Businessman Patrick Bitature identifies the real turning point of his business career as the time he determined to go formal.
Years ago a consignment of mobile phones was smuggled out of Entebbe airport by his workers. Thinking they had done good by him they told their boss what they had done.
“It was a challenge to smuggle them back into the airport so that we could pay taxes on the consignment,” said Bitature of the event that marked the turnaround in his business career.
The long overdue confirmation of his transition from informal to formal businessman came two weeks ago with the East Africa’s emerging entrepreneur of the year Ernst & Young award.
The award which has been running for 25 years and held in 50 countries worldwide is recognized as the premier event of its kind.
The judges drawn from eminent people in society -- this year included Justice Geoffrey Kiryabwire, head of our commercial court, take the nominees through a rigorous vetting process that tests the entrepreneur’s vision, knowledge of his business and grasp of the enterprise’s strategic direction.
“It was a very enlightening process that clarified a lot of things to me about my business and the way forward, not only in speaking with the judges but also in interacting with other nominees in the region,” Bitature said.
Bitature known for his flagship Simba Telecom, which deals in airtime and mobile phones with branches in Kenya, Tanzania and Nigeria, also has interests in real estate, insurance, power generation and following his entrance into radio years ago has now added Television broadcasting with his interest in pay TV company, Zuku television.
It all started with this father, Paul a businessman in his own right, who gave Patrick and his siblings pocket money at the beginning of every holiday and insisted on seeing who had grown his money most.
Selling sweets to neighbours, grew into selling clothes to schoolmates and then owning night clubs – he sold the wildly successful Ange Noire club to current owner Charlie Lubega, eventually owning an MTN airtime selling franchise from which all his other interests seem to have spawned.
This has all come to pass because of a change of mindset.
“I made a lot of money before I got formalized but I have little to show for it, by formalizing my business I have made more money than I imagined,” said Bitature, who estimates his companies which employ at least 1000 people, turns over more than $100m annually.
He doubts he would have been able to partner with credible international firms in his business and retain their trust is he had not formalized. Bitature acknowledges there is a lot of work to be done on his businesses, but says he is now on a n irreversible path in that direction.
In his seminal book “The Mystery of Capital”, Hernando de Soto argues that the reason capitalism only seems to work in western economies is for lack of formalization in the rest of world. He looked beyond the systematization of business processes to the nature of property rights. Property rights are the bed rock of capitalism, if you cannot show proof of ownership you cannot extract maximum value from of a property and therefore frustrating wealth creation.
De Soto found that the cost of formalizing property rights was so onerous in many underdeveloped counties that many people chose to remain informal in their practices, putting a cap on a country’s development. A country develops because its citizens develop.
But as Bitature’s story shows for the few who make the thousand mile journey the benefits can be innumerable.
“The seduction of being informal is that it seems like you are savings costs not registering, not paying taxes, dodging debtors, not keeping books properly, operating in cash … but it limits your growth and in which arena you can play,” Bitature said on the sidelines of another event last week in Kampala to honour his achievement.
“You cannot grow to be big a tree without a mindset shift, without that (mindset change) you will remain a shrub,” he said.