Investment Challenges faced by Ugandans in the diaspora

There was a time when all that we heard about the Ugandan diaspora were tales of people going out of the country to destinations like the U.K, USA, Canada etc to do back breaking menial jobs regarded with disdain by the locals of the host countries. Over the decades however, the narrative has since changed. It is common lately to hear of Ugandans taking on high level jobs in globally renowned multinational organisations. As a result, the remittances by these Ugandans back home have grown in leaps and bounds to the extent of being recognised as one of the leading stream of money into the local economy.

Due to one reason or another, there is a desire by most of these diaspora dwellers to put up some form of investment back home. Probably they have plans to retire in Uganda when done with the globe trotting while others are simply trying to set up an income stream for their extended families back home.

Most of the Ugandans in the diaspora I have shared with on this matter of investing back home confess that they have tried and will keep trying. However, they highlight a number of challenges that they face in their quest to do so. These include;

Trust: There is a general lack of trust among the people they have tried dealing with to represent their interests. They highlight a shortage of people they can consider reliable and faithful to manage their investments. Stories abound of diasporans that have been fooled into constructing homes that end up not being theirs or purchasing land they eventually don’t get to own.

Lack of information on available opportunities: Getting Information in Uganda can be a herculean task. This is not a challenge confined to those in the diaspora only. Most government staff believe hoarding information is key to their survival in office. When opportunities arise, these officials tend to hoard it and prefer to dispense it in a biased manner especially to those that reward them financially.

Matters are aggravated by the existence of a bad culture especially among government agencies that prefer to work as independent silos. Today’s opportunities can only be best exploited through a multi-sectoral approach. You can’t talk of attracting industries into the country without ensuring that there is adequate electricity, good transport infrastructure as well as communication facilities. This therefore calls for lateral interfacing among the relevant agencies.

Government aside, there is a general preference by most Ugandans to store opportunities in their brains hoping to dispense the knowledge in a piecemeal basis in order to be deemed relevant. Most of this knowledge being hoarded cannot be easily exploited by the very people hoarding it.

Accessing research data is another blister that needs treating. The Uganda Bureau of Statistics (UBOS) has numerous studies it has undertaken in the different sectors of the economy. Unfortunately, whatever information they have is usually treated with the same sensitivity as security related information. It leaves one wondering why in the first case they gather and process data.

Lack of accurate information: Where information is available, its accuracy is often questioned. It’s very common to come across multiple sources of information on a particular issue all giving different versions.

The diasporans, do not usually have the time to tooth comb through the information that they get about the investment climate back home. This is why they prefer to get it in as clear and accurate a manner as possible so that they can make decisions in an expeditious manner. Remember, the urge to invest back home is competing with alternative investment possibilities abroad.

Weak/Corrupt government institutions: The government institutions meant to facilitate investment are weak and largely corrupt. They either do not do enough or simply encourage an atmosphere of corrupt tendencies, a factor which exposes people’s investments to a lot of risk.

Take the case of land, there are numerous stories of diasporans that have been defrauded as a result of having their land sold to other parties without their consent or even buying land with fake titles.

If it requires one to board an aeroplane and spend a couple of weeks in Uganda just to pursue a land transaction to conclusion, the cost of such an investment turns out to be unfairly high.

A diasporan I interviewed for this article told me how he once pitched a low cost road resealing solution to the Kampala City authorities some years back only to be shamelessly told that, “Ffe tunaalya tutya?” (How shall we eat?) Basically, they implied that cost cutting solutions are not good for them because they need generous cuts/kickbacks off any works that have to be done on the road.

Business Models that depend on one’s presence: Most businesses that the diasporans engage in can best work with physical supervision by the owner. The working culture in Uganda is still poor to the extent that the diasporans find it hard to run their business operations remotely, either the staff will work in a lacklustre manner or they rob you from within.

