Wednesday, May 21, 2025

NICK KOTCH: TRIBUTE TO A GREAT MENTOR AND AN EVEN GREATER MAN

NICK KOTCH recruited signed off on my recruoitment into Reuters those many years ago. A young business journalist, he was asking to be an all round correspondent for Reurters in Uganda. 

I am embarassed to say I turned down an initail offer to join Reuters, because I could not be bothered writing about politics and society. Thank God he never gave up on me. I will be forever be grateful for the opportunity it gave me to broaden my perspectives and see the bigger picture.

I admired his commentary and try -- badly to emulate his thought process.

RIP  Nick Kotch

Tuesday, May 20, 2025

BODAS A TEST FOR MARKET ECONOMICS

Last week I had reason to drive down Bombo road, onto Kampala road before turning off onto Entebbe Road.

I cannot remember the last time I did this. I do not think I will be doing it ever again.

Driving on our capital main thoroughfare, is a nightmare of  hundreds (and I fear I understate this) of boda bodas criss crossing, weaving, ducking and generally causing hypertension on that dual lane carriageway.

Add to that the trucks loading or offloading this or that merchandise, taxis starting and stopping without warning, pedestrians jaywalking all over the place and you really have to wonder. The horror.

Those were my initial thoughts, but when I sat down and tried to make sense of it calmly, I could not help but marvel at how the market works.

First off the boda bodas are responding to a need, a need for transportation, in a city without mass transportation services. They are responding to a need for quick and inexpensive movement in a city clogged with cars...

The urgent need for their regulation is understandable, not least because they have become a power onto themselves, see Wandegeya and Jinja road intersections. But we have to be careful not to throw out the baby with the bathwater.

When I looked in my archives I found a pre-covid article about a Safe Boda end of year party. Hundreds of riders had congregated at Lugogo Cricket oval for day long reveling with family and friends. I remember being in awe at how the company had aggregated all these numbers under one roof – it was rumoured at the time there were about 10,000 SafeBoda Riders, and in doing so providing employment, safer transport and financial inclusion.

But only last week I read another article about Mogo, which has carved out a niche for itself in financing the purchase of motorbikes for boda riders. According to the story, in the last two years they have financed 30,000 bike purchases but since their inception towards the tail end of the Covid, they have helped finance the purchase of  half a million bikes around the country.

For those of us looking from the outside, this number seems like a stretch, but not so much so when you factor in the hundreds, maybe thousands of boda bodas Uganda police has impounded, with little effect on the overall industry.

I remember before Covid thinking, the boda boda industry was a bubble waiting to burst, going by the number of riders I saw not having a fare. I guestimated that at least a third of bodas had a rider only, no passenger. My thinking at the time was that the industry was gearing up for a major correction, as more and more people bought bodas but the market was getting saturated and would prove less viable for entrepreneurs.

I suspect it is not as lucrative as it may have been 20 years ago for the first movers. But like Malthus, the 18th century economist who warned that the world was doomed as population grew to stretch known resources, I did not factor in innovation, ingenuity and sheer grit of the industry operators.

With Covid came the explosion of the delivery business, which bodas have cornered for themselves. Everyone has his go to boda guy. Especially women. You cannot be a woman worth the varnish on your nails, if you do not have at least have three bodas on speed dial.

One Sunday afternoon I was out to one of our leading restaurants and could not help but notice the number of boda guys waiting to take delivery of orders. On asking the duty manager how much of their business is in deliveries, without blinking an eye, he said 60 percent. And this, when seating space in his restaurant was already at a premium.

So I was wrong those many years ago, that the boda bubble was about to burst. Thankfully so.

That being said, government has to recognize that what was originally a stop gap measure, a plaster, for an inadequate transport system, is growing in to a monster that needs to be regulated.

These boda guys are not stupid. They are aware of the potential threats to their livelihoods that could come with a more organized system. They will organize, if they already haven’t done so and resist any attempts to regularize the system.

We should not forget how one UTODA used to run riot all over the city, their taxis a power to themselves and their business model not unlike a criminal organization.

As is usual, the market is often ahead of the regulators. And thank God for that. Government needs to recognize the importance of the bpda industry, but take a long term view about how to integrate mass transport, taxis and the bodas into a coherent transport industry. The industry or market can very well do this by themselves, but the problem with the market is that it tends to concentrate resources or power in a few hands, and leave the rest exploited and trampled upon.


Wednesday, May 14, 2025

UGANDA'S ECONOMIC FUTURE: BETWEEN HOPE AND THE GHOST OF AMIN

“We’ve been here before, haven’t we?”

Uganda’s economy is at an inflection point. Again. The familiar script is unfolding—high growth projections, glittering infrastructure projects, oil riches promised just over the horizon. But scratch beneath the glossy headlines, and the cracks are all too visible. Public debt is ballooning. Youth unemployment festers. And the political system remains firmly stuck in an old gear.

It’s an old Ugandan story, one that has played out in different shades since the British lowered their flag in 1962. But are we condemned to rerun history—or can we finally write a new chapter?

