Tuesday, February 2, 2016

POVERTY, THE ROOT OF ALL EVIL, BUT IT IS AVOIDABLE

Last week the heart rending tales of our youth, mostly women, being mistreated as domestic servants abroad got me thinking about these people’s motives for travelling to unknown destinations with nothing but their willingness to work and hope of improved income for their families to bank on.

This desperation means that they are vulnerable to scam artists and human traffickers who see them only as units of production to be flogged to extract their full value and discarded once their sale by date has expired.

It does not take stretch of imagination to see what drives our youth to such desperation.

It is in the statistics. According to World Bank figures we have a GDP per capita of $571. This figure is basically a division of the country’s economic output by the total population. One can already see the flaws in this measure.

For one it suggests that we all have equal access to the nation’s economic output, which we all know is not true. Differences in education level, application, skill marketability and negotiation prowess means there will always be disparities in how much of the pie one can capture for oneself.

Within reason the more money one earns the more they can keep for themselves as wealth. So the trick is to earn more and more, which you can convert in to wealth.

For starters there is a difference between earning and making money. The former being money paid to you for your labour – physical or mental and the second, coming from the unlocking of income from assets.

So on the one hand one can go and work hard climbing the corporate ladder until retirement or until they attain their level of incompetence, whichever comes fast or go into business for themselves.
Of course in Uganda we are familiar with a third route where people help themselves to public or company funds for their own private gain.

Another definition should be introduced at this point. 

"All wealthy people are rich but not all rich people are wealthy. The difference being that the wealthy have created mechanisms for making more and more money and if they lost everything today they would be fine, while the rich may not have that mechanism and no guarantee that if they fell on hard times they would be able to recreate their happier circumstances...

The corrupt are rich and not necessarily wealthy.

But sticking to the bona fide ways of raising in come increasing levels of education help for money earners but not necessarily for money makers. Money makers need to be able to sell, manage teams and build businesses, skills that are acquired through experience more than burning the midnight candle with your feet immersed in cold water.

One more set of definitions, to be poor is to be unable to meet your obligations, when you get a job you become financially independent, when you have money working for you enter into the realm of financial independence and onwards to richness and wealth.

It all starts with an income.

And given the two paths we have outlined you either go to school to get a better job and earn better or you look around yourself and look to unlock the assets there in.

For the income earners to become wealthy it would be useful to learn how to invest, essentially place the management of their money with other people --- the government or the private sector, in the hope of a better return. Better investment knowledge will ensure increasing efficiency in converting income into wealth.

Given that the majority of us do not have access to quality education the second path seems to be the more obvious route to break out of poverty.

That Uganda is gifted by nature is not just empty sloganeering. All around us we have natural endowments with some skill and organisation can be unlocked.

That we squander our endowment is shown in our statistics. Agriculture output accounts for less than three of every ten shillings in GDP generated. This would not be a bad thing in itself, in fact as the economy gets more sophisticated agriculture as a share of GDP is expected to fall. It is a scandal in our case because seven in ten Ugandans rely on agriculture for a livelihood.

It means that the majority of us, seating on our biggest asset are failing to unlock its value to improve our lot.

"Clearly our people are perishing for lack of knowledge. Knowledge not restricted to the substance between our ears but also collective knowledge of our society....

So it is obvious our various roles in eradicating poverty – the government devises the curriculum and supports education in both the public and private sector. And us on our part make learning an ongoing process long after we have graduated from primary, secondary or university, which learning we translate into practice, especially in unlocking our assets.

Maybe one final trait we can cultivate is delayed gratification.

To recognise that compounding or building on past gains, is the surest ways to poverty eradication and eventual wealth creation but can, and is, frustrated by us consuming our winnings too soon and therefore frustrating the process.


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