Tag Archives: business

Why Nakumatt struggles as Capital Shoppers and others thrive

While browsing the Twittersphere, I came across a thread in which the issue of Nakumatt Supermarket’s limping performance in Uganda was being discussed viz a viz local Ugandan Supermarkets.

Ms. Nancy Kacungira loudly wondered what the likes of Capital Shoppers are doing right to stay in business to which the renowned economic affairs analyst Dr. Ramathan Ggoobi duly responded by stating, “Alot. Location, good supply chain management (high fill rate), and damn, I’ll say it …. loyal ‘sectarian’ clientele.”gobbi_tweet

The last part of his submission is what I didn’t find worthwhile. So, as a supplier of supermarkets, I went ahead to respond as follows, “They pay us well and promptly. Including Quality (Supermarket). I find the assertion of “sectarian clientele” as lame reasoning by @rggoobi.”wire_response

Its eight years since I started supplying supermarkets with products and this has given me some time to appreciate the business. A supermarket is no different from a warehouse where suppliers bring their products for onward sale to customers. The only difference is that Supermarkets have to invest in a few things that make the shopping experience of a customer conducive. Their key issues of concern are usually branding, location, management systems, market identification and interior décor.

The success of a supermarket is hinged on three core factors as indicated in the illustration below.Supermarket_Success

When Uchumi joined the Ugandan supermarket space over ten years ago, they heralded a new era that saw them take supermarket branding to a new level all together. The supermarket enjoyed market leadership overnight, largely a result of the corporate buzz created whenever anything new is launched as well as the significant presence of Kenyan professionals in Kampala. Nakumatt followed suit years later and it too caught the attention of the Ugandan market by launching 24 hour shopping services. Within a short while, it had grown and surpassed Uchumi as well as other leading local supermarkets like Quality and Capital Shoppers.

During all this time, the local supermarkets must have been learning serious lessons from these foreign entrants. Nakumatt, Uchumi and Tuskys, all Kenyan supermarkets by origin had the money, systems, branding and rode on the wave of a significant presence of Kenyans in Uganda to kickstart their business. They also won over many Ugandan shoppers and a simple way to tell that is by studying various suppliers’ delivery schedules that largely rotated around these supermarkets.

So, the factors Dr. Ramathan Ggoobi attributed the success of Capital Shoppers to like Location were definitely considered by the likes of Nakumatt. Take a look at Nakumatt’s branches at Oasis Mall, Bukoto, Entebbe, Mbarara, Bugolobi (although they goofed up by placing another branch at Village Mall in the same vicinity). Consider Uchumi’s branches that existed at Garden City, Nateete, Freedom City, Kabalagala and Gulu. They were well thought out and always outcompeted neighbouring supermarkets. But somehow, they went bust. Uchumi is now spoken of in the past tense having fled with Billions of Shillings owed to local suppliers. Nakumatt is in intensive care unit, trying so hard to stay alive and relevant. How did they get to this?

I will rule out the economy because the same economy is where you find other thriving supermarkets like Capital Shoppers, Quality Supermarket, Mega Standard, Ssombe Supermarket, City Shoppers Supermarket, Senana, Cynibell among others. The customers are still existent considering that they are the very ones patronising the currently well performing supermarkets.

In my view and as a supplier, the one aspect of the business that these supermarkets did ignore and are now paying heavily for is the Supply Side (read as Stock in the diagram shared earlier). This is in tandem with Dr. Ggoobi’s point on good supply chain management.

A supermarket’s shelves are what they are because of the goods that suppliers diligently avail for sale. Without these goods being supplied, they remain empty and useless to any consumer. Most supermarket suppliers never get credit from their raw material suppliers prior to producing products for the supermarket. However, when it comes to supplying the supermarket, they are required to do so on credit. The credit terms range from a few weeks to two months. Consider that often times, the supermarket pushes the supplier to offer significant discounts which are hardly passed on to consumers. In essence, the supermarket receives an interest free loan since after sale, they can still re-use the supplier’s money on other activities of their choice.

Suppliers are usually resilient and able to patiently wait until the due dates promised for payment. Sometimes, the due date is not honored by some supermarkets and suppliers have to make multiple attempts and trips to get paid. This is where the likes of Uchumi, Nakumatt and Tuskys went wrong. They knew that being “large” and “credible” players in the market, the suppliers were at their mercy. Wrong!!! This perception might have been true for a while but as word spread through the networks of suppliers about their financial dishonesty, one by one, we begun pulling out of making supplies. Eventually, the shelves begun starving of our products and customers started noticing. This proved one thing, suppliers are as important as the consumers.

Another aspect is the shoppers’ psychology. The reason a good number of urban dwelling Ugandans abandoned the small shops in preference for Supermarkets was the ability to find everything they needed in one place and at a competitive price. This expectation can only be met when the supply chain is very fluid. So, by letting down their suppliers, these supermarkets once again exposed themselves and could hardly meet this expectation. End result? Customers begun gravitating towards alternative supermarkets that fulfilled this need. Take the case of a battered Uchumi, in its last days at Garden City mall, Capital Shoppers opened up a branch right below Uchumi’s premises and within no time, it was attracting a much bigger crowd. A relative of mine once intimated to me that he was fed up of going to that Uchumi branch due to the lack of a wide range of goods for sale. He felt so relieved when Capital Shoppers opened up. This too further cements the supply chain factor.

Now, back to the insinuation by Dr. Ggoobi that Capital Shoppers is thriving because of a “loyal ‘secterian’ clientele.If indeed this is worth noting as a reason, does it also imply that Nakumatt’s failures are attributed to the sudden absence or exit of a loyal sectarian (Kenyan) clientele? It is an open secret that Kenyans loved patronising Uchumi, Nakumatt and Tuskys. These very Kenyans are still around and their numbers have probably grown. Why is it that these three supermarkets have either closed or are limping in this market?

I do shop a lot at Capital Shoppers and Quality Supermarket but have not seen any sectarian tendencies in their clientele. I would be hard pressed to point out that the majority of shoppers “appear” to come from one region of the country.

Lets face it, the Kenyan supermarkets came in with a lot of SWAG and knew they would steamroll the local market in a bullish manner. While they appeared to be scoring early successes in this regard, their local counterparts used that time to re-invent themselves and learn a few things from the competition. The founders of Capital Shoppers and Quality Supermarket are very hardworking modest living Ugandans who started off in very humble ways. Their continued success even during this trying time of the economy can be largely attributed to the respect they accord their suppliers as well as being able to continuously learn and unlearn.

James Wire is a Small Business and Technology Consultant based in Kampala, Uganda

Follow @wirejames on Twitter.

Email lunghabo [at] gmail [dot] com

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Good African Coffee Closure. Is Uganda’s economy on Auto Pilot?

Andrew Rugasira is no saint, however one thing I can authoritatively say about him is that he is a resilient entrepreneur who always turns ashes into beauty. Many years back, I recall him running a prominent promotions company called VR Promotions which bit the dust. He was humble enough to go into hibernation only to re-emerge a couple of years later with Good African Coffee.

When I bought the newspapers of the 25th of April 2017, I was taken back upon reading a story about how the tax man had closed down his business for tax arrears of UGX 1.2 Billion.

On the 23rd of April 2017, Ian Ortega posted a mind opening article on Facebook in which among others he stated, “… We pride in building mansions in our villages in a sea of mud and wattle houses. And in the end we pay for it with insecurity, with deaths. It makes no sense to have majority poor and few rich. It always backfires… Start doing something to make sure the economy works for everyone regardless of their field. Let it work for a musician, for an artist, for an engineer, for the teacher etc. That is how you build sustainable societies.

