#OutToLunch Dubai visas: Time for Africa to develop its ports, free trade zones and resorts

#OutToLunch Dubai visas: Time for Africa to develop its ports, free trade zones and resorts By Denis Jjuuko The emirate of Dubai has been one of the favorite destinations for Ugandans. About five hours away by air, Dubai glitters with its skyscraper spikes that pierce the clouds. The shopping malls, the desert safaris, dinners on dhow cruises, the pilotless trains, multiple lane freeways and spaghetti intersections, affordable 5-star hotels and serviced apartments, Dubai is always on people’s radars. For decades, Ugandan traders have been frequenting Dubai to source for their wares. From used cars and automotive parts, garments and jewelry to smart phones. Whether at a café in the airport or somewhere in the shopping malls, if you were keen you would find a youthful Ugandan earning a living in the city, on a business trip or eating life with a big spoon! Dubai is a world class city that has been on bucket list for many Ugandans. Honeymoons, festive season holidays, anniversaries, or just to chill out in the ocean while taking selfies with dhow shaped 7-star hotels providing the backdrop, Dubai was an ultimate visit for many. A few Ugandans have even invested in real estate in the city. But what made Dubai really endearing for most Ugandans was how easy it was for people to acquire visas. It was one of the few mega cities where a visa is required but where one didn’t have to donate half their salaries to pastors to pray for them so they could get it. Agents easily arranged tourist or business visas, making Dubai accessible for anyone with a few shillings to their name. That has however changed. Dubai says 20 countries including Uganda will no longer have access to these easy to get 30-day visas. One would have now to pray to get a visa. As I write this, some notable businesspeople I know were denied visas or didn’t get them in time for their trips. Apparently, some youthful Ugandans have been abusing the visa—going as tourists and overstaying their visas trying to eke a living in the lit city. Those who the authorities have been able to catch have been detained awaiting deportation. Many claim they have no money to pay for air tickets. The politicians quickly saw an opportunity and became benevolent helping some to return home. With access to Dubai becoming increasingly difficult, some businesses will suffer. Many tour agents have been surviving on tours to Dubai and as the festive season approaches, it is going to be tough for them. Many people had even booked trips already and paid. The agents would now have to refund if they fail to secure visas. Companies like Uganda Airlines will be hit as well. Some goods that have been always imported from Dubai or even from nearing emirates like Sharjah will now become scarce. Your car spare parts will most likely become expensive. If you have been looking for a gomesi, the prices may double and so many other such products. Those who have been exporting matooke and all such produce may see a dip in their pockets. It is already a tough economy for Uganda this year. Lack of access to Dubai will make things worse. Since almost half of the countries on the continent have been affected, it is time for the African Union to show what it is made of. Using the power of collective bargaining, they can talk to the rulers of Dubai for a way out. It isn’t Africa that has been only benefitting from easy access to Dubai. The Emirates Airlines, perhaps Dubai’s most important asset has daily or weekly flights to almost all international airports on the continent. It may not be its most lucrative route, but one it can’t live without. We are a continent of 1.4 billion people, same population as China and several times bigger than the USA. We have more natural resources than some of these very big economies. That is why the African Union should come in and work out a deal that is suitable for all parties. However, this is also a wake-up call for Africans to develop the continent and stop relying on outsiders for every little thing. It is time to develop our ports and create free trade zones that can attract investment. We must stop fighting each other for every little thing and ensure that there is rule of law which is key in attracting foreign direct investment or FDI. We can trade with each other. We have better weather than Dubai so we can build the resorts. We just need to focus. For the traders, may be it is time to invest in factories here than relying on only importing finished articles. The writer is a communication and visibility consultant. djjuuko@gmail.com

November 17, 2022

Out to Lunch

#OutToLunch with rising inflation, government priority should be on paying local suppliers