Lack of investment support infrastructure: This is an accusation levied by the diasporans and shouldn’t be taken lightly. For anyone intending to invest, it is important that they get to actualise their intentions in a manner that is as smooth as possible. For long, government agencies tasked with facilitating investment were detached from each other until a decision was made to have some coordination across all of them.

The processes of registering a business, acquiring tax identification, getting an investment licence among others were for long handled by different agencies located in different offices across the capital city of Kampala.

Lately though, a single-spine approach has been implemented where a visit to the Uganda Investment Authority can enable an investor walk away after accomplishing all the requisite registrations. While this is commendable, the next step is to take this interaction online in order to facilitate engagement with the diasporans.

Lack of a Government support structure for diasporans: Apart from what can best be described as a rag tag effort by government towards dealing with diasporans, there is no institutionalised approach in place aimed at deliberately engaging them in order to further their ambitions to invest back home.

Occasionally one hears of a team of government officials destined to attend annual gatherings of Ugandans in the USA or the UK but that is as far as it gets. The cosmetic engagements that occur in such events need to be taken a step further to enable any Ugandan in the diaspora acquire information, make decisions as well as protect their investment back home without pulling many strings.

Poor work ethics: For those that have lived in developed countries and even had a chance to work there, the work ethics of a typical Ugandan would send them reeling in shock. The reason this is an important issue is because it has a direct impact on the productivity of any business investment.

Imagine if the average production capacity per employee in a toilet paper factory is 50 cartons per day and the best our employees can do is half that, it definitely distorts the anticipated performance of the overall investment.

Take the case of employees who are willing to jump onto any excuse to either come late to work or avoid working entirely. They complain of rain or traffic jam as a reason for being late, a burial or sick child as a reason not to work for the entire day etc. The reasons tend to be numerous and very petty at best.

Lack of Skilled Manpower: The quality of manpower being churned out by the education institutions is degenerating at a very high rate. It is common to find today’s graduates failing to execute tasks that were taken for granted a couple of decades back.

The questionable skills that the pool of job seekers have are a bog let down to those planning to invest. It implies that one has to factor in resources for skilling employees thereby increasing the business start-up costs.

High cost of capital: Accessing financing especially long term can be very expensive in Uganda. Matters are aggravated by the constant need for collateral by the financial institutions. This creates limitations on the ability of an investment to scale. This challenge has been partially attributed to the private sector competing with government for the available credit.

Despite all these glaring challenges, it is good to note that the diasporans have not hesitated investing in Uganda. However, it seems like their level of investment would be much greater if only a number of these hoops were addressed. In a follow up article, we shall talk about what the Government of Uganda can do to address this increasingly crucial section of Ugandans.

James Wire is a Small Business and Technology Consultant

Blog: wirejames.com

Twitter: @wirejames

Email: lunghabo (at) gmail (dot) com

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7 responses to “Investment Challenges faced by Ugandans in the diaspora

  1. Ugandans in the Diaspora interested in joining an investment group initiative we are launching should please reach out to me. Contact information is on the link below:
    https://unaapresident.org/

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  2. More questions or challenges than answers. There are those who have been in the diaspora and are now back home- they are probably now conversant with his things are channelled, where to invest, what would seem to work…., how about we form an alliance and introduce working ethically? Could be a good place to start for those who aren’t.

    It is true we are a people of “sitta kange” even those in legitimate thriving businesses don’t want to say, lest you pick on it and run past them; unfortunately this happens even among those in the diaspora. We need a mind shift to a place where Andrew has an idea, Brenda has money, Catherine can has the time to set the ball rolling, Donald has extra skills to bring to the table, Edwin has had a deeper revelation into the idea to make it even better….. Noeline who can replicate the idea in another part of the country..
    Great highlights and insight into the world of our brother’s and sisters out there. Thank you James.

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  3. Reblogged this on MY PYJAMA PROJECT and commented:
    Food for thought… an African economic hurdle for the most part.

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  4. I currently use MoneyInAfrica.com for reliable information on the investment opportunities available. They provide good analysis on shares and bonds in Uganda.

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