Having interacted one on one with Mr Rugasira a year back, I got to know quite abit about his ethos. While he is a hard nosed businessman, his passion for equitable growth and development is worth admiring.

Businesses close for various reasons and their closure has varying impacts on the economy. There are businesses whose closure will largely cause ripples among a few selected elites (who tend to be the noise makers) while others have the Fall Army Worm effect of distorting the bottom of the pyramid poor.

According to the New Vision, Good African Coffee has a network of more than 14,000 coffee farmers and has facilitated the set up of 17 (Seventeen savings and credit organisations) for these farming communities. The average household in Uganda has 5 members. This implies that if each coffee farmer is equivalent to one household, then the direct impact of his investment at this micro level has a reach of at least 70,000 people. Considering that in Uganda, it’s part of our culture for a household head to help various extended family members especially economically, we can safely assume that each farmer has an impact on 10 (ten) people in the extended family bracket. This implies that upto 140,000 people indirectly benefit from Good African as a result. On average we can safely state that at least 200,000 people from the coffee growing region are beneficiaries.

The New Vision further stated that the Good African products are available in over 700 UK Supermarkets as well as 500 stores in Africa. As a supermarket patron, I have come to learn that products on those shelves serve not only the purpose of consumer consumption but also national branding. How many people today in the UK swear by Good African Coffee? Judging by the inquisitive nature of today’s shopper, chances are high many have got to learn more about Uganda in the process. What better marketing for our nation?

While I am inclined to believe that management issues have definitely contributed to the status-quo, it’s quite sad that the tax man would be left to execute such a closure without proper appreciation of its wider implications. The Uganda Revenue Authority is not to blame since it is merely an execution agency tasked with collecting revenue for the Government. However, with all the tax breaks we keep hearing being directed to questionable foreign investors, why would a legitimately Ugandan owned and home grown business fail to be extended help? We just heard about the planned UGX 77 Billion tax relief that a number of companies whose list is led by the Sudanese owned AYA Group of Companies are likely to get. In my view, the footprint Good African Coffee has is much wider than AYA and any of those companies on the bail out list yet above all it impacts the lowly farmer whose sole hope for survival is farming.

We always hear of decisions being made in National Interest and this is what Hon. David Bahati, the State Minister of Finance for Planning emphasised while meeting Parliamentarians over the AYA bail out. Why was Good African overlooked?

  • Is it because the latter promotes the well being of peasants and there is this general fear among the political elite of genuinely empowering them?

  • Could it be that Rugasira doesn’t have the right brokers to argue out his case before the high and mighty in the Ministry of Finance?

We have been led to believe that overnight business moguls who set up with Shopping malls out of the blue are the ones that deserve respect and propping in order to keep our economy afloat but if we do not babysit the Rugasiras of Uganda and ensure that their businesses succeed at all costs, we shall continue in the cyclic rat race characterised by chronic poverty. Government should sit down Andrew Rugasira, make it clear to him that the success of his business is a national priority and could even have security implications considering that a large section of the farmers are from the already troubled Rwenzori region who might perceive matters differently. The riot act should be read out to him before working out bail out terms and conditions.

PS: In case you are comfortably employed with a regular salary and high flying MBA, you might have a problem appreciating the challenges genuine entrepreneurs go through in this Ugandan economy of ours. One day though, I hope you will be around long enough to appreciate what goes on the other side of the bridge.

I say, Bail Out the Brother !!!!!!

[UPDATE: Two days after publishing this aricle, Good African Coffee was reopened. I thank the authorities for having exercised a sense of sobriety. Now the ball is in Rugasira’s court to ensure he complies as required. ]

James Wire is a Small Business and Technology Consultant based in Kampala, Uganda

Follow @wirejames on Twitter.

Email lunghabo [at] gmail [dot] com

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HOW TO – Start a Mobile Money Business

Mobile Money (MM) is a form of electronic money service that enables phone owners send, receive and store money. The relative safety, ease of mobility and convenient nature of this service has endeared it to all sections of the society from the rich to the poor.

Before we proceed, it is important that we familiarise ourselves with some terminologies.

Agent: A person or business that is contracted to facilitate transactions for users. The most important of these are cash-in and cash-out (i.e loading and withdrawing money onto/from the MM system). They sometimes register new users, a service that earns them extra commission. As front line personnel, they also teach users how to best use the service.

mobile_money_agent

A Mobile Money agent in Kyebando, Kampala, Uganda

Aggregator: A person or business that is responsible for recruiting new MM agents. This role is sometimes combined with that of a Master Agent.

E-Money: Known as Electronic money in full. It is stored value held in the accounts of users, agents and the provider of the MM service.

Cash In: The process by which a customer credits their account with cash. This is done usually via an Agent who receives the cash and proceeds to credit the customer’s MM account.

Cash Out: The process by which a customer withdraws cash from their MM account. It is done usually by an Agent who gives the customer cash equivalent to a transfer the customer makes to the Agent’s MM line.

Float: The balance of e-money or physical cash that an agent can immediately access to meet customer demands to purchase or sell e-money.

Liquidity: The ability of an agent to meet customers’ demands to purchase (cash-in) or sell (cash-out) e-money.

MasterAgent: A person or business that purchases e-money from a Mobile Network Operator wholesale and then resells it to agents who in turn resell it to users. They usually manage the cash and e-money liquidity of their agents.

Mobile Money Transfer: A movement of value that is made from a mobile money account to another through the use of a mobile phone.

Platform: The hardware and software that enables the provision of a mobile money service.

In Uganda, the Mobile Money system works as follows;

The Mobile Network Operator (MNO) like MTN, Africell and Airtel sets up a platform that offers a service for phone owners to be able to “store and transfer” e-money using their phones.

A phone owner registers for the mobile money service with the telecommunications provider who creates the mobile money account associated with that particular registered phone number.

The customer then proceeds to cach-in onto their mobile money account by using a Mobile Money agent whom they give cash in exchange for e-money on the Mobile Money account.

This customer can through the execution of some commands send e-money to another mobile money account holder anytime they so wish. The recipient is at liberty to cash-out as and when they desire.

Just to show you how Mobile Money services have permeated our economy and become an integral part of our operations, picture the following scenarios;

  • Oloya works in Kampala and is constructing a house in the village. Every two days he is expected to pay for the services of the builders. By using MM, he is able to pay each builder directly onto their phone hence being assured of their commitment.

  • Nankabirwa is a produce dealer who has a network of buyers traversing numerous villages in Rakai, Masaka and other outlying districts. Their role is to identify produce for purchase and acquire it. By using MM, she is able to send money to these buyers of hers in the nick of time. She makes at least eight transfers daily during the peak harvesting season.

  • Pabire a rice farmer in Doho rice scheme by virtue of his mobility utilises MM transfers to pay for his workers’ services. These workers engage in activities like planting and weeding rice, land preparation, harvesting among others. This allows work to flow smoothly even in his absence.

  • Bakka leaves home for work fully knowing that there is no money for food that day. When he reaches his workplace (a washing bay), he transfers his income from washing the first three cars of the day to his wife at home using MM. Come evening, he is assured of finding food at home.

  • Sangalo is organising a wedding and she has reached out to relatives and friends to fundraise. The mode of pledge fulfillment being used is MM. Those contributing are sending their cash pledges directly onto her Mobile Money account.

  • Mugerwa, a parent at one of the boarding secondary schools is called by his son who reminds him about the study tour they are supposed to go for requiring a contribution of UGX 50,000/= per student. Instead of driving there to make payment, he simply sends th money via MM to the concerned teacher who then registers his son for the trip.

