CRISIS; How the Increasing Prices Of Fuel is affecting Other Businesses

By Moses Oketayot

As of Wednesday 4th May, this publication did a survey in the different fuel pump stations in Kampala, and a litre of diesel was selling between 4900/= to 5300/= while a litre of petrol was going selling between 5150/= to 5,350/=.

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The country has a 30 million litre fuel storage facility in Jinja, and it holds fuel enough to run the country for 4.6 days with a daily consumption of 6.5 million litres. Government is to ensure that the reserves have 12 million litres which is 40% of the total 30 million litres capacity.

With the prices showing no signs of going down in the shortest time possible, and fuel being the driver of all the sectors of the economy, and businesses both big and small are feeling the pinch of the price hikes.

Fred Kataibwa, a motorcyclist at the City Square stage in Kampala says that the ever increasing price of fuel affected his business in a way that he spends a lot of money daily on refilling, and yet customers have no money and pay very little for the routes he rides on, whereby he told our reporter that before the economy was fully opened there were distances that used to go for 5,000/= but now it is at 3,000/= despite the increasing fuel prices.

He says that on a daily he spends 20,000/= up from the 15,000/= before the prices started to shoot up, and he makes between 40,000/= to 45,000/=. To stay afloat in business in these hard economic times, Kataibwa says that he tries his best to make daily savings for the uncertain future.

Matovu Vincent a taxi driver in the old taxi park who operates on the Mutungo Bbiina Kasokoso route says that the price hikes have affected their daily income just like his colleague Fred Kataibwa because they spend a lot on fuel but the passengers have no money and they cannot increase the price because they would lose out.

“We transport each passenger at 2,000/= per head in a 14 seater taxi, and yet we spend 20,000/= for every return trip,” he said. He appealed to the authorities responsible to give them incentives like subsidizing on the price of fuel so that it can be affordable to all involved in the transport business.

Before the prices went up, Matovu said that they would spend 12,000/= for three litres of fuel per route, but currently they spend 15,000/= per route and he refills three to four times a day that means he spends between 50,000/= t0 60,000/= daily currently.

Our reporter also spoke to a bus driver with Baby Coach operating on the Fort Portal-Kasese-Bundibugyo route on grounds of anonymity since he is not the company spokesperson, and he said that before the prices of fuel began to increase, they would spend 800,000/= per trip, but currently they are spending 1,600,000/= double the price before, and yet the passenger fares have remained at between 25,000-40,000/= across all the bus companies plying the same route.

The transporters said that they are voiceless and are at the mercy of government, because every time they try to increase the transport fares, the government threatens them with revoking their licenses and yet when prices of fuel increase, nothing is done to help them.

Servicing of the buses is also very costly according to the transporters in that before brand new bus tyre used to cost 800,000/= but now it is selling at 1,200,00/=, and when you add on the prices of other spare parts, it becomes very expensive to service the buses to remain on the road.

Peter Nabaasa, a wholesaler who deals in beans in downtown Kisenyi, has also not been spared from the ripple effects of the fuel hike in his business. He says that he transports his beans from Kabale, and that before the prices of fuel shot up, he would spend 1,300,000/= on fuel but he has been forced to fork an extra 400,000/= with the current prices of fuel and yet the prices of beans per kilo has stagnated between 2,800-3,000/= depending on the type and quality of the beans,

To keep break-even in the business, Nabaasa said that he has accepted to move with the situation until it stabilizes by reducing the profits so that he remains in business.

When we reached out to the chairperson of Kampala City Traders Association (KACITA)Mr. Tadeo Musoke to paint a picture of how the situation has affected traders under KACITA, this was his response.

“For us as KACITA and other stakeholders, we had to petition the President to see how he can intervene on the issue of fuel which we think can save the economy because some members were using the high fuel prices to increase prices of commodities in their shops.”

Mr Musoke said that the president replied to them and copied in the Ministry of Finance Planning and Economic Development, and instructed them to formulate a committee to see a way of mitigating the problem and find a long lasting solution. He said that they met with the ministry and the Permanent Secretary of the Ministry of Trade and Industry together with other stakeholders including the Uganda Manufacturer’s Association (UMA), and the State House economic monitoring Unit and made recommendations to government on what needs to be done to arrest the situation before it goes out of hand.

Among the recommendations that KACITA  and other stakeholders made to government is for government to expand the capacity of the country’s fuel reserves, and to fast track the rehabilitation and expansion of the railway network as a cheaper alternative of importing fuel into the country. The committee also recommended that the public transport be developed so that the public use more public means that private means of transport which will go a long way in reducing the price of fuel. They also recommended that the cost of fuel marking so that the end user will not incur a lot of cost when buying from the pump.

Mr. Musoke has also advised fuel importers to use the central corridor of Tanzania which is cheaper as compared to the Kenyan route.

He also says that there is need for investigations to find out whether there are some traders who are deliberately hoarding goods to create artificial scarcity to maximize their profits. In a nutshell, he said that the scarcity of fuel has affected every Ugandan. Musoke also said that together with other stakeholders, they have made suggestions to government to allow some traders to import household goods at duty free from within the East African Community bloc to help reduce the prices of the locally produced household goods whose prices have shot up in recent months, but they haven’t yet been given the green light by government

At a personal level, Mr. Musoke said that he deals in electronics appliances whose prices cannot be increased as he added: “Unfortunately what I sell, I cannot increase the price because if I increase the prices, no one will buy. It is not a necessity as such the customer will say let me first think about food for my family. I am selling and trying to survive at a great loss.”

Women entrepreneurs alike have been affected by the fuel crisis in the country and Yvone Mpanga the Director in charge of Programs and Publicity at Uganda Women Entrepreneurs Association Limited (UWEAL) when contacted had this to say on the current situation and its effects on their businesses: “At a time like this when even data rates in Uganda are among the highest in the world and some social media channels still off i.e.  Notably, 1GB is approximately 1USD per day. The increasing costs of fuel have become an impediment to business mobility as the routes/roads virtually as well as a road network logistically has an adverse effect on the bottom line.

Women entrepreneurs therefore; might want to collaborate regionally so that movement of products from one region to another is done jointly if we are to reduce costs of transport.

She conclusively said that there is no indication that the fuel rates will go down anytime soon so coping, collaborating and opting to cut middle men might help.

 

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