Tuesday, September 1, 2015

THE SCENT OF ROSES AND WEALTH CREATION

Last week we arose to news that a company belonging to Kampala businessman Sudhir Ruparelia has been allowed to lease land at Namulonge, part of the National Crops Resource Institute.

Premier Roses intends to utilise the land for growing roses, vegetables, fruits, herbs and spices mainly for the export market.

"The knee jerk reaction to the deal was a throwback to the rabid opposition to the sale of government properties in 1990s. Then like now, the chattering masses prophesised that, nothing good would come from selling the badly tarnished government silver, buyers would strip the companies of their assets and live us holding a worse carcass than we had sold them and finally that we were enriching foreigners at the expense of locals by selling the revenue sapping enterprises...

Almost 20 years down the road the doomsayers are conspicuously silent reminding us they still live among us when they pop up to throw feeble punches for their lost cause.

At the heart of this debate is the question of how best do we drive development given the resources we have and the context in which we find ourselves.

We are a country wealthy beyond measure, and we are not even talking about oil. Our arable soils, benign climate, abundance of animal and plant specii, resourceful people and central location on the content among other attributes means it is a scandal that more than half our population live in abject poverty (forget the low standards our officials use to measure poverty).

We are asset rich but cash poor. We are poor as a country because we have failed to unlock this embarrassment of potential riches.

The formula to unlock this wealth is simple, but not easy, is time tested and replicable.

Through entrepreneurship you manipulate the factors of production – land, capital and labour to generate value recognised by the market and which the market is willing to pay for at a high price than the cost of production. The resulting profit is used, some of it, to pay the entrepreneur and the rest ploughed back into the business.

The reinvested money if employed properly will grow the company and increase its capacity to create more value and the cycle continues.

However the entrepreneur does not operate in a vacuum and he needs a good political environment to do his magic.

"It is interesting how the wealth of nations is determined largely by the imaginary lines that separate one country from the next. Our political boundaries will determine that people in western Uganda live a better life than their neighbours in eastern Congo or northern Ugandans compared to south Sudanese....

 Governments thanks to the incentives that drive them – entrenching themselves in power through spreading patronage, are terrible at business, but they can help the private sector unlock wealth through maintaining law and order and enacting progressive policies.

Which brings us full circle to the case of the Namulonge land.

"The land in question is largely unused or severely underutilised. It’s creating no jobs or new knowledge as was intended. The government is hoarding it, depriving Ugandans of the economic output that would result from it if properly utilised...

Sudhir’s company comes along offering to put it to use and even willing to pay for it. The only concern would be were it not put to use, which is unlikely as every businessman needs to make a return on his investment, his very survival depends on it.

We are within our rights to ask that proper procedure in allocating the land was followed. We are within our rights to insist that the land is put to productive use. We are even within our rights to reject the application altogether.


That last option however would be counterproductive even destructive. It would send out the signal that reason does not prevail in Uganda either out of jealousy or malice. But worse still it would discourage entrepreneurship and by extension the betterment of our collective lot.