Tuesday, July 13, 2010


Last week central Uganda was racked by violent incidents sparked off by a standoff between government and the Kingdom of Buganda over the issue of His Highness’ trip to Kayunga district.

During the same week the Global Competitiveness Report 2009 – 10 was released and showed Uganda remained in the last quartile of countries surveyed. However it had risen up the ranks to 108 from 128 last year. These results were derived from a survey of 133 countries.

Competitiveness refers to the efficiency with which countries, in this case, convert inputs and costs into outputs and sales.

In a globalised economy the lesser developed countries are those who can not compete in international markets and therefore are unable to deliver the goods and services to their people that will lift them out of underdevelopment.

The TV footage of youth, even kids, taunting armed policemen and the tales of road blocks being set up by these same youth to harass and rob law abiding citizens -- I cannot possibly see how these were agents of the Kingdom -- are some of the symptoms of a country that is unable to cater for its own.

Such scenes of mayhem arising out of economic distortions, whatever the politicians say, strengthens my conviction that this country needs to be run like a business.

Businesses exist to enrich their shareholders.

They do this by providing goods and services to the public in such a way as to create a profit, which profit is then distributed between financing the continued operations of the company and paying the firm’s owners a dividend.

The shareholders do not always run the company but often times hire management to do that for them.

Mangement’s job therefore is to deliver profit. They do this through manipulating the three processes of human resource management (older economists call it labour), operations and strategy.

In the context of these three parameters management’s key role is to allocate resources to areas that will ensure maximum return.

In the case of Uganda Ltd the dividend to the people – the shareholders, comes in the form of an ever improving standard of living as a result of greater employment and business opportunities.

These riots in Kampala are being fuelled by unemployed youth.

An interesting anecdote from the riots was that there was no looting in St Balikudembe (Owino) or Wandegeya markets, because the traders there were willing to guard their interests with their lives and sent the word out.

These traders may not run multi-billion shilling enterprises but they have a stake in the wellbeing of the economy and as a direct consequence will fight to keep what is theirs and more importantly will be unlikely to be seen in the streets hurling stones or harassing unassuming citizens.

To take the analogy further the government is the management and whose only justification for continued existence is that it shows a consistent and preferably, growing return on our investment.

A company’s financial statements – the profit and loss account, balance sheet and cashflow statements provide a snapshot of a company’s health.

The relationships in the balance sheet are critical. In Uganda Ltd’s case the liabilities – loans, grants, taxes should be employed in the creation or production of assets. A country’s, like a company’s, key assets are its people, and creation of a conducive environment for this key asset to thrive is critical.

So Uganda Ltd’s liabilities should be employed in improving education, health, infrastructure, ensuring security and economic stability. Liabilities are wasted if they are employed to sustain a bloated public service and subsidise ostentatious living by a country’s elite.

The efficient conversion of liabilities to assets in Uganda Ltd is being hampered by corruption, an inefficient bureaucracy and poor or lack of strategy.

Assets produce income and assuming a tight rein on expenditure – cut down the number of districts, disband three-quarters of the executive and parliament and snuff out corruption, the country should show a profit.

This is simple but not necessarily, an easy thing to do.

As a former minister lamented in the late 1990s after a crucial piece of legislation he was trying to push through parliament was summarily thrown out, “This is a small economy, a small account in a leading investment bank, but we transform it because of politics.”

An inefficient state fails to deliver, leading to violence and instability as we saw last week that only serve to set back rather than advance the march towards progress.

Published September 2009, New Vision

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