Thursday, May 26, 2016

SON OF THE SOIL RETURNS WITH OPTIMISM

Dominic Barton, boss of global management consulting firm McKinsey & Company is tickled pink by his new Ugandan passport.

A Canadian citizen, who calls London his primary home, was born in Uganda in 1962 in Mukono, where his father was visiting lecturer at the Bishop Tucker Theological College, which is now a part of Uganda Christian University.

A visit to Mukono on the weekend, to among other things see the place where he was raised – he left Uganda 1969, was not dampened by his failure to find the actual building, “I couldn’t find my house, the place has changed, it is all built up now.”

Nevertheless he was glad to be back and he had some thoughts in the issues that the continent in general and Uganda can look forward to or guard against.

"Off the top of his head, the opportunities for future progress will revolve around our young population, natural endowments and how we embrace technology but warns there has to be a sense of urgency among bureaucrats to keep the momentum going...

 “I am bullish on Africa. It still the second fastest growing region only south east Asia is growing at a faster arte… when you disaggregate take out north Africa and all that’s going on there, and the effects of oil you see 13 economies growing very quickly, faster than before and Uganda is one of them, “ said Barton, who is also the chairman of US President Barak Obama’s African policy think-tank.

The Arab spring that kicked off in Tunisia at the end of 2011 has dampened growth in North Africa, where Libya and Egypt have also been affected. Oil prices fell to record lows in February cratering at $26 a barrel from highs of $140 a few years ago, a development has affected oil producers like Nigeria and Angola aversely.

In Uganda on his way from the World Economic Forum, which was held in Rwanda last week, Barton – who was last in Uganda in 1991 said he sees progress and senses a willingness to keep it going.

“I think the opportunities are in the consumer goods area, this is a young urbanising population, whenever you have a young urbanising population it creates growth,” he said, adding however that these youth will need jobs and the infrastructure to get their wares to market.

Barton thinks a determined push into agribusiness is what Uganda should be looking at in the short to medium term.

He says in the next ten to fifteen years more than 2 billion people will be joining the middle class, especially in south east asia, generating a huge demand for resources particularly food.

“Uganda is a bread basket. To me the model should be like Kansas, Illinois and Minnesota, which have some of the largest food companies in the world, they create great jobs, they don’t just export, they are packaging it, processing it and adding value to it,” he said.

The three states are situated in in the middle in the US and are big producers of wheat, soy beans and livestock.

And finally he thinks technology will draw more people into the formal economy.

“One of the wonderful things about technology is that people can participate, people will come to them. One of the things that Ali Baba and Ten cent has done in China it has connected small businesses all over China allowing them to be able to participate,” Barton said.

He also points out that it allows for education in new and interesting way and to maximise the use of available resources

Challenges abound of course.

He says infrastructure is a challenge pointing to the hours he spent in traffic to and from Mukono.

"But he is optimistic that the work that is being done in integrating the region’s infrastructure is good, creating a bigger market and easing movement around the region will pay out huge economic dividends....

“The second is education for employment, is what we should be pushing, not education for education’s sake…. Skills imparted in short bursts but targeted at getting kids employed,” Barton said.

And finally something else to watch for that could jettison all the good work of the last decade or so?

“Volatility. Making sure things stay stable. One of the reasons Africa has come back the way it has because it has been relatively more stable over the last 10 years. The challenge is to ensure that stays. We assess countries not only for growth but for stability.”

Barton says that the lack of inclusive growth is a phenomenon all around the world but one everyone has to face up to, he thinks the solution is education.

“But it has got to be practical education … we have to ask what is it that employers are going to need, what are the jobs that are coming and how do we train people for them? We don’t need to spend four years we can train in six weeks. Do these sprints of knowledge.”

McKinsey has some experience with that. In Kenya they have a program called generation where they take poor children, train them up for jobs in four to six weeks and afterwards all of them have got jobs and six out of ten have two job offers. They started with training sales forces for financial, retail and health services.