  • One can also pay for electricity, water, television and other services using Mobile Money.

So, how does one start this business as an Agent?

You need to have the following basics:

  • Two sim cards (Airtel and MTN). They are the biggest networks and handle at least 98% of the transactions. Others like Africell are still insignificant players.

  • Display Table. You need to have a display table that will not only store the tools of your trade but it can be stocked with other complementary products like mobile phones, accessories like phone jackets, screen protectors among others.

  • A dual sim card phone

  • A chair

  • Transaction books

  • Location

There are three approaches one can use to kick off. They are;

  1. Hiring a Transaction Line: This one involves hiring an already registered Mobile Money transaction line from someone or a company. With this line, you simply start off business without going through any registration hurdles. The things to note about this option include among others:

    • Paying a monthly rental fee of at least UGX 50,000/= for the MM line.

    • Income is in the form of a percentage commission earned on each transaction and is paid at the end of the month.

  1. Acquiring a Transaction Line through an Aggregator or Master Agent: Aggregators or Master Agents are companies that control specific territory on behalf of the Mobile Network Operators. Territories could include places like Kyebando, Kanyanya, Nakawa, Seeta, Bweyogerere e.t.c. These Master Agents get agency tenders through some bidding process and thereafter become responsible for licensing MM agents in their territories. For one to be licensed as an agent, you need to:

    • Present an Identity Card

    • Present a letter of introduction/recommendation from the Local Council

    • Have a deposit of UGX 80,000/= (Eighty Thousand Shillings) to purchase the kit

    • Fill in an application form

    • Have starting Float of UGX 2,000,000/= (Two Million shillings)

Income earned here is in form of commission on transactions. An additional surcharge of upto 10% (depending on the Master Agent) of your income is deducted for tax to the Uganda Revenue Authority.

  1. Direct Registration with a Mobile Network Operator (MNO): One is at liberty to register as an agent directly with an MNO like MTN or Airtel. Its requirements are more than the previous two options and they include:

    • Business Registration

    • Introduction/Recommendation letter from the Local Council

    • Functional bank account (for at least three months)

    • Filled application forms

    • An 80,000/= (Eighty Thousand Shillings) charge for the kit

    • Initial Float of UGX 2,000,000/= (Two Million Shillings) only.

Like the rest, income earned is in form of commission made on the transactions carried out. Unlike option 2 (two) above, with this form of registration, you are only charged the tax levy for Uganda Revenue Authority when your commission earnings exceed the UGX 1 Million Shillings threshold. The MNO then proceeds to deduct 4% which it channels to the tax man as opposed to the 10% deduction by Master Agents. This is definitely a better deal.

Option 1 is as instant as they get. If you want to hit the ground running, you may opt for this one. However, the margins are greatly reduced by the fact that you hire a Transaction line at a fixed monthly sum and because you are operating under another Agent, your margins are lower.

In the case of Options 2 and 3, After application and paying the UGX 80,000/= for the kit, you have to wait for two to three months prior to being approved as an agent. Once that is done, an Agent kit is availed and it consists of; three (3) phone lines, a phone handset, transaction books and other branding material like an apron.

Upon collection of this kit, you’re expected to deposit a float of UGX 2,000,000/= (two million shillings) on your Mobile Money line. Do I see you getting disheartened? True, raising this two million shillings lumpsome is a daunting task to many but there is always a way out. One trick is to borrow that money for a day, place it onto the MM line as float subject to approval and collection of your business material from the Master Agent or MNO. Once you have all that you need, proceed to cash out the borrowed money and return it to the lender.

How do you earn commission?

There is a well established commission structure clearly outlined by each MNO.

Airtel Agent’s Commission Guide (Extract)

Transaction Tiers

Cash In

Cash Out

Min

Max

500

2,500

150

100

2,501

5,000

150

125

5,001

15,000

285

450

125,001

250,000

520

1,300

1,000,001

2,000,000

4500

7,500

When a customer walks in and requests to deposit e-money onto their MM account, depending on the amount, you earn the commensurate Cash-In amount. If it is UGX 10,000/= they are depositing, then the agent will receive a cash-in of UGX 285/= on that transaction. Similarly, the Cash-Out commission applies to money withdrawals from the MM account.

Airtel does allow agents to check their commission status on a daily basis via the phone. However, the same does not seem to be true with MTN Uganda.

Success Factors for the Moble Money Agent business

  1. Trustworthiness: If you have to employ someone to operate this business on your behalf, you need to be able to trust them Anything short of that, you’re setting yourself up for failure. There are very many opportunities that these workers get to collude with crooks.

  2. Location: It is crucial to choose a location that is good. Since the commission on individual transactions looks small, the trick lies in volumes. How many transactions can you notch up a day? Ideal locations are corners of buildings or roads, boda-boda stages, busy trading centres, low cost residential suburbs, shopping arcades, taxi parks/stages among others.

    mm_corner

    A corner location like this one is very conducive for the Mobile Money business

  3. Customer Care: Many customers are ignorant about the operation of the Mobile Money services. They tend to ask questions one may consider dumb hence the need for any agent to have very good customer care skills. While researching for this article, I found agents being swamped by customers who wanted help with Sim Card verification. Imagine!!! Do not compromise on this particular issue when recruiting someone for your business.

    mm_operator

    Good customer care is dependent on the Mobile Money operator

  4. Mathematical Knowledge: The operator needs to have good mental maths skills. Customers come with all manner of requests and you need to be quick to mentally calculate and determine how much to transfer as requested. I witnessed a case where a lady came and requested the operator to cash out money from her account which has UGX 15,000/= (fifteen thousand) and ensure that it remains with only UGX 6,000/= (six thousand). He had to ensure that the transaction fees were factored in too. The operator had to first engage in some quick mental math before eventually fulfilling her request.

  5. Float Availability: How much do you have as e-money or cash? Customers keep walking in and out either cashing in or cashing out. You need to be in position to meet their needs most of the times otherwise they are likely to resort to the competition. I once had a need to cash-out UGX 300,000/=. I walked to three different MM agents in Wandegeya and none could meet my need. Out of frustration, I settled for partial cash-outs based on the float each agent had and this saw me use four different agents to meet my need. Since then, I never go to Wandegeya for MM cash-outs. Remember, if you set a reputation of always having adequate float, more customers patronise your services thereby enriching you commission-wise.

What are some of the notable challenges of this lucrative business?

  • Conmen: There are many conmen on the loose who target MM agents. Any form of sloppiness can lead to severe punishment. There was a case of a man who pulled up his sleek car infront of the agent’s display table, requested her to transfer UGX 450,000/=. She faithfully yielded as he pretended to count some money. The minute he confirmed reception of the money, he simply drove off leaving her stranded.

Most sophisticated conmen have been observed to operate from the city centre locations. So, in case you’re starting out, as you gain the experience, try to operate from the suburbs first.

  • Theft: Due to the carelessness of some agents, there cases of customers whose sole intention of patronising your service is to get to know the PIN number used to access the MM line. Most times agents type in the PIN number in full view of the customers. What the crooks then do is to later return and find a way of stealing the phone handset. Within minutes, they have withdrawn all the money and discarded the phone.

  • Cash Robbery: There are cases where an Agent has to bank the money earned. Sometimes due to late business closure, they might have to go home with the earned cash. Depending on how secretively one handles their operations, thugs tend to get wind of your earnings and simply way lay you.

  • Attention to detail: A customer once walked to an agent and requested to cash-in UGX 99,000/= (Ninety Nine thousand shillings). The agent instead punched UGX 990,000/= (Nine hundred and ninety thousand shillings). The customer paid up and left. During the evening reconciliation, she realised there was a massive shortfall and upon close scrutiny, the anomaly was discovered. It took a week of negotiations and a 100km journey to Masaka from Kampala for the money to be recovered.

