THE IDEA WAS GOOD BUT FOR THE EXECUTION

This week the government was finalising paying out the Covid-relief monies to the 500,000 eligible households.

First off this was a better intervention than the posho and beans that were dished out last year, which benefitted a few connected people more than the intended beneficiaries.

I was shocked to learn recently that

of the sh59b that was earmarked for the distribution of that posho and beans, easily half of it went into logistics...

On this front alone, that the sh53b will get to the intended beneficiaries, this has been a succcessful intervention. Going by this logic more people have benefitted frrom the sh100,000 than those that benefitted from last year’s food handout.

Of course there was also the argument that, what if I don’t need or want or like posho and beans? Your relief is more a poke in the eye than help to me. With money I can decide to buy charcoal instead or pay for medicine or send it to a more needy relative, that is more meaningful relief than the photo opportunity of distributing food.

But now that the intervention is coming to a close, it’s a good time to look back and assess whether it met its intended goals and how can we do it better in future.

First off notice that we are completing the process at the end of the 42-day lockdown. Talking about shutting the barn door after the horse has bolted. This is a major failure and that is where the assessment has to start. I would like to give the government the benefit of doubt, but previously we know that delays heighten crises, allow for ignoring established procedures leaving room for grubby fingered opfficials to make a killing.

We urgently need to invest in data gathering and management. A lot of time was spent trying to find out the intended beneficiary because we were using 20th century, manual processes like asking village chairmen who their vulnerable are. Also the delays came as result of verifying the intended beneficiaries, a discrepancy between their names, phone numbers and ID numbers  led to rejection. No suprises that the most discrepancies were in the Kampala area. This data should be at the end of a button click, gathered and updated in real time. It would have meant that by the end of the first week of the lockdown we would have sent the money.

Also with this we would have a real assessment of who the vulnerable are. While we were constrained by finances, the 500,000 families were not arrived at scientifically – be suspicious of round numbers when dealing with human situations. Also sh100,000 handout was not arrived at scientifically, it just sounds like a nice number to dish out, how do we know the real need was not sh78,000 or sh111,000 per family.

There have been suggestions that to speed it up even more a voucher system should have been employed. Under this scheme beneficiaries would have vouchers acceptable by everybody to buy what they want. But knowing our government’s reputation as a bad dedbtor, this would only stress local economies more. So forgoing speed for efficiency is a good idea. Also it means that even informal businesses, like your neighbourhood rolex seller will be a beneficiary.

In the long term with better data collection and management government can extend this to other relief interventions. In other places such interventions are targetted at single mothers or out of work people or invalids and are ongoing. The telephone system has shown to be a cost effective way of distributing this, we just need to smoothen the means of identifiying beneficiaries.

Related to that the importance of the ID has been shown. People were reluctant to get IDs for all sort of funny reasons, never mind the usual suspects who hold all government programs in suspicion. But even more mindboggling is the number of IDs,  thousands of them that lie unclaimed. Sometimes in this country you don’t know whether to cry or laugh.

We criticise government for poor service delivery but refuse to show up for even the poor services...

These shortcomings not withstanding government took the right route in dishing out cash, but there is a lot of room for improvement in getting out such relief in a timely and appropriate manner.

 

OF COVID-19 AND UGANDA'S SMES

It has been quite a month for Uganda’s pharmacists. 

First we had Dr Patrick Ogwang with his Covidex support treatment from covid-19. Before we could catch our breath there was another potential covid-19 treatment out of Gulu University. Dr  Alice Lamwaka the lead researcher was also trying to get the relevant permissions from National Drug Authority (NDA) to allow for industrial production of her Covicyel.

But

like most things in life these latest innovations are the finished product. Unseen is the years of  sweat and toil that went into producing them...

These are the fruits of President Yoweri Museveni’s insistence two or so decades ago, that funding to science be increased. Both innovators have been the beneficiaries of this move, especially in creating a favourable environment for research to be done in the country.

Of course we have a long way to go before research & development can be treated with the seriousness it deserves in this country, but these trailblazers will hopefully bring about the much needed mindset required to support R&D and not only the finances.

In the light of these discoveries and the challenges that will emerge to make sure their full potential is unleashed for the public, both here and abroad, the need for building and improving a business ecosystem that can take such innovations from inception to commercialisation will become glaringly clear. 

A country is only as viable as the vibrancy of its business community, more so its indigenous  businessmen.

"To build a robust business community takes generations and the sooner we get on with it the better this country will be....

It helps in Uganda that we have a liberal economy where anyone who wants to start a business can do so to the extent of his capacity. It helps too that years economic decline has made it natural for Ugandans to go into business. We take this for granted but there are countries in the world where going into business is not a consideration for the vast majority of the population. It helps too that government has been at the head of efforts to create a common market for East Africa and beyond.

