OUT WITH THE OLD AND IN WITH THE NEW

My friend is practically dancing in to the new year. In 2022 he had a eureka moment, which led him to track his financial progress.

My friend, lets call him Jack, had heard it all before, “What you focus on expands” , “You cannot manage what you do not track” etc etc. In fact he was guilty of giving other people advise on how to track their finances.

Jack in the evening of his working life, at the beginning of the year wondered what he had to show for all his “hard” work.

So, he put pen to paper and drew up a balance sheet of his life. At first it went beyond his finances, but the state of his finances stood out, among all the other things he was tracking. The others were his physical, mental and spiritual progress.

In the “Millionaire next door” authors Thomas Stanley and William Danko recommend a standard to determine whether you are doing well in how much you keep of what you earn – your wealth. Their formula – your net worth (assets – liabilities) should be more than your annual gross income multiplied by your age divide by ten, their measure of whether you have been an efficient accumulator of wealth or not...

Say you are 50 and have an annual income of sh100m you should have a net worth of 50 X 100/10 or sh500m. Your net worth is the sum of all you own, assets, minus what you owe, liabilities. So, if all Jack’s assets – house and other properties come to sh500m what he should owe no one anything. Of course, if he owes the bank some money it means his assets must be more than sh500m to qualify as doing well.

While at the beginning of the year Jack was comfortably over the mark – he had a net worth of just under sh800m, it was too soon to celebrate.

His salary constituted his major income and his assets were bringing in barely half of his annual income, so his assignment was to find ways to make his assets sweat more. This was the eye opener for him. That cut off from his job he wouldn’t get though half the year at his current lifestyle, despite a healthy net worth

He had always understood what asset rich and cash poor meant, but seeing himself as such drove the point home much better.

All along he had been walking around thinking he was successful but the reality on paper showed him he was a paycheck away from financial disaster.

Starting in the new year he started tracking his income and expenses, assets and liabilities and particularly trying to figure out how to earn from his assets and in he event he acquired more whether they made him money or not. He did this on a monthly basis.

His income from assets has not moved much but there has been an almost total shift in his mind set. He now has as his phone screen saver the saying “The goal is to be rich not to look rich” He has learnt that wealth is not loud. That the movements in his personal balance sheet will take a long time to be recognized by the general public.

"He has debunked the idea that you need to eat the sweat of your brow, that when you make money it is time to blow it. That was his previous mindset...

That, money is not for eating but for making more money. While he did not agree with that at the beginning of the year he has come around to that way of thinking more and more as the year comes to a close.

On the surface of it, it sounds like a miserly way to live, but he has since discovered that if he earns a thousand shillings and recommits sh700 to reinvestment and eats the rest his consumption is still sh300 more than it was the day before.

It doesn’t sound like much but if he maintains the discipline he will be eating sh3,000, the sh30,000, then sh300,000, then sh3m…. you get the drift. But before he can eat more he has to invest more.

By watching his numbers every month is much better able to make financial decisions than previously when he was guessing. He now knows how will allocate every shilling he gest to him the income from his assets rising throughout the year.

He now knows better, and wonders why he did not know this years ago. But he did, it was just not his time to appreciate it.

In the new year let us be like Jack lets track down our balance sheet, but more importantly how much money we are getting from our assets.

Merry Chirstmas and Happy New Year.

 

 

 

 

BEST OF THE BEST FARMERS AND THE RIPPLE EFFECT ON UGANDA

A week or so the New Vision celebrated the best of the best farmers from 2014 to 2018 Best Farmer competitions.

 Since 2014 New Vision has been profiling farmers who qualify to compete to determine who is the best.  The winners in addition to getting help to improve their farms, are flown to the Netherlands to learn from farmers. Another major sponsor of the event is dfcu bank.

"A better country than the Netherlands to use as an example, it would be hard to find. The Netherlands is second only to the US in terms of agricultural exports, in 2019 recording

€94.5b (sh366trillion), it accounts for a third of world chill, lettuce and cucumber trade and a fifteenth of apple production. Uganda’s agricultural exports in 2021 came in at about $5b(sh18.3trillion).

They produce four million cows, 13 million pigs and 104 million chicken annually. And as if that is not enough they have 24,000 acres or an area half the size of Kampala, under greenhouses.