  • Collusion: Some staff running the MM outlets have a tendency of conniving with other people to defraud their employer. They then feign ignorance or put the blame on mistakes.

Just to give you an idea, earnings can start from as low as UGX 50,000/= (fifty thousand shillings) per line per month with start-up Float of UGX 500,000/= (Five hundred thousand shillings) reaching an average of UGX 1,000,000/= (one million shillings) with a float of UGX 3,000,000/= (Three Million shillings).

The monthly pay for Mobile Money Operators ranges between UGX 100,000/= and UGX 150,000/=.

While offering the MM services, always consider selling complimentary products like Airtime, Flash disks, Memory cards among others. Airtime commissions can very easily supplement your income too. The current commission structure on airtime of UGX 10,000/= (ten thousand shillings) is as follows:

MNO

% Commission

MTN Uganda

4%

Airtel

5%

Africell

7%

Welcome to the Mobile Money Business.

James Wire is a Small Business and Technology Consultant based in Kampala, Uganda

Follow @wirejames on Twitter.

Email lunghabo [at] gmail [dot] com

Other Articles of Interest:

Additional information from GSMA – Mobile Money for the unbanked.

HOW TO – Start a Chapati Business

Rolex, one of the CNN recognised world famous foods is basically a Ugandan Chapati wrapped around a fried egg. Chapati is one of the most sought after snack like foods by all categories of consumers.

chapati

Chapati as it is known in Uganda

Making and selling Chapatis is one of the businesses that many find easy to set up due to the low start-up investment costs as well as high demand for the product(s). It is however important to note that while you can run it as a standalone business, it is always wise to have two or three other complementary products alongside it in order to reap maximum benefits. Some of these products are Samosas (sumbusa) and Mandazi that have similar requirements for inputs. What is shared here can be similarly applied to other products like doughnuts.

What infrastructure do you need to effectively run a Chapati business?

  • Operating Table. Notice the concealed compartment. It is a pre-requisite when selling food products by the roadside in Kampala.

    OperatingTable

    Operating Table for a Chapati business

  • Charcoal Stove

    CharcoalStove

  • Saucepans (At least two big ones)

Saucepan

  • Frying pan (For preparing the chapati)

FryingPan

  • Bench (for customers to sit on while eating)

  • Plastic plates (for customers to use when eating)

  • Jerrycans (keeping a water reservoir for customers to clean their hands or even wash your utensils)

  • Basin (for mixing dough)

Key considerations when setting up the business

This is a basic, easy to set up business. However, one need consider the following issues:

  1. Business Plan: A basic plan can suffice. It ought to answer a few questions like target market, desired sales targets, long term outlook, product mix (are you dealing in chapati alone or a mixture of products), planned operation approach among others. If you feel encumbered writing it down, at least have some of these issues answered mentally.

  2. Recipe: For those that know all about Chapati, you definitely can tell the difference between a good and bad one. This usually boils down to recipe and of course workmanship. Considering that there are many chapati sellers especially in the key trading or residential areas, having an attractive recipe will guarantee you return clients.

  3. Location: In this business, location is paramount. It is essentially a roadside business whose ultimate goal is to prey on the gullibility of people going about their usual routines. You need to make it as convenient as possible for someone to part with that loose change in order to satisfy their hunger pangs. Common locations for chapati stalls are trading places with shops, restaurants and supermarkets; residential neighbourhoods; public transport stages as well as environs of bars.

    location

    Notice the strategic roadside corner location of this chapati business

  4. Raw Materials: Other than the earlier mentioned equipment, recurrent costs go to cooking oil, Wheat flour, baking powder and any other ingredients of your choice. Most of these are readily available in supermarkets and shops. Just make sure you purchase quality and unadulterated products.

  5. Products: Chapati can be packaged in different ways to form different products. You can offer a plain chapati, Rolex or even a Kikomando (Chapati mixture with beans)

    kikomando

    Kikomando, one of the best selling products

  6. Human Resources: If you do not plan to directly run the business, then you need to hire decent people or a person that will ensure you offer a very tasty product as well as manage customers well. Do not underestimate the kind of person you choose to play this role. They are the face of your business. Structure out a motivating payment structure. As opposed to a fixed salary, a sales oriented approach towards payment is likely to be more enticing.

hr

Some of the factors that attract customers to your chapati stall are;

  • A nice recipe

  • Good public relations / sales language. The way your staff talk to the customers especially ladies who happen to be the biggest customers is key.

  • Smartness. Ensure that you or your staff manning the stall is smart at all times.

  • Endeavour to keep the operating area as clean and free of insects like flies.

How can one invest in the Chapati business

One can venture into this business in different ways. Some of those that I have been able to identify are:

  1. Renting Space. You might be having a shop or premises that are in a strategic location by the roadside. You can simply rent out space to anyone who is interested in setting up a chapati stall and they are in position to pay something commensurate monthly.

  2. Hiring a Location and erecting key infrastructure. As seen earlier, the operating table can take on different designs as well as abilities. Some people have specialised in identifying customer friendly locations, erecting a shelter as well as the required operating table then renting out the facilities to actual chapati sellers for a daily rate. One of those locations I know of earns the landlord UGX 50,000/= daily!!!!!

  3. Acquire all the requisite infrastructure and set up a chapati stall. This would imply running the business in its entirety. It might involve you manning the stall directly or hiring an individual that you pay.

What is the sales outlook like?

The location in which I did the research from was in a Kampala suburb called Kyebando. It is not as busy as many of the suburbs I know. However, the sales figures were quite interesting.

One packet of Wheat Flour weighs 2 Kilogammes and on average produces 20 chapatis. The highest selling stall in that area consumes not less than 24 packets daily. The arrangement used is option two where the actual chapati seller hires infrastructure from someone else. He pays a daily rate of UGX 50,000/=. Considering that each plain chapati costs UGX 500/=, this guy should be earning gross revenues of at least UGX 240,000/=. This is exclusive of extra income that comes from Rolex and Kikomando sales.

Something definitely looks quite appealing. Don’t you think so? If I were to go into this business, I would focus on eventually setting up a chain of outlets using investment model II above.

Welcome to the Chapati business. I wish you the best in your endeavours.

James Wire is a Small Business and Technology Consultant based in Kampala, Uganda

Follow @wirejames on Twitter.

Email lunghabo [at] gmail [dot] com

Other Articles of Interest:

HOW TO – Start a Snacks Business

A Snack is defined as a small portion of food or drink or a light meal, especially one eaten between regular meals (Dictionary.com). Snacks are one of the top selling items in any shop or supermarket in Uganda. Everyone everywhere somehow eats a snack or two daily.

In Uganda, the common snacks are ground nuts (pea nuts), Soya, Mandazi, Chapati, Simsim, Crisps, Chips (french fries), Sumbusa, pan cakes, doughnut, popcorn, gweke (fried maize), cookies among others.

The snack business is characterised by the following;

  • Low entry barriers (can easily be started with few resources)

  • Easily run as a home business

  • Low margins

  • Requires high volume sales

  • Price sensitivity

If you have any remote interest in cooking, then this is one of the most obvious businesses to pursue. Before you start worrying about how to sell the product made, let us scan through the various issues that need to be addressed.

Key Considerations

To set up a snacks business it is crucial that one addresses the listed issues:

  1. Business Plan: Have one, however basic. This plan should be able to guide you on what you plan to produce, how you plan to sell it, anticipated trading volumes, an overview of your operating expenses, targeted sales price among others.

