Tuesday, August 18, 2015


Recently a UK business support outfit Approved Index released research which showed that Uganda was the most entrepreneurial country in the world, while Japan, Italy, Germany and Finland were among the least.

In a report published on the Virgin Entrepreneur web site they went on to wonder how Uganda could come top of the heap given our violent past (sounded like we had been reduced to some apocalyptic wasteland).

This report is not the first to find that Uganda is the most entrepreneurial country in the world.

In 2003 the Global Entrepreneurial Monitor – sponsored by the World Bank, published a study that ranked Uganda the most entrepreneurial country in the world. The next year it found that Uganda was second only to Chile as the most entrepreneurial country in the world.

"In trying to explain the apparent contradiction of why if Uganda was so loaded with entrepreneurs why wasn’t it growing faster and a more developed country, the researchers explained that there were two type of entrepreneurship – necessity and opportunity...

In the necessity entrepreneurship people start businesses to meet their daily needs, essentially they are not unlike subsistence farmers.

While opportunity entrepreneurs start businesses to fill a gap in the market and a ready to grow the business to its full potential, these kind of businessmen would be found among the founding fathers of the globe’s biggest companies.

From the outside the distinction may seem minor but it makes a world of difference.

Once the aim is to grow a business to satisfy personal needs once these are satisfied it’s difficult to grow it to become the job creating and tax paying giants that can have real transformative effects on economies.

It is not to say that necessity entrepreneurs can’t grow into opportunity entrepreneurs.

So the reason why Uganda has businessmen falling out of its years and yet not seeing a commiserate improvement in the people’s wellbeing is because most of our businesses are subsistence businesses.
This is a hangover of our turbulent history when jobs were in short supply but people had t live so they started a kabusiness.

As the economy has grown and become more formalised, the urge to start a business has been dampened as salaries have improved and one can expect that if the economy continues to grow we may see a further dimming of entrepreneurial ardour.

But that wold be a major loss. All big businesses start as small businesses. But due to the peculiarities of the market it is hard to determine at the beginning of the process which start ups will grow to become big businesses. The natural selection process that operates in the market is such we need thousands of small businesses to start up, thousands more to collapse for just one Google or ExxonMobil or Toyota to emerge.

So that companies are starting up around every corner is a good first start for Uganda. Now the trick is how do you keep these companies popping out of the woodwork, alive, thriving and growing?
The knee jerk reaction is for people to talk about financing, but money does not come first. It’s the idea and the execution of that idea that leads to a need for and access to more money.

Financial support is crucial even critical, but more importantly is that our businessmen need help thinking about their business. We need to provide the support to hold their hands through the difficult ups and downs of business. Mentorship programs where experienced businessmen can look over their businesses advise them on where they are going right and therefor do more of and where they are veering off the tracks and do less of.

In more developed economies where the pool of successful businessmen is large these mentorship programs are quite developed. But in addition they have government programs which help with advice, cheaper funding and access to investors, but up to a certain point.

But as my hero Warren Buffett says some things just take time you cannot impregnate nine women and hope to get a baby after a month.

"We are often impatient because we have seen better in our travels and on TV but the truth is we as a country are at the very rudimentary stages of creating many of these systems and institutions...

We are probably better off than most in that the default mode for most people seems to be to set up a business for some extra cash now we need to shift that thinking to setting up businesses to exploit any opportunity to the full.

It’s a lot easier said than done.

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