Flashback: Amin’s Economic Vandalism

Ask anyone old enough to remember, and they will tell you the 1970s were Uganda’s lost decade. When Idi Amin seized power in 1971, the economy nosedived with frightening speed. His decision in 1972 to expel Uganda’s Asian community—who dominated trade, industry, and finance—was economic suicide.

Overnight, factories stopped. Shops shuttered. Uganda’s once-vibrant industrial belt from Jinja to Mbale turned into a graveyard of rusting machinery. Inflation surged past 100%. Coffee smuggling to neighboring Kenya became more lucrative than legitimate export. Kampala became a ghost town by dusk.

Amin's economic vandalism left scars that have never quite healed. To this day, Uganda’s business class remains wary of state intervention. Cash is king, and the distrust of formal systems is woven into our economic culture.

The Museveni Years: Reform, Boom, and Complacency?

When the NRM marched into Kampala in 1986, they found a country in ruins. But to their credit, they rolled up their sleeves. The economy liberalized. The private sector was revived. Inflation was tamed. GDP growth ticked steadily upwards through the 1990s and early 2000s.

Those were heady days. Banks opened, supermarkets returned, mobile phones became commonplace. Uganda became the IMF’s poster child for post-conflict economic reform.

But as the years rolled on, the glow faded. Corruption scandals multiplied. Infrastructure projects became overpriced boondoggles. Domestic arrears—government bills unpaid to suppliers—ballooned, straining the private sector. By the late 2010s, the private sector was grumbling about the same things: late payments, tax harassment, and a government that had become a poor listener.

As Shillings & Cents has long argued, Uganda’s biggest challenge is no longer external shocks. It is our own fiscal indiscipline and complacency.


“Government arrears to suppliers are not just a cash flow problem—they are a symptom of a state losing control of its finances. Left unchecked, this will choke off the very private sector Museveni’s reforms nurtured.”

The Oil Dream: Promise or Peril?

Now enter oil. Uganda’s 6 billion barrels of oil have been called the ticket to middle-income status. And the numbers do look mouthwatering. The East African Crude Oil Pipeline (EACOP) is expected to drive GDP growth into double digits by 2025-2026.

But we’ve seen this movie before. Nigeria. Angola. Equatorial Guinea. Oil has often been more curse than cure.

Already the warning signs are there. Environmental protests are growing. Western financiers are pulling out. Questions about how revenues will be managed remain. And our governance systems—well, let’s just say they were not designed to handle billions of dollars sloshing around.

Uganda must confront this reality head-on. Oil revenues need to be invested in diversifying the economy, not in flashy projects or patronage politics. Otherwise, oil will leave us with little more than polluted wetlands and a shattered macroeconomy.

The People Question: A Young Nation on Edge

Uganda’s population is young. Very young. With a median age of just 16, our youth should be our biggest asset. But the hard truth is they are becoming our biggest challenge.

Every year, hundreds of thousands of graduates join a labor market that simply can’t absorb them. The boda-boda economy is now an employment strategy for graduates. This is unsustainable.

Without urgent reforms in education, skills training, and job creation, we risk creating a generation that feels cheated—and whose frustrations could spill over onto the streets.

Agriculture: Still Our Golden Goose?

Despite the oil hype, agriculture remains Uganda’s economic bedrock. Over 70% of Ugandans depend on it. Yet, productivity remains low, post-harvest losses are staggering, and value addition is minimal.

There are bright spots—like Bayaaya Specialty Coffee in Sironko, where women are driving high-quality exports to Europe. But such initiatives remain isolated islands of excellence.

Uganda must modernize its agriculture. That means investing in irrigation, storage, agro-processing, and market access. Without this, the sector will continue to underperform—and Uganda will remain stuck as a raw commodity exporter.


“Forget the oil for a moment. The fastest route to inclusive, job-creating growth is through agriculture. If we get that wrong, everything else is noise.”

Infrastructure: Debt and Glory?

Uganda’s skyline is changing. Expressways, dams, airports—they are all symbols of ambition. But they come at a steep price. Uganda’s debt has swelled to over $24 billion. Debt servicing now gobbles up over 40% of domestic revenues.

Infrastructure must make economic sense, not just political sense. Roads to nowhere and dams without industries to feed will haunt Uganda’s balance sheet for decades.

Regional Integration: Our Neighbors, Our Lifeline

Uganda’s economy does not exist in a vacuum. Our links to the East African Community (EAC) are critical. But tensions with Rwanda and Kenya over the years have shown how fragile these ties can be.

Uganda must play a smarter regional game—positioning itself as the logistics and services hub of the Great Lakes region. That requires diplomacy, trade facilitation, and resolving the perennial non-tariff barriers that stifle regional commerce.

Climate Change: The Storm We Are Ignoring

Uganda’s planners are obsessed with oil and infrastructure. But the biggest threat to the economy is quietly creeping through our fields and rivers—climate change.

Droughts are becoming more frequent. Floods are washing away crops and homes. Agriculture is under siege.