  2. Recipe: Come up with a recipe for the snacks you want to produce. This is very important since you are entering a market that is likely already flooded with similar snacks. It helps if you find a key differentiator. An example, if you chose to go into the Fried Mukene Snacks business today, the edge would be in adding some spices to your recipe that will attract customers to your product.

  3. Raw Materials: You definitely need to acquire raw material which will be processed to form the snacks. This raw material is key in your value chain. Ensure that you set up a steady supply of the raw material to avoid breakdowns in your production cycle. Nothing hurts customers like getting accustomed to your product and then they all of a sudden have to bear with its absence from the market for a week or so. No amount of excuses will win all of them back. You will essentially have gifted them to the competition. If you can stock the raw material to avert such instances, do so.

  4. Production Equipment: You’re going to have to acquire equipment necessary for the production of these snacks. Depending on the snacks in question, the equipment can be as basic as they get. Look around in your local market, talk to people already in similar business to find out where they source their equipment from or at worst, visit the upscale supermarkets and shops that deal in the high end equipment. Your pocket and planned target market is key in determining what kind of equipment you settle for.

    IMG_9700

    Plastic packaging can be sealed with either the electric sealer, flat iron or candle.

  5. Production Location: Where do you plan to make the snacks from? This is dependent on multiple factors among which is your target market, resource availability, production expectations, type of snacks etc. There are snacks that need to be consumed within a short timeframe after production for the best customer experience like chips, rolex (chapati & egg), sumbusa or fried fish. You also have snacks that can be kept for a while and even packed like mandazi, cookies, roasted groundnuts and gweke. The longer lasting snacks can always be processed from any location, packed well and sold in entirely different locations while for the quick to eat snacks, you need to position your production facility near the customer.

  6. Packaging: This has to do with the way you present your product to the customer. You could choose to go it anyway you want but first assess and see how others are doing it. If you’re going to use supermarkets and shops to retail your products, you need to have decent attractive packaging in place.

    IMG_9697

    Compare the two packagings. Which one gives better appeal?

    If you plan to sell by the roadside, then all you need might be old newspapers in which to wrap the snacks. Align your packaging with the target market so that you avoid over or under investing in it. This has a direct impact on your sales performance.

  7. Branding: This is the practice of creating a unique name and image for a product in the consumer’s mind. As you set out to sell your snacks, you need to create an identity for them or else they will get lost in the multitudes of products out there. A customer should be able to know that they are buying your product and not any other. Near my home, there is a Chapati seller who branded his stall as Budaka Boys. As a result, it is very convenient for me to send my 8 year old to buy his chapati. Do not undermine your days of small beginnings. Most big name product brands started small. Work on the branding as you go along with the business since it is likely to significantly complement your other efforts. I have developed three household product brands from first principles today and hence know what it means.

  8. Sales Strategy: By now you should be having an idea about how you plan to sell your product. There are numerous ways snacks are sold and some of them include; roadside sales, door to door hawking, office to office hawking, supplying shops or supermarkets, online (whatsapp, facebook etc) among others. Your choice should be determined by the target market you have in mind, cost of product, packaging and capital investment at your disposal.

  9. Human Resources: Do you need to hire workers? Can you do this work on your own (at least for starters)? Are you able to pay the workers? Do you need workers in the production or sales and marketing areas? Ask yourself leading questions before you make a decision. Alternatively, even when you need workers, maybe starting with family labour could be a better strategy. It’s worth learning from the Indians here.

  10. Money: The snack business in its most basic form does not require lots of money to start. With UGShs 100,000/= (Approx US$ 30) one can kickstart this business. However, as stated earlier, being a low margin business, you will need to target volume sales before making sensible returns. This implies re-investing your proceeds religiously at least for the first six months in order to grow the business operations.

This may not be an exhaustive guide but should give you a good idea of the landscape you should expect to find going into the snacks business. Feel free to contact me for more detailed input.

James Wire is a Small Business and Technology Consultant based in Kampala, Uganda

Follow @wirejames on Twitter.

Email lunghabo [at] gmail [dot] com

Other Articles of Interest:

HOW TO – Start a Home Business

The signs of a struggling economy are allover us. Everywhere you turn, businesses are closing and the new ones that open can hardly last six months. The spending power of Ugandans has greatly reduced thereby affecting many an entrepreneur.

When you take a walk through most of the shopping centres and office buildings in Kampala today, you’re likely to find many closed shops and business premises. The spiralling rent charges under a climate of reduced business are leading many to abandon city operations or if not business altogether.

Despite these grim signs, we Ugandans are known for our entrepreneurial spirit. We always want to have something on the side. Recently, while having lunch with a friend that had just been registered by the Architects body, the first thing he told me was, “I want to register my own Architectural firm now.”

I however want to share with you the idea of doing business from your home. This is a concept many are not aware about or feel inclined not to embrace due to various perceptions. However, if you really want to continue being an entrepreneur under these tough economic times, you need to seriously consider starting a Home Business.

As I understand it, a home business is one that you operate from the confines of your residence. It involves producing your products or offering your services from the confines of your residence only going out to either prospect for customers, deliver a service or make deliveries in the case of products. As someone that has dabbled in home business for eight years now, I can say that it’s worth the inconvenience.

Some of the benefits of a home business include;

  • Lower Business Start-up costs: By operating from your residence, there are a number of shared costs that you can share with the pre-existing dispensation. Electricity, Rent, Water can all be initially utilised from the home bills.

  • Ease of working: For those that are trying to earn an extra buck outside their official jobs, working from home during the evenings and weekends can help them grow their dreams in business.

  • Flexibility: Home business saves you the daily routine morning and evening traffic jams that you mandatorily go through in order to head to a remote work place. This implies that you can start work at convenient times without a hussle. Working mothers would appreciate this more than the men because they usually have to divide their attention between work and the children.

  • Business Validation: By operating from home and avoiding certain overheads, you are able to get time to not only understand the business better but also verify its potential for success. I covered more on this in this article.

How do you go about starting a Home Business?

Passion: First and foremost, identify where your passion lies. Due to the kind of inconvenience a home business is likely to have on your personal life and space, it had better be something you are so passionate about and do not mind doing any time of the day. Short of that, you might back off before maturity due to flimsy reasons not worth noting here.

Skills: Now that you know what you want to do, ensure that you have the requisite skills to see it through. These skills could be acquired by you or hired. I do all my home business with my family. We do not hire external labour at all. However, there might be cases where you need to hire external skills sets. Ensure that you plan well on how to embrace external people in your residence.

Minimum Viable Product/Service: Assess the opportunity you want to pursue and establish what is required at a bare minimum for you to offer a service or product on the market. Even when the product/service is not what you eventually envisage it to be, focus more on getting into the market and letting the market shape your eventual decisions on the product or service. I do package products for supply to supermarkets. Initially we started by packing only 100 gram products, however, due to customers’ demands, we now added packs of 250 and 500 grams.

Market Access: Getting to the market is another crucial consideration while working from home. You need to study your target market and establish the most convenient and cost effective modes of accessing them. Supermarkets are one good avenue for products. I also know of a young man who sells second hand clothes from home. He reaches out to most of his clients on phone and through hawking visits to recreation centres in the evening hours as well as over the weekends. This guarantees him regular sales.

Working Space: Remember you’re operating from your home. For some, you might be having an empty room somewhere that you can put to use. In other cases, this free space is not there and you just have to create the space. I begun the home business while renting a house, so, space was an issue. What I opted for was to have a portion of the sitting room turn into a production area for a limited time and upon completion, it reverted to its original setting. If you came home while we were producing our products, you would think it was a 24 hour factory.