This made all the more amazing when you realise that the Netherlands occupies about 42,000 km², a sixth of the area of Uganda.

Interestingly they have managed this high agricultural productivity while reducing water usage by 90 percent and ferterliser use just as dramatically over the years.

Just by looking at the numbers one can tell that the Dutch farmer has attained a level of efficiency and productivity, we can only dream of in Uganda, with our better weather, more arable land and double annual seasons.

One local ranch owner with a herd in the hundreds and lands stretching over a few square miles, on return from Netherlands years ago, concluded that we were joking in Uganda. He was put to shame by a farmer he visited who with a fraction of his herd and situated on barely 10 acres of land was producing more milk than he, many times over, with only he and his son as the permanent workers on the farm.

So, one of the tests of the best of the best farmers is whether they had improved their farming practice after their return from the Netherlands.

All the best farmers have returned from the Netherlands with the expanded outlook, improved their farming methods and increased their productivity.

Since 2014 the Dutch embassy and KLM Royal Dutch Airlines have sponsored the travel of 58 farmers, a motley crew that represent every region of the country. The best farmers have not only improved their farms but have proved useful resource for their communities. Many of them set up training institutions to transmit their knowledge...

It is not a stretch of imagination to think that if each of the farmers influenced 100 other that is 5800 farmers and if each of these influenced another ten and then … you get the drift.

There is a difference between politicians urging us to turn to agriculture or extension workers directing us what to do, but when we see one of our own working under in our context working and succeeding it is a higher level of learning.

And if the New Vision can keep facilitating the travel of our best farmers to the Netherlands the rural landscape can very well be transformed in our lifetime.

"While industrialization is what we aspire to, most countries transformed by first ensuring that they produced food surpluses. This did two things it ensured food security, which meant they reduced on their use of vital foreign exchange to import food and secondly, the surpluses beyond exporting them formed the basis of their agro-industries.... 

One of the things they learnt in the Netherlands is how to add value to their products and many of the best farmers now have cottage industries, processing their produce for use in their communities. Will be surprised when these same farmers become the backbone of our future agro-industrial base?

But the highlight of the event for me is when I sat with Flora Kakande of Pumpkin King. Her company grows and process pumpkin into a variety of products, but in addition is working to help farmers grow pumpkin, including refugees in western Uganda. Everything of the pumpkin is usable and have huge health benefits.

After hearing their story I wondered aloud why people like them do not make noise about what they do as the idlers who make more noise in begging ‘Gavumenti Etuyambe”

“But we are working when do we find time to make noise,” was her quick rejoinder.

MAKING SENSE OF THE BUSINESS OF SPORT

Last week former MP Odonga Otto lit up social media with claims that Uganda’s sports bodies, more specifically football governing body FUFA and the Uganda Olympic Committee (UOC) receive millions of dollars a year from the international parent bodies to support sport but that the sportsmen do not benefit.

The former MPs diatribe was prompted by the question “Why isn’t Uganda at the World Cup?”.

Interestingly movie streaming company, Netflix, released a docuseries “FIFA Uncovered” a damning expose of how football governing body is riddled with corruption.

All this was happening against the backdrop of one of the most exciting World Cup’s in recent memory.

I think the honorable Otto’s claims should be looked into, if only so our sportsmen can get the much-needed facilitation they sorely deserve. But that is a story for another day.

However, what piqued my interest this week was the release of Forbes annual list of highest paid sportspersons.

Its an exciting list, like all such lists go.

"At the top of the list was Argentine footballer, Lionel Messi who last year made $130m (sh480b) before tax on and off the pitch. Messi, 34, took a salary cut to join Paris St Germain from Barcelona but business partnerships with Adidas, Budweiser and PepsiCo more than made up for the shortfall and then some...

There were other household names in the world of sports on the list like basketball’s LeBron James ($121m), Stephen Curry($92.8m) and Kevin Durant($92.1m); Soccer’s Christian Ronaldo ($115m) and Neymar ($95m); now-retired Tennis player Roger Federer ($90.7m) and boxer Canelo Alvarez ($90m) among others.

Interestingly despite the recent global crisis, sportsmen’s earning have been seen a lot of inflation. A decade ago the highest paid athlete was boxer Floyd Mayweather who earned in ($85m) and Ronaldo was the only soccer player in the top ten.