Uganda’s future will depend on how quickly we pivot to climate-smart agriculture, renewable energy, and water conservation. Ignoring this will be catastrophic.

The Governance Question: The Big Unknown

Finally, the elephant in the room—politics. Uganda’s economy, like its politics, is dominated by a single man who has been in power for nearly 40 years. Whether Uganda can transition peacefully into a post-Museveni era will be the ultimate test of its economic resilience.

Investors need predictability. Businesses need rule of law. Uganda’s prosperity hinges on building strong institutions, ensuring peaceful succession, and cleaning up governance.

 Will This Time Be Different?

Uganda stands on the brink. It has the resources, the people, and the geography to become an East African powerhouse. But the weight of history is heavy.

Will oil transform Uganda—or will it become our curse? Will the youthful population become an engine of innovation—or a force of unrest? Will we fix our fiscal house—or mortgage our future?

These are not academic questions. They will define whether Uganda’s next 20 years will be a golden age—or a tragic rerun of old mistakes.

History is not destiny. But only if we choose to learn from it.

Tuesday, May 6, 2025

OF CREDIT, COLLATERAL AND COURAGE: WHAT THE GROW LOAN IS TEACHING US

When the GROW Loan started rolling out its billions last year, I was sceptical. Not because the idea was bad—on paper, it sounded like the kind of thing development wonks dream up over coffee in climate-controlled boardrooms. But because I’ve seen this movie before: government-backed loan schemes that arrive with fanfare, fizzle quietly, and leave little more than PowerPoint decks and donor reports in their wake.

This one, it seems is different.

To be fair, the GROW Loan—part of the larger GROW Financing Facility (GFF)—isn’t just about chucking money at a problem and hoping it sticks. It’s about deliberately targeting women entrepreneurs, including refugee women and those in host districts, and giving them a financial ladder to climb out of informality and survival-mode hustling.

"By April this year, over UGX 50 billion had been disbursed through six commercial banks—Centenary, DFCU, Equity, PostBank, Finance Trust and Stanbic. There are three lending levels based on loan size (UGX 4m to UGX 200m), and performance grants to sweeten the deal—5% for women, 8% for refugees, and 10% if you tick both boxes.

The average loan for Level 1 (the smallest category)? Around UGX 10 million. That’s your classic salon, poultry project or boda spare parts shop. But here’s the kicker: 28% of borrowers had never touched formal credit before. That’s not just a number; it’s a quiet revolution in how women engage with money and formal finance.

And yet, not everyone is toasting champagne.

The demand is undeniable, with more women being turned away than qualify for the facility. The eligibility hurdles are real. Many women assumed “GROW” meant “free money” or “soft cash.” But when they turned up at bank counters, they were asked for cash flow statements, business records, and—brace yourself—collateral.

Even though PFIs accepted everything from land sale agreements to livestock and even Bibanja land, the reality is that many women—especially younger or unmarried ones—don’t own property or control assets in their names.

So what happened?

Well, the women who made it through the vetting process did something quietly transformative. They converted informal networks into formal credit behaviour. Some roped in their spouses as guarantors. Others leveraged group savings schemes to back their applications. And quite a few went back to the drawing board—pulling together the paperwork, the proof of business, the receipts.

This tells us something profound: women aren’t credit risks. They’re system survivors.

Still, if we zoom out, some uncomfortable patterns emerge. For one, Greater Kampala alone took 45% of the loans. Meanwhile, refugee-hosting districts got a measly 3%. That’s a far cry from the equity narrative being spun in the project’s mission statements.

Then there’s the age gap: just 4.2% of borrowers were under 30. It seems the banks still don’t trust our young women—or maybe they haven’t figured out how to speak their language yet. Because trust me, Uganda’s young women aren’t short of hustle. What they’re short of is formal documentation and someone willing to take a chance on them.

To be fair to the project managers, they’re not blind to these gaps. Plans are already underway to onboard SACCOs and MFIs—especially in underbanked areas—to push GROW Loans deeper into the grassroots. They’re also investing in post-loan business development support, so these women don’t just get a cheque and a prayer.

But what really gives me hope is this: they’re listening. Not just to disbursement figures but to borrower voices. Field visits, testimonial videos, even those brutally honest borrower engagement sessions—they all point to a project that understands that money alone doesn’t change lives. Trust does.

And that’s the real story here.

"The GROW Loan isn’t just about expanding access to credit. It’s about rewriting the terms on which women interact with Uganda’s financial system. It’s about seeing Bibanja land not as a bureaucratic headache but as real-world collateral. It’s about understanding that a boda-stage matron with no paperwork could still be running one of the most consistent cashflow businesses in her parish.

It’s about credit with empathy.

The next few months will tell us a lot. If the PFIs can crack inclusion in refugee districts, if SACCOs can step up, and if the system starts trusting youth a bit more, then GROW could end up being more than just another acronym in Uganda’s development alphabet soup.

It could become the blueprint for inclusive finance.

 

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