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My then 5 year old son helping with the product display at a tradeshow

Cooperation: For the married or if you’re sharing a residence, you need to win the cooperation of your family members. Do not force some of these activities upon them as they are likely to get very negative about the entire project, eventually working against you to its detriment.

Do I hear you asking, what kind of business you can do from home?

In a series of articles titled Business You can start with less than 100,000/=, I covered a number of possible business opportunities. Reading through will give you a good idea of what to try out.

However, Snacks, Mushroom growing, Decoration, Online Work like Transcription, Software Development among others are some of the easy to start home businesses.

Off you go. Get started and feel free to share your experiences.

James Wire is a Small Business and Technology Consultant based in Kampala, Uganda

Follow @wirejames on Twitter

Other Articles of Interest:

Small Business? Beware of Conmen

“Two Hundred trays of eggs needed per week by a leading hotel in Kampala. Please call 0772345678. Competitive price is expected.”

That was the WhatsApp advert that jolted Tadeo into action. He had been looking for market for his eggs and here was a chance to not only sell his own eggs but also other farmers’ eggs. He quckly called the number listed and proceeded to negotiate for the offer. After some haggling, he was given a go ahead to supply the eggs starting the following week.

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My Local Chicken at home sitting on its eggs

With his little savings, Tadeo embarked upon looking for farmers that could supply him 100 trays consistently, since his capacity met only half of the demand. He committed himself and bought the extra 100 trays in time for the Monday morning supply.

On the D-Day, Tadeo hires a car to take his produce to the client. They meet in the parking lot of a busy hotel in Kampala where the transaction is completed. However, there is a catch, the buyer indicates that as is standard procedure, the hotel only pays 25% of the invoiced amount upon delivery with the balance being cleared on the next supply.

Already convinced that this was the start of a long term relationship with a big client, Tadeo gives in and leaves with the 25% pay. He then proceeds to prepare for the next delivery as promised. A day to the planned second delivery, the contact number of the client is not available and this goes on for the subsequent days. A visit to the hotel in question reveals that there has never been any such employee on their payroll.

Tadeo realised he had been conned !!!!

Starting a business is never something easy. Keeping it running is an even harder task. This is further complicated by the ever increasing complexity of getting customers. When someone poses as a customer for your product or service, you always trip over yourself to ensure that you give them the red carpet treatment. In most cases this involves throwing all caution to the wind. That is what Tadeo did and now is in losses he had never anticipated.

On my part, I’ve had a fair share of such incidents and they continue to-date. Having a product on the Supermarket shelves exposes you so much to these conmen/women. They traverse these shelves picking up contact numbers from products and will call you under the guise of placing a big order. They even try to make the matter so urgent and tend to offer money that is above your expectations.

Other conmen come in form of companies. Uchumi is one such company that conned us suppliers of millions on its way down the drain. Due to their branding, they always gave this impression of “We are too big to fail”. This led many of us SME suppliers to blindly continue supplying well knowing that when they pay, we shall get one fat cheque. The day they closed, I believe some suppliers closed shop.

In essence, while you’re out there struggling so hard to come up with a presentable product or service that can rake you some money, someone else is working so hard to con you of the money you are desperately trying to make. As a result, over the years, I have gained some sixth sense ability that helps me sense conmen (at least the unsophisticated) from afar. These are some of the flags that should always trigger you off;

  • Unprofessional Conduct: For someone that wants to do serious business with you, they had better exude some sense of professionalism. I agree there are those cases where the people you are dealing with are purely unprofessional by nature but with the large undertakings, if the prospective customer is making attempts to do things in a manner that doesn’t augur well with basic business processes and principles that is a flag right there in your face. Why for example should I meet you in a car park to supply a hotel food products? Why should first design for you a website before you can pay me even a commitment fee? Why should I undertake that research you need before we have a contract signed?

  • Rushed Approach: Most conmen will want to rush you into their proposition. A few days back we had someone who called and asked about our fish products. A day later he followed up the call with another and this time he was making an order to a good amount of the product. He then requested that we meet in the city centre at a place he would confirm later. At this point, I detected him as a conman and the next time we received a call, I told him to try sourcing our products from the supermarkets. He’s not called back ever since.

  • Changing of Numbers: Most conmen will use different numbers to call you up. This helps them to try and conceal their identity. Sometimes when you call back, you realise that he/she used a public phone to raise you. Another flag right there.

  • Clarity: Conmen are hardly clear in their communication. They will ask you one thing then later alter their request without any particular reason. Before you know it, when they learn of another product or service that you have, they go ahead to quickly express interest in that one too. That is a flag.

  • Talk Big: These conmen usually talk big. They will paint this picture of you getting a lot of business through their contacts. They will lead you on and depending on your appetite for quick gain, in a matter of hours or days, their plan comes to fruition. Thereafter, they disappear into thin air.

As a small business, take care in your search for the ever elusive customer. Be content with the few you have got so far and do the best you can to keep them on board. The mass numbers will eventually come your way if you lay the right strategies. Overnight success is a preserve of Hollywood movies. The tried and tested approach is one of slow but steady progress.

Watch out for conmen/women.

Follow @wirejames on Twitter

Business you can start with less than UGX 100,000/= (US$ 30) – Part 2

In Part 1 of this Article Series we saw how you can start a food business with less than UGX 100,000/= and the story continues. This time we are looking at Household focused businesses.

Household Related Businesses

There are many household targeted businesses that do not require much financial muscle to start yet at the same time have the potential to become serious cash cows. Some of those I have been able to identify are listed here;

Compound Slashing: This one tends to flourish alot during the rainy seasons as a result of faster growth of grass. You can start by using a simple slasher that will cost you not more than UGX 7,000/= and be guaranteed to rake in at least UGX 3,000/= per customer with more money being earned based on size of compound or area of operation. Affluent neighborhoods tend to be willing to pay more for such services than the less affluent.

Gardening: People especially the ladies love flower gardens in their compounds for beauty. Anyone who has skills in this area and can also offer professional advice on what type of flowers to grow and how to blend them with each other will walk away smiling from face to face. This is a business you can start with brain work and a few implements which can hardly cost you more than UGX 40,000/=. For more expensive equipment, when starting, I advise that you only hire per job thereby pushing the cost to the customer.

Dry Cleaning: Not everyone can afford to take their laundry to the dry cleaner and yet they still need these services. A number of bachelors and spinsters living alone tend to have this problem. They are hardly at home and never want to hire full time maids but would want to have a walk in handy person to do the washing say once a day. Interestingly they tend to pay handsomely since they usually have more disposable income. The capital to start this is your strength and washing skills. Otherwise the customer gives you the basin, water and drying line where to hang the clothes.

Car Washing: Washing bays are becoming too scary for some car owners because lately they are associated with networks of thieves that make copies of car keys and use them to rob the cars after trailing the owner. Unfortunately, for many, they have no choice but to continue using these washing bays. The few that can spare time always wash the cars from their homes. However, if you have the goodwill, identifying a neighborhood of affluent car owners could come in handy for you to start a door to door home based car washing business. Investment required is Sponges, a few brushes, soap and a hose pipe, all costing less than UGX 50,000/=. Water is likely to be provided by the customer.

Garbage Disposal: Before I moved to my own premises, I used to spend UGX 5,000/= per week on garbage disposal. This is a decent sum to whoever offers such services considering that my service provider was a young man that lived in the neighborhood. With just his hands and a hired bicycle, he would collect the rubbish and dispose of it once a week. He definitely didn’t need even more than UGX 20,000/= to start this business.

