Investment Decisions to Consider as Uganda’s Economy Recovers
Africa Investment Opinions

Investment Decisions to Consider as Uganda’s Economy Recovers

By: Michael Ssekyondwa, Head of Retail Banking, KCB Uganda

The economy was undeniably impacted due to the COVID-19 pandemic, with many businesses closing, others struggling to stay afloat and some continually doing their best to innovate in order to recover from the heavy financial burden experienced in the year 2020.

With the stock markets depreciating, interest rates on returns on investment dipping and investment assets frozen or stifled; 2020 was a time of reckoning, rethinking and re-strategizing for individuals passionate about growing personal wealth and driving towards financial security.

However, according to projections from economists, the economy is slowly recovering with a number of sectors opening up for business and normalcy starting to recuperate, giving a glimmer of hope.

Financial investment is an essential venture for personal growth, economic security and the creation of wealth. Though slow, the economy is reported to be growing at a rate of 3% according to the Bank of Uganda Monetary Policy Statement of December 2020, as individuals and businesses increase economic activity since the easing of lockdown late last year.

This presents an opportunity for all of us to make conscious life-changing investment decisions to cushion ourselves from further effects of uncertain times as these. Below are quick tips to set you on the right trajectory ceteris-paribus (all factors constant); 

Diversify Your Investment Options

It has been said in many forums that real estate (land and housing) is the safest mode of investment. While true, this comes with an extended return on investment period.

To avert this, a wide range of investments in different classes of assets is a critical investment tactic in terms of averting risk and accumulating diverse returns overtime.

The unprecedented financial times that many businesses are recovering from is an insight into the need to consider having more than one source of investment.

Bible scholars will tell you that in Ecclesiastes 11:2, the good book says; “Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.”

In this way, when uncertain times like COVID-19 presented, if 5 out of 8 of your businesses are affected, you still have 3 that could preserve you and your family through hard times.

Long term Ventures

Long-term investment as opposed to short-term investment, provides the potential for compounding and amassing wealth overtime.

In as much as the short-term investment may not be as costly or delayed in terms of return, the cost is riskier therefore investors and those intending to invest should consider injecting their monies into projects like bonds, treasuries or money markets that overtime provides multiplied, compounded, and to great extent guaranteed income.

Real estate will also fall in this category and will provide for both immediate securities should you need liquidity or frequent and recurrent revenue; in the case of a commercial or residential building, it would be monthly rent from tenants.

Fixed Income Investment

Fixed income investing is a viable avenue that not only provides investors with fixed income as a return on investment (ROI) at regular and consistent intervals but is also a very safe tactic in terms of capital preservation (money invested doesn’t lose value over time).

Because of the recurrent payments as ROI that is resultant of investing in assets like bonds, treasuries or money markets, you are rest assured of an additional source of income especially where the assets perform well.

Fixed-income investment also enables an investor avoid having to deal with the market’s unpredictability and the uncertainty that comes with it.

Payback Period

When planning or intending to make an investment decision, it is important to put the payback period into consideration.

How long will it take for your business to score returns? You don’t want to invest and wait for an unplanned and prolonged period before you realize any returns on investment.

Therefore, whatever an investor injects their money into should have a relative payback period. Investors should put emphasis on calculating how much has been invested and how much time it will take for the returns to be registered before fully investing in a business or project.

If you invest your money rightly today, the chances that it will increase are inevitable, thus enabling you to live comfortably through retirement or achieve financial goals like starting a business, building a house, buying a car, or taking children through school.

Group Investments

Money is scarce and no one individual on his own can meet all his financial and investment goals if he or she is to turn around ventures quickly.

With the right team and people on board, Group investments are a gold mine because they raise capital in a short period of time, they spread and minimize risk among the group members and have a resource-rich composition.

Today, investment clubs or groups have people from all walks and levels of life; accountants, tax consultants, lawyers, doctors, carpenters, businessmen, marketing and comms professionals, engineers, grocery shop owners, foresters, logistics, barbers among many others.

With such internal club wealth in human capital, this diversity will spur the group in ways unknown and they will support each other on a diverse number of projects and at different levels.

Groups however require rules and regulations as well as rules of engagement that clearly define roles and responsibilities to ensure consistent and unwavering involvement of members.


According to the World Bank, about 89 percent of household heads are employed in the informal sector in Uganda; so social insurance provided through traditional employment contracts is not a reality for most Ugandans.

And yet, even for the elite community, the uptake of insurance is still low. There are different forms of insurance most common being Health, Life, General, and Third Party.

As investors, we need to get in the habit of insuring our lives, families, businesses, and property as a way to minimize risk and cushion ourselves from major losses arising out of unforeseen circumstances.

An Intentional Saving Lifestyle

Finally, it is recommended that while you invest, you should keep saving. It is no secret that in many ways, a situation may arise that will require immediate cash and yet all your money is ‘stuck’ in investments that may not have reached maturity to provide very short or medium-term returns or liquidity.

Therefore, making an intentional provision for saving a percentage of your income will go a long way in helping you meet important and abrupt financial obligations arising from unplanned sickness, loss of a loved one, property destruction, or accidents like the outbreak of a disruptive global pandemic.