Political factors always determine the extent to which government my influence the

economy. Policies developed by government determine the initiatives that will be

introduced which either favour certain sections of the economy or may be against them.
These can be through trade regulations or taxation and include; employment laws,
consumer protection laws, environmental regulations, trade restrictions or reforms, health
and safety requirements.

A stable political environment is known to create a favourable environment for different

categories of businesses while an unstable political environment always creates uncertainty
in the business environment. This will either attract investor or alienate them. Times of
Amin where investors where chased away and the stable environment that has occurred
since 1986. This has attracted investors again. it builds confidence in existing and potential
investors. Without confidence that a business will grow based on a government’s political
status, investors and business persons will shun off. The northern Uganda had been ignored
by investors because of the LRA rebels where by nobody was willing to do any business
there. Today, the region is starting to flourish for example Gulu has greatly developed and
businesses are thriving because for the currently stability there.

Political groups can also influence the government to allow for establishment of certain
businesses or cripple them. Before establishing or when running a business, it is important
to consider the role of politics. This will enable you to employ necessary strategies to
cushion your business from political influences. For example music promoters who used to
work with Bobi wine always counted losses for all his cancelled shows because of his
involvement in politics while those who are pro government like Balaam and Bebe cool
have enjoyed a smooth ride.

Government trade policies. These impact and determine the success of any business in the
country. Where government allows free trade, businesses easily grow however where the
policies are restrictive, businesses will not flourish. Reforms such as trade liberalization,
privatization over the last decades have attracted investment hence contributing to
economic growth.

Diplomatic events within the country and region greatly affect the existence of businesses
within the country. The East African community has greatly led to the establishment and
growth of different businesses as a result of availability of market arising out of free
movement of goods and services. Further to this, cooperation between member states have
been a contributing factor in the flourishment of these businesses. Rwanda had closed its
border with Uganda and businesses around katuna were greatly affect. Since its reopening,
business is slowly returning to normalcy.

Government legislation creates rules and regulations that promote specific businesses while
stifling others. It can prevent specific business for special reasons or consumer interests.
For example, the government of Uganda Prohibits and/or Restricts Importation of among
others used motor vehicles that are over 15years, Used computers and appliances and
Imports which are also banned under international agreements to which Uganda is
signatory. They normally tend to put a heavy penalties or tax on these items. Uganda
Revenue Authority imposes an environmental levy on vehicles over eight years old, and
the Ugandan government has banned the importation of used computers and used
refrigerators. Therefore as a business person or a potential entrepreneur, it is critical to
consider these factors before and when running a business. It helps one to make an
informed decision.

Economic factors. These basically lie under; interest rates, exchange rates, taxes and
inflation.

Interest rates mainly affect business that rely on loans/ borrowed capital to operate their
businesses. High interest rates are a deterrent to business people who may want to take out
loans to fund their business as the cost of loans would be so high while in instances where
the interest rates are low, business people can easily take out loans since the cost of the
loan will be low.

Exchange rates. Over time, we have seen the Uganda shilling becoming weaker against the
US dollar. People who carry out businesses in foreign currencies get affected in such a
way that one would need more shillings to buy a similar product from abroad. If the cost of
a shoe was USD100 which was equivalent to UGX350,000 when the exchange rate was
3500 has become more expensive in that one would now need to have 375,000 to import
the same shoe since the dollar is now 3750 hence making the cost of doing business high or
even leading to high prices which people may not afford. This leads to pushing some
people out of business either by not being able to import things or by failing to sell stock
which would have become more expensive.

Taxes. Taxes always have a great impact on businesses in Uganda. Taxes such as company
tax, capital gains tax, corporation tax, and value added tax, local hotel tax for hotels,
excise, import and customs duties levied on businesses in Uganda. Businesses that are
taxed end to have their capital and cash flows affected hence reducing on the amount of
investment one would have made. On the other hand, some businesses especially foreign
investors are always favored in that they are given tax holidays and at times subsidies. This
improves on their investment muscle hence they are able to set up businesses easily in
Uganda than their counter parts who are heavily taxed.

Social cultural factors.

Social factors generally tend to do societal forces. These could be from colleagues, family,
neighbors and friends. These affect attitudes, opinions and interests which in the end affect
product sales and services of businesses plus revenues earned.

Where individuals spend time with friends socializing in events such as parties, watching
games, movies and many others, money is spent on items such as drinks, and snacks. This
may be a different case in situations where individuals do not hang out. Uganda being a
country of people who love hanging out has created very many hang out places hence
growing different trades such as alcohol in bars, barbeques and many others.

Religions have had a great impact on businesses where by different religions have different
norms and beliefs for example Muslims who don’t eat pork. In areas that are dominated by
Muslims, you will find very few pork joints while in areas that are dominated by Christians
while have very many pork joints hence the pork business will flourish where Christians
exist than areas where Muslims exist. In periods of fasting, Christians tend not to eat things
such as meat hence affecting the meat business.

Cultural factors. Areas with cultural sites and centers have benefitted the government as
these have attracted tourists. In the process, the tourism business is boosted plus the
surrounding businesses that may be selling other items. This is so because as tourists visit,
they also end up being attracted to the other things that may be available. This is the
reverse for areas without cultural sites.
Technological factors. These influence the country’s through provision of effective and
timely information. New technologies and innovations tend to create new businesses and at
the same time improve on the effectiveness and efficiency of existing businesses. The
banking sector is one of the sectors that have greatly embraced technology and this is
evidenced from how they carry out their operations where by most of the activities have
now been automated. Individuals can easily carry out a number of transactions from the
comfort of their homes or on the go. Where technology is embraced, the ease at which
business is done I increased as opposed to places where it is not embraced.

There is a great rise in the number of entrepreneurs arising out of ICT for example
transport services like Uber, taxify, safe boda. All these run on technology and have eased
the way people can access transport services. Ecommerce has been greatly adopted for
example jumia that is an ecommerce bringing together various online sellers and
connecting them to customers. This is all courtesy of technology. Today, business meetings
are held online, the internet has become a place where people from different parts of the
world connect and talk to each other, carry out trade hence facilitating businesses. One can
order an item while in Uganda, sends money using his bank and his items get delivered.