Thursday, January 30, 2014

OUR BUSINESSMEN NEED TO BECOME CORPORATE

Last week warring factions in South Sudan signed an agreement to cease fire following weeks of fighting during which the advantage see sawed from one side to the other.

There a lot of Ugandan businessmen are waiting with bated breath for the resolution of the conflict so they can jump back into one of the most lucrative but lawless markets in the region.

Among Kampala's chattering masses there has been criticism of government, that they aided the then rebel SPLA against the Khartoum government but Uganda has derived little commercial benefit from the world's newest nation. The feeling has been that Kenyans had jumped in and snapped up all the prime business opportunities.

The outbreak of fighting in December may have changed that perception dramatically. It came as a surprise that anything from 20,000 to a million Ugandans were actively involved in South Sudan in as diverse roles as boda boda riders to humanitarian aid workers.

We knew through anecdotes that our northern neighbours were buying up our produce while still in the fields, but we didn't know that our northern neighbours had now overtaken Kenya as our biggest trading partner accounting for than a billion dollars in exports in 2012, with some estimates suggesting that figure was set to double in 2013.

Officials estimate that continued instability in South Sudan will account for up to a percentage point of economic growth this year.

Suddenly the importance of south Sudanese is enough to make us ignore their occasional uncouth behavior.

Suddenly it doesn't matter too whether our businessmen affected are Baganda, Banyankole, Japadhola or Lugbara, they are our business people and can we evacuate them and we sympathize with the losses they have incurred.

A national interest can only be forged it seems, when we think of ourselves in relation to other nations.

You want to tread carefully on the issue of commercial interest dictating foreign policy but when you think about it, economic interests do not respect tribe or creed and are more durable than other transient differences.

It is interesting too that while happenings in south Sudan dominate our front pages they do not exercise the Kenyan popular thinking as much. The difference maybe in the way our respective commercial agents have operated in south Sudan.

While in Uganda's case it has been individual businessmen striking out on their own, trying to make speculative gains from trade. In the Kenyan case it has been more the case that huge corporate entities, banks for example, which have pitched tent in Juba. Probably explains the difference in reactions to the crisis by our respective governments.

Our businessmen may learn a thing or two from going the Kenyan way though.

In operating as companies rather than individuals they can scale up their operation to take advantage of bigger opportunities, their size would be impossible for politicians to ignore in Kampala and therefore take safe guarding commercial interests more seriously but more importantly, spread the risk of doing business among more shareholders ensuring that in the case of business failure the loss is not as disastrous to the individual businessmen.

Our businessmen can not get away from it. To take on the new competition for the region's opportunities, they need to get more organized. At very basic level they need to stop operating as individuals and go corporate.

The Vasco da Gamas and Christopher Colombus when they set out to explore for alternative routes to Asia, created corporations to support the endeavor spreading risk and ensuring that even if one mission failed they could finance others in the future that hopefully would recoup earlier losses.

Of course the challenge of operating with other partners is that it will take more intelligence, patience and sacrifice to manage shareholder expectations. There is bound to be a steep learning curve for our businesses but lessons they have no choice but to learn.

Its unlikely that south Sudan will remain unstable for long, but for a long time before proper structures are in place it will always be a high risk environment to operate in. 

Once beaten twice shy, we cannot ignore the market but our businessmen need to think more about covering he downside in future forays north.

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