But that is not enough. There are major parts of the business ecosystem that need to be in place before we can unleash the full potential of our people...

The World Bank’s Doing Business 2020 report ranked Uganda 116 out of 190 countries polled as an indicator of how lacking our business environment is.

Everyone likes to say how lack of access to affordable finance is a major shortfall, I think it is lack of business skills that is the major hindrance . If our businesses were better organised, the funding that they require would find them. I am always amused when I hear businessmen complaining about the high lending rates in banks as a major impediment. 

A few years ago, a business I am intimately familiar with was in need of  working capital, it overextended itself and was in danger of collapse. It went to their bank, which they has patronised for ten years for the facility. It took them three months to get the facility – it was only by the grace of God that the business survived up to that point. And by that point the need for working capital was not urgent. 

They had to provide proof they were a legal entity, auditted accounts, a resolution by the board to get the facility and finally a security to back it up. Part of the delay was that the bank were not familiar with using treasury bonds as security! How many businesses that are ten years old have auditted books, a board of directors, not to mention a credible security.

Over the years the interest paid on the facility, which has  been as much as sh350 million has not exceeded 10 percent. Not only was it cheap to the business, but how many businesses have collapsed for the lack of cash, and much less than sh350m?

One day the same business is going to need long term capital, beyond the owners equity and I am sure they will have access to cheaper funds than many businessmen in this country have access to, because they are mo re organised than most.

If you read the stories of the major companies in the world today none if any started by borrowing from the bank, in fact they were well into their development that they even approached the bank. They often employed funds from friends and family first, then high net worth individuals, with banks only serving as conduits for payments to them or to their suppliers.

Also many times initial funding from outside this group – friends, family and net worth individuals, came from government funded business support agencies.

For your friends and family it maybe easy to  unburden of their funds – a few shillings to get you our of their hair, but assuming your father is not a high networth individual, what kind of businessperson would you need to be to have such a person invest in your business?

Let me give you an idea. A few years ago the aforementioned business tried to raise a billion shillings in equity. It had been in operation ten years and shown a profit from year one. Initial shareholders had seen their interest grow more than a hundred fold during the period. But they only managed to raise sh200m. 

I blame their inability to raise the full amount down to their poor sales skills, especially in communicating the  immense future value of the business to the potential investors. But also imagine how difficult it is to convince someone to part with their cash for a benefit far into the future, which despite the evidence is hard to envisage for the best of minds.

"As a minimum you have to convince them that past success is replicable into the future. That the past success was not a fluke but came from business skill...

Also imagine how much money we are holding on to that would be deployed in useful enterprise, but for lack of trust in our businessmen’s skills? As an indicator prior to covid-19 every weekend Ugands blew millions of shillings on weddings.

That is why government needs to invest in improving business skills.

GETTING COVIDEX OUT TO THE MASSES

A fortnight ago the National Drug Authority (NDA) gave the greenlight for Covidex to be distributed as a supporting treatment for Covid-19.

While the public had already caught on to the usefulness of the drug, Jena Herbals Ltd the producer of the drug, still had to cross some Ts and dot some Is with the NDA.

In a an interview aired last week, Dr Patrick Ogwang said he is confident of the drug’s efficacy – it worked for him and several other people he tried it on, and was working to scale up production from the current 30,000  20 ml bottles daily.

"Going by Ogwang’s expertise and experience it is safe to say the science is proven, the trick now is to scale up production to get the medicine into as many hands as possible, which is where business management comes in....

The first order of business is for Jena Herbals to lock down the intellectual property that surrounds the formula for Covidex. 

Intellectual property is a real asset on a company’s books. Like any other property this can be sold, leased or mortgaged to generate income for the company. And like any other property needs to be protected from people who want to steal or abuse it.

"Given the real need around the pandemic – there are currently  at least 12 million active cases worldwide, the covidex intellectual property needs to be secured internationally....

 The enormity and cost of this task is such that the government needs to  be involved, if only as a way for creating global market access for the drug.

Already President Yoweri Museveni has pledged that his government will help with funds for expansion.

The business acumen surrounding Jena Herbals will determine whether they can – as their founder wishes, provide this good to the widest public.

It is safe to say that Jena Herbals was unknown to most people until now. The challenge of scaling up production to even a million doses a day will invariably require more resources – financial, human resource and even land and a dramatic improvement in management. It is one thing to run a 30,000 bottle a day production line and quite another to run multiple production lines in multiple locations around the world.

Of course if they secure the drug patents they can license bigger pharmaceutical concerns –CIPLA comes to mind, to help in the wider distribution of Covidex.

Beyond what government is willing to provide financially, which is a drop in the bucket, to tap into the trillions of dollars of funding sloshing around the world a restructuring of the company to reflect this new reality is imperative.