#OutToLunch Even with rising inflation, government priority should be on paying local suppliers By Denis Jjuuko Somebody who had spent half the year planning for an event with many visitors expected in the country told me that most of his delegates had decided not to come for health reasons. They feared the outbreak of Ebola in the country and decided that they would attend by Zoom. I couldn’t blame them! My thoughts ran back to the lockdowns of the past years due to Covid-19. But imagined how many people were going to lose money over this. The airline, the airport, the taxi guys, the hotel and the entire hospitality value chain. Imagine if you had pegged your business performance on this conference and perhaps many others. It could end up in tears or what we call “going back to the village,” euphemism for a business that has burst. Living in Kampala or urban areas is expensive so for the majority of people, once business fails, they return to their villages. If you are a regular reader of Ugandan newspapers, you would have come across many properties on sale. That wouldn’t be a problem if the properties on sale were not being auctioned for failure to pay back loans. In just six months (January to June 2022), Daily Monitor reported that 2,076 properties were advertised for forced sale in its newspaper alone. There are a few other newspapers which could be having similar numbers. The properties advertised in newspapers are those largely by formal lenders such as commercial banks. Many people borrow informally and their properties are sold without the necessity to advertise first. There are many reasons why people fail to pay bank loans. Sometimes money comes in too late and too little to do the business (banks take their time to disburse business loans) while some borrowers misuse the money spending it on luxury than the intended purpose. Others invest in get rich schemes, like we saw last week, that promise unrealistic returns. Many others invest the money in the business they aren’t yet familiar with leading to losses. Sometimes money is invested in new businesses that need a lot of time to break even and be able to pay back the debt. Businesses take time to grow and there are always unexpected eventualities. For example, if you borrow money and buy machinery to make some products, it may take you months before the actual installation is done. The testing of the machinery and then so many other stuff you need in place. The lender won’t be waiting for your business to turn a profit. They will need their money. The interest rates are very high as well even when the business is profitable. The economy hasn’t fully recovered from the effects of Covid-19 and today we have another crisis—Ebola on our hands. Like the guy who was organizing the conference, investors and even international NGOs will wait and see before they make decisions to bring in the money. In the meantime, more people will continue to struggle to pay back their loan obligations. So government should prioritize paying its public debt especially to local suppliers. Many Ugandan companies are in debt because they supplied government with goods and/or services and they have resorted to begging bureaucrats to pay them. Either invoices are deliberately misplaced or the people responsible for making payments have zero interest in settling invoices. Accounting officers of government ministries, departments and agencies or MDAs must see to it that people are paid on time once they have fulfilled all the contractual terms. There shouldn’t be a reason why MDAs procure goods and services and then make suppliers and providers “dance on a needle” before they are paid. The concept of “kiwato” which means that you pay half the money you are demanding to those officers who are supposed to be doing their job must be completely dealt with. Corruption must be nipped in the bud if businesses are to survive. There should be no reason why anyone should pay half the money they are demanding so that an invoice that had been deliberately misplaced is all of the sudden available and moving through the payment processes. The Uganda Development Bank should also further slash on the interest rates they charge and make it easier for small businesses to borrow. Bank of Uganda should also come up with more innovative ways of taming inflation than always raising the central bank rate (CBR), which always means hikes in commercial bank interest rates. The CBR may work in Europe, but is it the only solution for developing countries like Uganda? The writer is a communication and visibility consultant. djjuuko@gmail.com

November 17, 2022

News

#OutToLunch How to tell a pyramid scheme from a genuine investment

#OutToLunch How to tell a pyramid scheme from a genuine investment By Denis Jjuuko In the late 1990s, at every little gathering, people especially men converged in every little corner and made their nails dirty. They were scratching for cash and Hyundai cars. Like in all such lotteries, a few people would be winning hence more people buying the tickets to scratch. The scratch for cash, cars and later houses business would propel the businessman behind it to one of the richest people in Uganda. Eventually, scratch for cash ran its course when more people realized that it was easier to go to heaven than becoming wealthy by simply scratching a piece of well decorated cardboard. As it was folding, the English Premier League was becoming increasingly popular being broadcast for free on one of the pioneer privately owned TV stations in Uganda. Being shown in color, the English Premier League quickly relegated Football Made in Germany to the backseat. Betting companies started sprouting up in every nook. If you predicted the score, you would walk away a millionaire. Like in all gambling, a few people must win to attract more others who fund the winning bonuses. The betting went beyond the English Premier League to all sorts of sporting activities. One day, on a walk in one of Kampala’s suburbs, I walked behind some security people perhaps from a night duty and they were discussing a football game that had taken place in Kazakhstan. One of them had bet on it. I didn’t know that there is anybody in Uganda interested in any football being played in Kazakhstan but that is how wide the betting net is cast. With everyone, apart from some members of religious sects who take vows of poverty, dreaming to becoming rich or at least go to their creator while trying, there is never a shortage of people willing to invest little and earn big. So a pyramid scheme will always show up. From crypto currencies, forex trading (though many of these are genuine), to the latest BLQ Football that is alleged to have disappeared with some Shs60 billion from Ugandans. There is another one that may become like BLQ. Using a similar model, it talks of being the future of football and its promoters claim to be backed by the world’s richest man—a real indicator of what lays ahead. They claim that if you invest Shs100,000, you would be able to earn Shs400,000 per a week. They don’t tell you how Shs100,000 can make so much money. But they also say if you recruit 1,000 members and you have “300 people on level one” (whatever that means), you earn Shs38 million per a month. What will the recruited 1,000 people be doing for one to earn Shs38 million monthly, they will never tell you. They also have an option where whatever you invest can return 4% to 8% daily. There is no business that can give you such daily returns that is genuine. Bonds give returns of up to 20% and that is annual for long term investors (15 to 20 years). The current rate is around 17% annually for such long term investors. If anyone promises you 4% to 8% daily (1,460% – 2,920% annually), go and eat your money instead of donating to them to eat on your behalf. There isn’t a business that is legal that one will do using your little savings or tuition fees to invest in a business, pay all the expenses, taxes, get themselves some profit and be able to give you 2,920% annually on top of what you have invested. The money they give the people who invest in the early days is got from people they keep recruiting and the only reason they pay them is to recruit more gullible people. This business model is not sustainable that is why once the people being recruited run out, the scheme collapses. And these days, you can’t even get the money. They simply make you open an online account where you see amounts being increased on a daily basis but once you try to withdraw it, they will claim a technical issue, an upgrade of the system or such other things before the site goes down completely. If you want to make money, without doing anything, go to your licensed bank and buy bonds or treasury bills or look for again a licensed insurance company or even those involved in unit trusts. You can reach out to Capital Markets Authority for the licensed ones. You can also buy shares in listed companies. Businesses promising you to simply recruit people, make them pay some money and earn Shs38m a month are just pyramid schemes.

November 17, 2022