Kampala. The number of companies winding up continues to rise, according to Uganda Registration Services Bureau (URSB).
Speaking during the Insolvency Conference Programme in Kampala early this week, Mr Mustapher Ntale, the URSB manager liquidation, said: “I do not have the exact figures but I can tell you the number is increasing. We have fewer cases of companies winding up because of insolvency while majority of liquidations are voluntary. I have received very many people saying the deal they expected did not work out or the idea they had did not work out.”
However, he did not provide data on how many companies have closed.
Insolvency is the inability for a company to pay its debts as and when they are due.
Mr Ntale said pressure from Uganda Revenue Authority (URA), among other factors, has been one of the triggers for increased closures.
“URA is causing an impact on dormant companies because if you have ever paid tax, URA keeps sending notices to pay tax. So when someone comes to us, we tell them to formerly close it and give a certification so URA stops the notices,” Mr Ntale said.
The closures cut across all sectors but Mr Ntale said it has been more pronounced in the retail stores sector with the closure of large retailers such as Uchumi and Nakumatt.
Meanwhile, the number of people who applied for individual bankruptcy grew from one in 2017 to three in 2018, according to URSB statistics.
Filing for individual bankruptcy is still rare because of the stigma associated with it.
Mr Gideon Badagawa, the Private Sector Foundation Uganda executive director, said companies are not just faced with high costs of doing business but are having internal challenges.
“The problem with the private sector is that everyone wants to do business regardless of whether they are able or ready. Not anyone can make money, it will be made by the organised,” he said, noting that issues such as interest rates and poor financial projections have been a major factor that have distorted business.
Uganda has slipped further in the Ease of Doing Business report by the World Bank, dropping to 127 out of 190 countries on indices such as access to credit, starting a business, paying taxes, cross-border trade or connect electricity.
Mr Badagawa attributed last year’s performance at 122 out of 190 countries to improvement in payment of taxes, business startup because of the One-Stop centre and credit access. However, he pointed out difficulties in electricity connectivity and insolvency processes.