5 Risks of Poor Money Business Choices and Decisions From SACCO and VSLA Income in Uganda

5 Risks of Poor Money Business Choices and Decisions from SACCO and VSLA Income in Uganda

Many people in Uganda are seriously engaged or willing to engage in business activities or any other activities that earn profits, either digital services or physical commodities.

But why are failure and difficulty always met? It's because of decisions we make without our knowledge of how harmful they may impact our growth.

One of the important parts is consideration of the choice of business to engage in, because not all investments are safe. Some appear profitable but carry serious financial, legal, or operational risks which discourage individuals. Let’s discover some poor business choices in Uganda, the risks involved, and how to avoid them if you consider taking up such businesses.

1. Fresh Fish Sales in Up-country Areas

Fresh fish sales can be a very profitable business but also very risky depending on how and where you source it from. Taking a known perspective, this business is very hard in Ugandan villages, especially in hot climate places such as Kotido and Moroto. Also, unstable electricity supply and high preservation costs worsen the situation. Maintaining freshness is difficult, and losses are common despite using ice or insulated containers.

Risk level: High

Best suited for: Experienced traders with cold storage solutions

2. Resale of Smartphones and Electronic Devices

This business faces legal risks more often due to the possibility of unknowingly trading stolen devices from young criminal gangs who intentionally sell stolen phones. Law enforcement investigations may lead to arrest and confiscation of goods without compensation. Such interruptions can damage business reputation and cause financial losses, even without committing any offence, yet you pay the consequences. Such a situation happened to one of the biggest phone sellers in Amuria called Eden Electronic Centre, owned by Chishne AJ. The total charges mounted on him cost UGX 7,000,000.

Risk level: High

Best suited for: Registered businesses sourcing from authorized suppliers

3. Second-hand Clothing Business

This is one of the most popular businesses in Uganda. Most times, it is affected by changing fashion trends and increasing levels of income, meaning customers prefer purchasing new clothes. The worst part is that some already packed bales may not contain clothes worth the value of money traders pay for. For example, you may purchase a bale at UGX 700,000 and end up finding only handkerchiefs inside, which when sold cannot raise that amount. Although demand still exists in some rural areas, poor durability often reduces repeat customers.

Risk level: Medium to High

Best suited for: Traders with strong supplier networks

4. Forex Trading

Forex trading is now a very popular culture among the youth but has most times weakened the financial positions of many because it carries very high risk due to market volatility. Most youth have limited financial knowledge and exposure to unregulated brokers.

Many youth get motivated to trade their capital without proper training or risk management, and some, especially the less informed, suffer the most.

Forex trading in Uganda can be viewed in two ways, requiring clear choices to be made. The lowest startup capital is about $100, which is UGX 350,000 to UGX 360,000 depending on exchange rates. The amount used monthly is directly proportional to higher startup capital in Uganda’s economy.

This implies it is better for a young Ugandan to invest in low-risk businesses with clear returns such as poultry, piggery, or small restaurants rather than taking high risks. After expanding and generating profit, then one can consider other options.

Risk level: Very High

Best suited for: Trained individuals using regulated platforms

5. Gambling and Sports Betting

Gambling is often viewed as a quick income source but has a very high probability of losing income and causing addiction. It mostly does not provide sustainable income and can worsen income-related problems.

Gambling is sometimes complex, although it gives millions to one lucky winner out of thousands. I have a clear testimony of my neighbour who won UGX 29,000,000 from sports betting in 2020 during lockdown periods. In less than 7 months, he was only left with the clothes he purchased and no income. These stories are not isolated; each individual can witness such happenings. I think this money has no foundation or clear plan for someone who lacks basic money-handling skills.

Risk level: Extremely High

Recommendation: Not advised as an investment

Conclusion

Lack of basic knowledge of money, business choices, and decision-making can affect your specific business. Always carefully plan, meet legal demands, and properly manage your chosen business. Remember to focus on education, diversification, and long-term sustainable businesses with reduced risk and higher outcomes, such as poultry, piggery, retail sales, and others.