Home Tutoring: Many parents are busy either looking for money, advancing careers or catching up with various social networks that when it comes to catering for the academic demands of their children at home, they fall short. Children usually have homework or need to revise in order to understand better what they are taught at school. Not many parents have the time nor desire to go through all this. Hence, anyone that can convince them that he/she can fill such a gap will make money comfortably most especially if your results speak for themselves.

Plumbing: Are you a skilled plumber? Take it from me that the mushrooming construction business is a big opportunity for you. Before you complain about not having money to buy equipment, there is an option of renting per job that you do. The most basic of jobs can easily fetch you not less than UGX 50,000/= in income and yet the actual financial investment is much less. I had a job done for me in the bathroom of laying the pipework for a Shower and Sink. The plumber walked away with UGX 120,000/= as professional fees.

Fetching Water: The coverage of piped water services is still wanting in Uganda. Many suburbs of major towns do lack piped water and homes have to resort to fetching water from different water sources. I once lived in such a neighborhood and in a month, I spent not less than UGX 80,000/= paying the man who used a bicycle to fetch the water. My quick guesstimate of that man’s income from only my neighborhood was not less than UGX 400,000/= monthly. You can start off with a second hand bicycle which will cost you not more than UGX 50,000/=. The jerrycans could cost you an additional UGX 20,000/=.

Shopping Services: There is nothing as tiring as having to shop daily from the open market or supermarket. In some cases you are forced to suspend important activities to rush to the market before it gets late in order to ensure that there is food at home. If you position yourself as a Professional Shopper, it is likely that some individuals will take on your services. Another target for such services are the expatriate community. In the cases I have seen, the customer gives you money upfront to go do the shopping. Your investment? Time and Product knowledge.

Dog Training: Dogs are becoming a standard feature in many homes either as mere pets or an addition to the security team. These dogs tend to be of more value to their owners when trained. If you can offer such services, you stand to benefit alot from the elite who tend to have such tastes.

Veterinary Services: Numerous homes tend to have animals as pets or engage in some form of urban agriculture. One of the most common is the Chicken, goat or cow rearing. As someone with Veterinary skills, you simply need to make yourself available to help families whose animals are succumbing to disease and you make clean money. The level of investment required is largely your skills since the customer is always ready to pay for any medicines over and above your professional services.

Do you have any ideas that need to be captured in this Household category?

Let us now review businesses in the General Category as shared in Part 3 of this article.

James Wire is a Small Business and Technology Consultant based in Kampala, Uganda

Follow @wirejames on Twitter

Other Articles of interest:

Business you can start with less than UGX 100,000/= (US$ 30) – Part 1

I am a firm believer in starting business the simplest way possible. While one may have this big vision about where they want to go, a journey of 1000 miles always begins with one step. Most times, we want to start that journey with 100 steps and hence get paralysed at the mere thought of gathering those 100 initial steps.

Recently, while reading through #FridayBusinessUnusualWithDM on Facebook run by my OB Dickson Mushabe, the issue at hand was to do with this person who had lost his job, had only UGX 100,000/= left and wanted to invest in a business without spending on consumption activities. That is when I realised that it was high time I shared on how one can start business with less than UGX 100,000/= (US$ 30).

The assumption in all this is that;

  1. You already have some requisite skills
  2. You are based in Uganda
  3. You are ready to operate below the radar
  4. You don’t despise work
  5. You have been pushed hard enough that you want to make a positive change in your life
  6. You are ready to work with others
  7. Above all, you are tired of talking and ready to act.

It is kind of unbelievable when one tells you that you can start business with such a seemingly measly sum of money which others easily spend on a lunch time outing. The fact is that it is very possible.

After listing down all possible business opportunities, I decided to group them in three categories (and this is to say that my list is not necessarily exhaustive). They are;

  • Food
  • Household
  • General

Due to the detail each category needs, I shall split them into three posts with the first one dealing with Food.

Food

If there is any industry in Uganda that provides you with ready income without so much hustle, it’s this one. The food business is less likely to expose you to the rampant corruption and opportunity politicisation that is faced by most other industries. People need to eat food, you don’t have to bribe them to buy your food nor do they have to know what political party you subscribe to before they can purchase. Some of the business ideas here include;

Snacks: These sell alot. They are needed for home and school consumption. Many parents with school going children always have to buy snacks for the children to take to school daily. Offices need snacks daily for their tea breaks. You could choose to sell directly to the consumers or to retailers like shops and supermarkets. Some of the most popular snacks I always see around are; Chapati, Sumbusa, Mandazi, Cookies, Cakes, Pop  Corn, Daddies, Roasted Groundnuts, Dried fruits like Mangoes, fried Silver Fish (mukene), Crisps among others.

Let us take the example of the Chapati Snack. To start off, all one needs is; A frying pan, A charcoal stove, Charcoal, Cooking Oil, A roller, Baking Flour, Baking Powder and a location. Depending on where you buy them, the frying pan, Charcoal Stove and Roller shouldn’t cost you more than UGX 60,000/= especially if you can settle for second hand equipment. Charcoal worth UGX 2000/=, Cooking oil (half a litre) at UGX 3,500/= , Baking Flour (1Kg) at UGX 7000/= and Baking Powder at UGX 1000/=. Choose a roadside location that has some decent human traffic and you probably pay nothing for it or a daily rental fee of utmost UGX 2,000/= . Rent a small table for UGX 1,500/= a day. Purchase packaging material to last you close to three days for UGX 2,000/=.  So far, you have spent a total of UGX 79,000/=. This should enable you start off from day one and thereafter, the returns from the business are expected to provide the initial cash flow required to re-invest.

This example shows us that going forward from day zero, the operating costs will be centred around Purchasing Cooking Oil, Charcoal, Baking flour, Baking powder, Table and location rental. This implies that you need to raise at least UGX 17,000/= from sales daily to have operational capital. As demand grows, you get an opportunity to sell more by procuring more raw material. I did talk to my favourite Chapati vendor and he confessed that profitability for him comes in after he has used at least 1.5 Kilograms of Baking flour. He has two key demand periods during the day and they are from 6am to 8am in the morning and 5pm to 9pm in the evening. In each of those periods, he uses up at least four (4) kilos of baking flour. Through my own judgement, this gives him revenues in the region of UGX 80,000/= to UGX 150,000/= daily.

Produce: This is one hell of a cash cow that many educated urbanites have never understood well hence leaving it for the others to exploit. The volume of food produce transacted in Uganda on a daily basis is simply massive and the margins usually made by the middle men are outrageous. Every food product you find in the market or supermarket has a supply chain associated with it. It probably emanates from some peasant’s garden, then is amalgamated by a village trader who purchases from the different peasant farmers in order to accumulate substantial volumes that are then sold to a larger trader who transports the produce to urban areas for eventual wholesale to retailers.

Products in this category that are easy to chance upon include; Maize, Millet, Rice, SimSim, Onions, Bananas, Tomatoes, etc. By simply identifying a place to purchase the produce, all one does is to ensure it arrives safely in an urban centre and you will make a decent margin selling to the Shop keepers or directly to consumers.

Take the example of Rice, during its season, one can buy a Kilogram of Milled rice for as low as UGX 1,400/= in the rice growing areas. Simply transporting that rice to an urban area like Kampala would guarantee you a wholesale price of not less than UGX 2,300/=. This gives you a margin of at least 60%. An investment of UGX 80,000/= in rice should yield you not less than 130,000/=. Should you choose to retail the rice like my sister does, the margin gets even much bigger.