“A lot of companies that want to hire people but the skills are not available this program should address a lot of that gap,” he said.

“Government policy also helps. Setting priorities. Take sectors and look at how we can build domestic businesses, what FDI do we need, what education do we need … we have seen this in Malaysia and Columbia,”

"He point to tourism as a possible sector but wonders whether we are doing the right things to attract visitors and sustain the sector...

Delivery is the key. Just get it done. How do you get it done? Governments need to move at a much higher metabolic rate. Speed is important. We need a sense of urgency,” Barton urges.



Wednesday, May 25, 2016

WILL THE MUSANA CART BRING THE ROLEX TO THE WORLD?

Almost two decades ago two young men asked themselves what it would take to create a “Rolex” chain of restaurants.

The ideas would be take the rolex, which at the time was championed by one Sula in Wandegeya, create a menu, standardise the ingredients, upgrade the sanitation issues, license the Sula name and employ him for good measure. 

They would then open branches at all the universities – there were only three at the time and they would have a million dollar business in no time.

It was brilliant idea. But that’s as far as it got.

Actually worse. The idea was forgotten.

That is until last week when Natalie Bitature was named one of three young Uganda women innovators at the World Economic Forum (WEF), that was hosted in Kigali, Rwanda.

Natalie, daughter of businessman Patrick Bitature, came up with the idea of a solar powered street vending cart for her final year undergraduate project. She is studying social entrepreneurship at Hult University in the US.

"The rolex is our original fast food, which needs few ingredients or space to produce and deliver...

Apparently the average vendor sells up to 200 rolex a day and nets about sh25,000. The project discovered that the main driver of the low margins was the energy source. They also worked out that sales would be even further enhanced if the vendor was mobile.

Enter the Musana cart.

Still in its pilot phase, the container on two wheels, would be nothing but a pimped up push-cart were it not for the fact that it has a solar panel for a roof, which would allow vendors to cook, or refrigerate drinks or even charge phones.

Natalie and her project mates have worked out it will cost just under sh2m to buy a cart.

“Of course it could be cheaper but what about quality. It has got to work. It has to be reliable, sturdy and the solar panels must provide enough power given all that it’s a fare price,” said her father Bitature.

The project members have worked their way around it by enlisting the help of a local microfinance bank to lend the vendors the money to buy the carts.

But the project is looking beyond Kampala, where there are an estimated 100,000 vendors of whom they are targeting one percent of for their cart, but beyond the borders of Uganda. They point out in a fact sheet that there are 13 cities around the continent with populations of more than half a million people.

"The project is interesting enough that it is one of six teams in the final round of the Hult Prize, which will be awarded in September. One million dollars will given to the winner of The Hult Prize, which is the world’s largest student competition for social good, aimed at solving the world’s most pressing needs in food security, water access, energy, and education. Over 25,000 projects from around the world including Makerere were showcased in the preliminaries. The five other finalists will receive $200,000 (sh700m) to go towards starting up their venture...

Regardless of what happens in September this project is noteworthy on several fronts but most especially it is about our own entrepreneurs and innovators thinking up solutions to our own challenges.

No in is going to do it for us. This applies to challenges in medicine, agriculture and the environment. 

As a country, as a continent we need to invest more in research and development. And then we need to develop the capacity in the public and private sector to take such promising projects to their full potential.

Uganda is the most entrepreneurial countries in the world studies have shown but we also have one of the highest death rates of business, with less than one in ten businesses making it past their fifth birthday. But an even more outrageous statistic is that even fewer companies, maybe even less than one in a hundred, live and thrive beyond the original founders.

A deficit in our business ecosystem, beyond inadequate funding is to blame. In more advanced economies businesses have the support of mentors, business associations and differing financing options tailored to the stages in the business growth giving them a better chance of survival.

"The younger Bitature has clearly tapped into this more developed environment in San Francisco, fast becoming the social entrepreneurial capital of the world, and chances are Uganda will be the winner from the experience...


And the rolex too. But not with Sula as its main mascot.