Wednesday, October 23, 2013

CORUPTION IS VERY DECEPTIVE


You might have heard the story. This guy owns a fumigation service. One day some gentlemen call him and say he comes highly recommended and that they have a job for him. They describe the nature of the job and they agreed on a price. The next day they pick him up but insist on blind folding him all the way to site. When they eventually take off the blind fold our fumigator finds himself in a garage stacked up to the ceiling with bank notes.

And this was in Kampala.

Last week a website Silicon Africa run a story “The New Rich in Africa” the article made the revelation that there are at least 100,000 dollar millionaires on the continent and that 20,000 are created every three years. Thankfully most of these are hardworking entrepreneurs and less and less public officials.

But it also described a new class in Africa who have enriched themselves off stolen public funds. The article went on to say that the African public official is not more corrupt than his counterparts in Asia or South America. However unlike his counterparts who invest in industry and building businesses the African fat cat consumes his money and squirrels the rest away in Swiss bank accounts.

Corruption is bad whichever way you look at it and even if the corrupt invest their ill-gotten wealth in the productive sectors of the economy there is still a negative consequence of this course of action.

Say for instance the thief got his money and built himself a chicken feeds factory. To begin with he has no cost of money and has a choice either to sell at the market price and make a huge profit or undercut existing players. Either way he distorts the market putting genuine entrepreneurs out of business and when the corrupt official’s access to free money is cut off – as often is the case, he will be unable to operate without the state “subsidy” and he will go the way of his competitors. This will disruptive to the chicken industry and cost a lot of jobs in the process.

Our guys of course gorge themselves on land and real estate, making Kampala’s real estate among the most dear in the region and placing it out of the reach of the average Ugandan.

The return of the Bad Black makes you think about illicitly gained wealth.

Her flight and eventual recapture has some interesting lessons for those who clamour for wealth by any means necessary.

First, that there is no money that cannot be finished. Secondly that fleeing the country to live abroad, where there are relatively higher costs of living means the money will get finished quicker and thirdly, if you do not have a genuine way of making money here you will be exposed faster abroad.
It is basic economics; money is a store of value but has no real value of its own. 

To keep the money coming you have to keep creating value.  If you are employee your income increases according to the increasing value you can show your boss you are creating for him – you might be able to hoodwink for a while but somehow they eventually catch on. You increase the value by adding to the stock of knowledge you have and can deploy for the benefit of your employer.

If you are a business man the value create is often in the needs you are meeting. To earn more you have to serve more people or show how much more valuable your service or product is to your existing client so you can charge him more or all of the above. The moment your market determines you are not adding value to their lives is the day you are out of business.

There is no value addition with stealing money from the public, which is why you never hear of a corrupt official who stole a few millions resigned and went off to start a business. It’s always that they get caught. Luckily for them in this country we don’t seem to able to convict these white collar criminals even if we found them hands dripping red. So they run off grumbling for public effect how they have been treated badly and that they are taking their skills elsewhere, to start business. Spoilt on the easy pickings of their public office they quickly find out they have no clue how to create value for which they will be paid.

Beyond the moral issue of taking that that does not belong to you, its next to impossible for corrupt individuals to do any value to our society – they even take more space than is necessary.

Okay maybe they put the odd kid through school, they provide some wages for the porters at their construction sites, buy a few beers at the bar but that’s about it.

It’s embarrassing but when they fall from grace the corrupt come up against the harsh reality that making money is hard enough but making that money work for you is even harder. You almost want to feel pity on them!

2 comments:

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