Business confidence rises as political risk weighs in
Apr 21, 2010
STABLE inflation and a robust financial sector has heightened business leaders’ confidence in Uganda’s economy during the first quarter of the year despite citing political instability as a major risk, a new poll has shown.
By Sylvia Juuko
Uganda’s economy is projected to grow by 6.2%
STABLE inflation and a robust financial sector has heightened business leaders’ confidence in Uganda’s economy during the first quarter of the year despite citing political instability as a major risk, a new poll has shown.
The latest Uganda business leaders’ confidence index by market research firm, Synovate, shows that confidence surged to 66.3% in February.
Confidence had plunged to a low of 47.9% in July last year when the effects of the global economic downturn were at its worst.
“Over half of the chief executive officers (CEOs) surveyed are optimistic about the performance of the economy in six months to come,†said Virginia Nkwanzi, the Synovate Uganda country manager, while presenting the results recently.
The index is a survey that collects information regarding business leaders’ perception towards the economy and is also conducted in Kenya, Tanzania and Ghana.
Uganda’s economy has been projected to grow by 6.2% this financial year and expected to expand to over 7% in the coming financial year.
Over 100 CEOs and directors of leading companies were targeted under the study that was held between February 1 and March 15.
Most business leaders are looking towards introduction of new products and services, cost cutting expansion in regional markets as the major drivers for growth in the next 12 months.
Nkwanzi notes that because of the global financial crisis, cost cutting was top on the list of strategies that business leaders focused on as a growth strategy.
Rwanda emerged the most favoured destination for expansion at 47%, owing to the improved business environment that has seen the country win accolades.
Other countries favoured for regional expansion included Burundi (35%), DRC (18%), Southern Sudan (12%), Tanzania (12%) Kenya (12%), Zanzibar (6%) and Mozambique also at (6%).
The quest for business expansion comes at a time when the East African Community’s common market’s protocol takes effect July 1, paving way for the free movement of labour, goods and services in the region with a total population of over 120 million.
The survey shows that the level of optimism was highest in the financial services (73.3%). Others include ICT/media/telecommunications (66.3%), services (63.5%), manufacturing (61.8%) hotel and tourism sector (61.1%) and agriculture (60.0%).
The findings show that the majority of the CEOs indicated competition and political instability as the major business risks.
“We have elections coming up next year, which affects optimism of business leaders, although there may not be any problems,†Nkwanzi noted.
Other risks included road and communication infrastructure, cheap imports, corruption, natural disasters, terrorism, lack of regulation and illicit trade.
The financial sector has witnessed expansion, which has, in turn, intensified competition as banks try to lure customers through new products and services.
The sector has also been characterised by an increase in service providers, introduction of new services, mergers and buyouts.
Increased competition has also been registered in the telecommunications sector that has now moved the battle to pricing and expansion into mobile money transfer services.
This explains why business leaders considered competition as the main risk to their businesses.
Regionally, Kenya’s business leaders had the highest level of optimism at 68.6%, followed by Ghana’s at 68.3%.
Tanzania’s business leaders’ confidence was reported at 60.7%.
Uganda’s economy is projected to grow by 6.2%
STABLE inflation and a robust financial sector has heightened business leaders’ confidence in Uganda’s economy during the first quarter of the year despite citing political instability as a major risk, a new poll has shown.
The latest Uganda business leaders’ confidence index by market research firm, Synovate, shows that confidence surged to 66.3% in February.
Confidence had plunged to a low of 47.9% in July last year when the effects of the global economic downturn were at its worst.
“Over half of the chief executive officers (CEOs) surveyed are optimistic about the performance of the economy in six months to come,†said Virginia Nkwanzi, the Synovate Uganda country manager, while presenting the results recently.
The index is a survey that collects information regarding business leaders’ perception towards the economy and is also conducted in Kenya, Tanzania and Ghana.
Uganda’s economy has been projected to grow by 6.2% this financial year and expected to expand to over 7% in the coming financial year.
Over 100 CEOs and directors of leading companies were targeted under the study that was held between February 1 and March 15.
Most business leaders are looking towards introduction of new products and services, cost cutting expansion in regional markets as the major drivers for growth in the next 12 months.
Nkwanzi notes that because of the global financial crisis, cost cutting was top on the list of strategies that business leaders focused on as a growth strategy.
Rwanda emerged the most favoured destination for expansion at 47%, owing to the improved business environment that has seen the country win accolades.
Other countries favoured for regional expansion included Burundi (35%), DRC (18%), Southern Sudan (12%), Tanzania (12%) Kenya (12%), Zanzibar (6%) and Mozambique also at (6%).
The quest for business expansion comes at a time when the East African Community’s common market’s protocol takes effect July 1, paving way for the free movement of labour, goods and services in the region with a total population of over 120 million.
The survey shows that the level of optimism was highest in the financial services (73.3%). Others include ICT/media/telecommunications (66.3%), services (63.5%), manufacturing (61.8%) hotel and tourism sector (61.1%) and agriculture (60.0%).
The findings show that the majority of the CEOs indicated competition and political instability as the major business risks.
“We have elections coming up next year, which affects optimism of business leaders, although there may not be any problems,†Nkwanzi noted.
Other risks included road and communication infrastructure, cheap imports, corruption, natural disasters, terrorism, lack of regulation and illicit trade.
The financial sector has witnessed expansion, which has, in turn, intensified competition as banks try to lure customers through new products and services.
The sector has also been characterised by an increase in service providers, introduction of new services, mergers and buyouts.
Increased competition has also been registered in the telecommunications sector that has now moved the battle to pricing and expansion into mobile money transfer services.
This explains why business leaders considered competition as the main risk to their businesses.
Regionally, Kenya’s business leaders had the highest level of optimism at 68.6%, followed by Ghana’s at 68.3%.
Tanzania’s business leaders’ confidence was reported at 60.7%.