Rising costs squeeze working capital for Kampala’s small firms

KAMPALA – Small business owners in Kampala say rising operating costs and slower cash-flow cycles are eating into the working capital they need to pay suppliers, meet payroll and keep trading.

The pressures dominated a meeting between entrepreneurs and dfcu Bank executives at the lender’s Ndeeba branch on 27 September, part of the bank’s Kyusa Level SME Customer Dine-Out series. According to the bank, owners spoke about managing liquidity as expenses climb, coping with stiffer competition and shifting customer behaviour, and finding financing that keeps pace with their operations.

William Kayongo, dfcu’s head of enterprise banking, said the squeeze left little room for loose financial management.

“Growth is important, but sustainable growth requires discipline,” Kayongo said. “Businesses need to manage their cash flows carefully, protect their productive assets and plan for risks that can interrupt operations.”

He warned that owners who mix household and business money weaken their own cash position. He said unexpected personal expenses paid from the business can divert funds meant for suppliers, payroll and day-to-day running costs.

Arthur Kintu, who heads the bank’s bancassurance unit, which sells insurance through dfcu branches, said an uninsured loss could wipe out the assets a business relies on to generate income.

“For many business owners, their assets represent years of investment and are central to their income generation,” Kintu said. “Protecting those assets should form part of the core business plan, not something considered only after an unexpected event occurs.”

Mathias Jumba, head of integrated channels, said pressures differ with the stage a business has reached. He said a start-up’s needs are not those of an expanding enterprise.

Rebecca Birungi, the bank’s chief financial officer, said the lender would use what customers told it to shape its products and services as businesses adjust to changing market conditions.

“The most valuable business insights often come directly from customers,” she said.