THE TIME VALUE OF MONEY

They say the rich measure wealth in terms of time and the rest in terms of money.

To illustrate. One group of investors every so often get called to Rwakitura to meet the President. For an afternoon meeting they often send their drivers off on the 300-odd km by road to Mbarara. When the drivers get to Lyantonde, past Masaka, their bosses take off from their private airstrip and get to Mbarara airstrip just in time to jump into their cars for the onward trip to Rwankitura.

During the duration of the drivers’ journey the investors hold a series of meetings, probably close a few deals and attend to pressing administrative matters, activities of which will help to put a few billion shillings on their balance sheet by year end.

Not to take away from the drivers – their skill and perseverance in doing the route, but they only get a few thousand shillings as their day allowance for making the trip.

If we measure efficiency as a function of money made over time, clearly the drivers have go the short end of the stick.

To drive the point further.

Given the choice between receiving sh100m on January1st or taking the proceeds of one shilling invested at the rate of 50% a week from January 1^st to December 31^st , which option would you choose?

It seems like a no brainer. But if you chose the sh100m up front you would have forgone sh1.3b in potential earnings. Do the math!

In both cases we put an inordinate amount of value on money. In the first case we would rather jump on a taxi rather than drive because it is “cheaper” to ride in taxi, we do not factor in the lost revenue that accompanies the lost time using public transport.

In the second case we are often guilty of overestimating what we can accomplish in a short time and underestimating what we can achieve over a longer period of time exercising diligence and good sense.

These two errors in judgment cost us thousands even millions of shillings as individuals, imagine what it costs us as a nation?

The current impasse with Karuma dam is like a bad case of déjà vu.

Bujagali dam was mooted in 1995. After almost 20 years of sniping from environmental do gooders, rear guard action from our very own political elite, the ejection of one investor and the acquisition of another, the dam’s first megawatt of power hit the grid in 2011. The losses as a result of lost economic activity due to loadshedding, raising of tariffs to accommodate thermal generation power plants and the near two-fold increase in the project cost must be in their billions. Monies which would have been better spent improving health care facilities or subsidizing education or building roads.

Our inability to solve the land question is another case of time wasting. Attempts by this government to regularize the land laws started with the constitution in 1995, stumbled on in enacting the Land Act and the continued tinkering.

The lack of clarity with our land issue is frustrating commercialization of agriculture and is a main reason behind the ever widening gap between the rich and the poor. Because ownership is often unclear no durable investments can be done on it. As a result the productivity of our farms is one of the lowest in the region frustrating efforts to grow an industrial base driven by agriculture – our most logical route to industrialization. The losses in terms of lost opportunities, uncreated jobs and lost tax revenues must run into the billions of dollars not shillings.

One can throw up examples of procrastination by our country until the cows come home.

Looking back over the last 27 years it is actually amazing what has been achieved, because for instance the government did not twiddle its thumbs about key policies like privatisation and liberalization of the economy, the decision to ally with the donor community to rehabilitate the economy or the pressing forward with regional integration at all levels. Imagine if our communications were still the monopoly the government telecomm company? Or we were still laboring under some socialist model, creating no wealth and distributing the ensuing poverty? Or the movement of goods and services were still restricted in the region?

I shudder to think!

We need to generate a sense of urgency, optimize our time usage because they time and tide wait for no man.