There are basically two kinds of financing that can take  Jena Herbals to the next level – debt and equity financing. Each has its pros and cons and its likely that Jena Herbals will need to use a combination of both to further its ambitions to get its treatment into every covid sufferer’s hand.

In the wider world there are people specialised in financing pharmaceutical developments and these maybe the best to help, not just any Tom, Dick and Harry with a few billions shillings.

In both cases, given the huge funding they will require they will need to convince funders that their ownership of the relevant intellectual properties are ironclad – would make no sense to put money in the business and then the next day the most valuable property is pulled out from under their feet, that they can indeed ramp production of the drug and finally that the investors will see a return on their investment.

On a national strategic level, government needs to secure supplies of the trees responsible for the active ingredient of Covidex. A statutory instrument banning the cutting down of the tree may a good start and incentivising tree farmers to start planting the valuable tree may be another. It was good to hear though that Jena Herbals is working on regenrating the active ingredient using tissue cultures, that would spare the widespread cutting down of these trees. While its only the bark that is required in some cases, don’t put it past us to hack down whole trees to harvest the bark.

"It also make sense to raise the secuirty status around the plant and the Dr Ogwang himself. Billions of dollars have been sunk into the Covid-19 fight, which money may go up in smoke if Covidex gets wider acceptance....

BOOK REVIEW: BUILT TO SELL

AUTHOR: JOHN WARRILLOW

Why do most people go into business? To earn an income or t o increase their income. For the latter type the business is a side pursuit to their job. What happens when the business makes more money than you have imagined in the first case or gets in the way of your main job, in the latter case? This is the beginning of the end.

In the former case the owner pushes up his living costs at the expense of the business and in the latter case the business owner decides in favour of keeping his job and the certain income that comes with it, and folds the business.

In “Built to Sell” author John Warrillow suggests an alternative, What if you built your company in such a way that you could sell it? That would mean for our first business owner, when he starts making too much money there is a process of investment of those additional funds to increase the value of the company and make it more sellable or in the second case the businessowner can sell his side hustle rather than just fold it.

"If we learnt how to build our businesses for sale – even if we never want to sell them, it will also ensure their sustainability and longevity....

The number is that barely one in a 100 companies in Uganda live to see their fifth birthday. But someone pointed out to me that is never the end of the business owner who just goes ahaead and opens another business. No wonder we are among the most entrepreneurial country in the wolrd.

So the author using a fictional narration a la Rich Dad, Poor Dad, begins with the businessowner who is stressed out and wants to sell his business. Unfortunately despite having buit it for five years, the way in which it is structured, with him as the center of gravit of the business, means it is worth nothing. A business is not the buildings, cars and machinery but the systems that take labour, capital and land and convert them into saleable products, that’s what investors are buying. 

The book therefore is how he restructures his business to make it saleable.

If there is only one quote to take away from the book it is “You should always run a company as if it will last forever, and yet you should also strive constantly to maximise its value, building in the qualities that allow it to be sold at any moment fro the highest price buyers are paying for businesses like yours.”

If you building it to live for ever you are unlikely to raid the till every Friday evening and to maximise its value the author urges that you focus  your offerings, build a sales force and a management team. Essentially build a company that can go on with out you. Think about it, no one wants to by a business where the star of the team is living, the value is that the functions of the company have been institutionalised, that you can place anyone in charge and the system will still work, that is where the value is.

Think of any business and the trouble they go through in the transition from the original founder to the next generation. The figure was that there was only one company with indegenous founders that has transitioned from one generation to the next in the last 50 years. This was true ten years ago and is probably still largely true.

What we are talking about  is a mindset change from subsistence, working to support your family and you to commercialisation, where you build a business to take advantage of market opportunities in a sytematic way...

 Easier said than done. It requires business owners to not see themselves as working in the business but rather working on the business. How do you tell the carpenter, who built his workshop from the ground up to stop working on the workshop floor with the th other carpenters step back, cretae a sales generation system, build and manage a team, who in turn manage the carpenters? You can say the same for the butcher, the farmer or the florist.

"We are still a very agrarian society where hard work is measured more by the sweat on your brow and the dirt on your hands. This book is saying business owners need to shift towards creating the intellectual property that is the business...

The book is a must read for every one in business, those going into the business and those who have been burned by a prior business but what to get back into it. It encourages a major mind shift which if achieved could reduce the attrition rate of our businesses. 

Of course the everyday challenges of business mean that not every thong will go to plan, but it does not hurt for businessmen to have a basic business model on which to overlay their experience, at least it will offer them a better chance than before at success.

As it is now even the MBAs among us blunder into business and hope for the best. This book might help in reducing that uncertainity.

Available on Amazon.