I once tried my hands in the Tomato Processing business and this involved me and my wife leaving home at 4am just to ensure that we were at Nakawa Market by 4:30am to buy Tomatoes straight from the farmers who had delivered. At that time of the day, a crate of Tomatoes then cost UGX 40,000/=. However, what intrigued me was that by 6am, the same crate would cost not less than UGX 75,000/=. Come 7pm, no one would be selling in crates anymore, they split up the tomatoes into small basins and as a result, a crate worth would fetch you at least UGX 130,000/=. Studying these trends showed me that one could as well choose to simply work for three hours daily i.e. from 4am to 7am and retire for the day comfortable. With such an idea, all you need is to invest UGX 70,000/= in purchasing tomatoes today from the farmers who deliver and you will be able to multiply your money by at least 40% daily.

Outside Catering: People eat food everyday, in offices, on occasions and everywhere. Many like me do not like leaving office to look for food to eat. However, if the food found us in the office, we wouldn’t mind buying. As a shrewd entrepreneur, you can position yourself as someone who identifies the market, have customers place orders with you and then establish restaurants or food vendors that you deal with to supply. As a ‘retailer’ you negotiate for a preferential rate per plate served, add your markup and offer such a much needed service.

Notice that you do not need to invest in cooking utensils and a heavy workforce that will keep you always on your toes. It’s a Do It Yourself kind of business that will only warrant taking on extra hands as it grows. You don’t even need UGX 50,000/= to embark on this.

To find out about opportunities in the Household sector, continue to Part 2 of this post.

James Wire is a Small Business and Technology Consultant based in Kampala, Uganda

Follow @wirejames on Twitter

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When Money Muzzles the Media. Ezee Money Vs MTN Uganda.

Ugandans have been known as an entrepreneurial lot and over the last five years it was common news seeing Uganda listed among the top entrepreneurial nations in the world. Buoyed by the high unemployment rate and lately the zeal to innovate, many Ugandans are coming up with initiatives that are changing the way we do business.

It is also a known fact that big business tends to prey on small start-up entrepreneurs either by suffocating them into oblivion or ‘stealing’ their ideas. In 2003, a pioneer IT Software Development company, Digital Solutions developed an Airtime Sharing solution that they dubbed Me2U and proceeded to interest MTN Uganda. After some back and forth communication, they got a chance to present the product to MTN and eventually were requested to deploy a laptop on the MTN network in order to test the service for two weeks. After the testing period, MTN expressed lack of interest in this service but turned around later in 2004 to launch a similar service. Digital Solutions dragged MTN to court and battled with the giant until an out of court settlement was made. During all this time, no media house had the guts to publicise the case save for one article I came across written by the Observer Newspaper.

Ten years later, Ezee Money a multi-national company offering mobile financial services to individuals and businesses dragged MTN Uganda to court. For What?

The issues at hand were;

  • Whether MTN breached statutory duties owed to Ezee Money under the Communications Act 2013

  • Whether the exclusivity agreements between MTN and Mobile money agents were lawful

  • Whether MTN committed unlawful torts (A civil wrong which can be redressed by awarding damages) of causing loss by unlawful means and unlawful interference with contractual relations

  • Whether Ezee Money is entitled to the remedies it seeks

This case has been on since 2013 and was eventually decided on the 6th of November 2015 in favour of Ezee Money. This is exactly twelve (12) days ago from the writing of this post. There-in lies the problem I want to tackle.

During the reading of the Judge’s ruling, many media houses were present and their reporters were seen keenly taking notes as expected. However, it surprised me when I learnt that none of the media houses went ahead to report to the public what had transpired. They all kept silent and internet searches that I have done on this case show the absence of any information on this ruling until the 16th of November when Ezee Money paid for advertising space in the New Vision newspaper to make public this information. It is even more disturbing that online media outlets like Chimp Reports, The Investigator, Big Eye among others that have established a brand for fearlessly publishing information took a step back and conveniently ignored this ruling. A quick visit to their websites in a way confirmed to me why they could have decided so.

Why was this a land mark case in Uganda?

mtn_kiosk

MTN Agent Kiosk

  • By ruling that the exclusivity agreements between MTN Uganda and it’s agents infringe Section 53(1)(b) of the Communications Act 2013, hence are illegal, many dealers whose ability to generate additional revenue had been stifled by an unfair dominant partner have been liberated. Imagine having a self funded outlet and you are restricted to dealing in services of only one operator. The over 15,000 MTN Agents and those of other Mobile Telecom companies have been landed an opportunity to diversify their business operations.

  • By further preventing MTN Uganda from inducing any third parties (In this case Yo Uganda) to breach their contract with Ezee Money, the impunity with which large market players have been acting to frustrate new businesses has been arrested. More details on this shall be shared in a subsequent article that will show how MTN Uganda orchestrated the plot to frustrate Ezee Money.

Now to the tough question, why was the media silent about all this?

Apart from a single article that I came across online published by the Daily Monitor, in 2013 when the case was unfolding, nothing much has been served to the public in this regard. I have always heard media practitioners share their experiences about how money rules their industry and that those with deep advertising budgets can always have the leverage to determine what is published about them. When MTN Uganda was fined by the Uganda Communications Commission in March 2015, what was expected to be headline news remained buried in inner pages.

Peter Osborne the former Chief Political commentator of the Telegraph resigned after realising the double standards the newspaper had regarding reporting about some organisations. Articles on HSBC Bank couldn’t be published for fear of losing advertising revenue and in a scathing article, Why I have resigned from the Telegraph he stated, “… HSBC, as one former Telegraph executive told me, is “the advertiser you literally cannot afford to offend.”” Are we in a similar situation already? Are there advertisers that just cant be irked? One of the leading business moguls in the country is known for using his influence to determine what gets reported about him hence helping keep undercover most of the slippery deals he’s involved in.

Jonathan Cook, a British journalist in his article Corporate Media and the Intellectual Cleansing of Journalists, states “We understood, and our profession’s own mythologising encouraged such an understanding, that investigative reporting was the purest form of the journalist’s craft. In many ways it was the ideal. The investigative reporter is the exception in journalism rather than the model. He or she is the loose cannon whose reports can bring the paper great acclaim but only if the reporter is kept on a tight leash. The honour they bring the paper can equally turn disastrous if the wrong subjects are pursued or the story leads in unpredictable directions that threaten powerful interests.” Are there powerful interests that are No-Go for our media today?

Selective coverage of issues pertaining ‘powerful interests‘ is another form of fraud on us the readers. The duty of a media house is to bring the news to its readers, how then can corporate or political interests be placed at the fore? “A free press is essential to a healthy democracy. There is a purpose to journalism, and it is not just to entertain. It is not to pander to political power, big corporations and rich men. Newspapers have what amounts in the end to a constitutional duty to tell their readers the truth.” Says Peter Osborne.

As you read this article, an entrepreneur can’t help but shed tears because they relate with the kind of treachery that has been exposed by the Ezee Money experience with MTN Uganda. MTN isn’t the only culprit in all this. I am sure there exist many similar stories across various sectors of the business landscape in Uganda. Many are not only cheated but also being manipulated into settling for less at the expense of perpetuating a very unhealthy business co-existence with larger industry players. Their only hope would be the media which if it genuinely stood for the truth could have helped expose their circumstances. It takes deep pockets as exhibited by Ezee Money and Digital Solutions to confront a heavyweight player. Pursuing a court case for three years is no mean feat and when faced with the choice of survival and an unending court case, the latter pales in significance.

Whenever they are faced with State inspired muzzling, the media is so quick to remind us about it’s independence and how it’s the Fourth Estate. However, what happens to the same independence when the very media is faced with wads of Dollars in potential advertising revenue?

It’s time to think hard, really hard.

Twitter: @wirejames

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