High Business Death Rate Dogging Uganda's Economy

Knowledge gaps and the high costs of doing business remain a major hindrance to Uganda's economic growth as most business enterprises started in the country do not survive beyond their first birthday.

Ronnie Mulongo, Manager Private Sector Development  at Private Sector Foundation Uganda (PSFU) says that some entrepreneurs lack research skills, documentation, planning for businesses and yet they expect to begin reaping profits quickly, not realizing that business growth is a gradual process which requires patience.

He says that if business technocrats fail to come out to support these SMEs' grow in business, there will be increased business mortality and unemployment with lack of job creation. 

//Cue in “You are just…”

Cue out “…what you do.”// 

He says enterprises that fail to grow are in all sectors in Uganda from trade, to agriculture and services and engineering. But those that require technical expertise like Agriculture and Engineering are affected most. Nelson Tukundane, Communications officer for Uganda National Farmers Federation (UNFFE) says farming entrepreneurs are affected by unprecedented crop diseases, pests and lack of technical knowledge to run their businesses.

//Cue in “These unprecedented circumstances…”

Cue out “…train all farmers.”//

UNFFE registers close to 100 new farm enterprises annually, but 60% of them never make it after one year in Uganda.

Everest Kayondo, Kampala City Traders Association (KACITA) Executive Director says because lack of financial planning and other business skills among Kampala businessmen, more than 50 enterprises that started late last year have been closed because of COVID 19. The entrepreneurs were not prepared for the pandemic. 

According to Douglas Baryevuga, Communications Officer Uganda Registration Services Bureau (URSB), about 60% of Ugandans end up in business accidentally with little or no prior preparation, due to a high copy and paste syndrome, unemployment and unplanned retirement.

Of the 20,000 business that officially opened in 2019, close to 12,000 have closed.

Yet the small businesses are the driver of growth for Uganda in terms of economic development, innovation, employment and wealth creation. These Small businesses are spread all over the various sectors i.e. Services (50%), Commerce and Trade (33%), Manufacturing (10%) and others (7%).