Businesses cautioned against offering politicians credit services

Business owners have been told to desist from extending services to political candidates on credit during this political season as they may fail to pay.

The caution was sounded by the Enterprise Uganda executive director Charles Ocici, on the sidelines of the Global Entrepreneurship week.

According to Ocici, businesses should ensure that political candidates make at least 98% payment for the services they want offered before entrepreneurs get the job done. This, he said, will help safeguard their businesses from the collapse that may arise from cash flow constraints.

"Whatever business deals you are getting from political candidates such as supplying them campaign materials and other consumables needed in these campaigns, ensure that you are paid before you make a commitment to deliver. Know that every electoral post has more than one contestant and you never know who will win.

"But even when the one you supplied wins, he will be indebted at the end of the campaign period and he might not be able to pay you on time; he might keep your money for another year or even longer," Ocici said.

Relatedly, Ocici also cautioned businesses against undertaking long-term asset investments during this season and keep all resources to delivering immediate solutions, as investing in long-term assets could get enterprises into liquidity constraints.

"Do not invest in expanding a factory by putting another line of production or any other asset investment; delay all those capital investments until after January," he said.

He, however, noted that if a business has adequate liquidity and has been waiting for an opportunity to acquire assets to support business growth, this is the right time, as people will soon be disposing of quality assets such as land, houses and vehicles, among others, cheaply.

The Global Entrepreneurship Week (GEW) is held annually across the globe to recognize, appreciate, celebrate and award those entrepreneurs who have endeavoured to deliver solutions to the world amidst very tough conditions and limited resources, among others.

Adapt

Like the GWE year's theme of "Adapt and Adopt", Ocici also urged Ugandan businesses to adapt to the current environment, which has been slowed by the COVID-19 pandemic, so as to survive and thrive in the current volatile environment.

"Know that the environment and circumstances have changed and you cannot force customers to come your way; you have to find a way where you can adapt and be able to meet with the customer at their current circumstances.

"Customers purchasing power has been drastically affected either because of loss of a job, lack of cash or even for those whose income has not yet majorly changed but now have many other obligations than before. This calls for reconfiguring your strategy and cutting redundancy and wastage to reduce overhead costs which could be passed to the final consumer in form of high price," he said.

About adopting, Ocici urged entrepreneurs to pick lessons from other players in the field on how to overcome challenges and thrive.

"Whatever circumstances you are going through, know that you are not the only one; there are other people in the same territory, sector or even a different sector that you can borrow a leaf from and learn how to adopt some of the practices that have enabled them to go through this wave and survive it with much stability as possible," Ocici said.

He added: "You need to have the inclination, commitment and the desire to learn from your neighbours, peers and competitors but also ensure that whatever you learn, you implement it immediately."

The Ernst and Young's senior partner for Europe, the Middle East, India, and Africa, Falco Weidemeyer, also alluded to the need for businesses to adapt operations by thinking about how to re-engage with their workforce and how to fix broken supply chains.

Additionally, he said businesses need to think about how to achieve a lower and more agile cost base and how to reduce operational risks and ensure customer access.

Weidemeyer, however, said that as businesses decide on these priorities, they will also need to think about what comes after, as changes in the global economy, technology adoption, societal norms and consumer behaviour will shape the future.