A decade further back Tiger Woods was the top earning sportsman pulling in $69m that year. There was no soccer player in the top 10 that year. 

Clearly more and more money is being thrown at sport, are we seeing a corresponding jump locally?

Our sports associations are largely run by volunteer administrators, who while not getting a regular income (so we think), hang on to their positions like grim death. If you line them up they are not the most altruistic members of our society, so you have to wonder why they keep in office for so long. For the love of the game? Puleez!

That aside the explosion in incomes for athletes around the world is a reflection of the need for content to feed the media. Revenues from broadcast long outstripped matchday seat sales for premiership teams.

It makes sense, the more people watching a sport, the more people will pay to slap their logos on those athletes to gain top of mind awareness with the consuming public...

So that seems to be a logical place to start, how do we attract eyeballs to our sports? With internet and the falling price of data It is easier than ever before to do this.  A half decent smartphone positioned to film from a strategic place and live streaming on any number of social media would be a good start.

For people to consume your media product they need they need consistency and quality and then the numbers can be sold to corporate clients. Its not automatic that the numbers will flood to your uploads that is a function of awareness building and marketing.

The following that comes with that can then be leveraged for sponsorships. Increased revenues can then be used to beef up sportsmen welfare and improve existing infrastructure

I simplify of course but it is actually a linear logic.

The sports administrators will complain that this needs money anyway. True, but the administrators need to cross the table to the side of the corporate sponsors to see things from their perspective.

The man with the budget is looking to see how much bang he can get for his buck, the assurance that if he gives you money, he will be able to report more sales of his product or greater brand awareness. If you can show him that, it makes it that much easier to loosen the purse strings. Its sales 101, show me value and I show you the money...

The money man on the other side of the table want also to see organization, so that he is sure that at the minimum his money will be good use and better still there can be a long-term relationship built. So, our organisations need to get organized (ironic?) before they can get money. Is it in anyone’s interest to keep them disorganized?

By the time Ronaldo commands $55m in off field income, his agents can point to the more than 690 million social media followers around the world, as a guarantee of eyeballs on him. These are independently verifiable. And by the way Ronaldo has all these followers due somewhat to momentum – I am following Ronaldo because my friends are following him, but more because his followers came from a deliberate marketing effort. You try to get a thousand followers on social media and you will see how hard it is to raise numbers.

KAMPALA SHOULD LOOK BEYOND SOLAR LIGHTING

I am currently eyeballs deep into the book “Power Play” by Tim Higgins, a book about the building of electric car company, Tesla.

Tesla is the company responsible for vaulting South African-born Elon Musk to the top of the wealth rankings last year.

It is an amazing read for anyone interested in getting the unvarnished view about how to build anything – the discipline, the struggles and how often successful founders come to the edge of failure only to survive mostly on the strength of a lofty vision.

And it is also an interesting book about the issues surrounding the future of cars and their use as we know them.

One of the biggest challenges for rolling out the Tesla was that you needed charging points around the car routes, otherwise the market for the car will always be limited. It reminds me of a time when, if you wanted to make a journey say to Mbarara, you had to make sure you filled your tank at the start of the journey, because of lack of fuel stations along the way, which is not the case anymore.

A combination of private capital and government concessions have made it possible for Tesla to dot a lot of North America, Europe and urban China with their charging points.

Which brings me nicely to Kampala City.

Plans are afoot to install lighting on the streets of Kampala. This is long overdue given the hundreds of kilometers of paved roads that have been laid in the last decade or so.

The plan as I understand it, is that the lighting will be solar powered.

Before reading the Tesla book I might have been sold on the solar plan, but I have reason to rethink this given our current context and the future.

First off, we are going to have an embarrassing abundance of hydroelectric power within the next year with the long-awaited commissioning of the 600 MW Karuma dam. This is power will need consumers and street lighting will be a good place to start. We know of course that this will cost money to the City authorities but I am sure government would be amenable to some concessionary tariffs for streetlighting. Package it as a security issue and the argument will get a lot of traction.

But money will not be an issue if we repurposed these street lights to not only provide lighting. They can serve as the basic foundation for electric vehicle charging points, starting with electric motorcycles and eventually cars. These cannot be serviced by the solar panels that would be installed for lighting.

The beauty of it is that while solar power is green power, what better green power is there than hydroelectric power.

But looking into the more immediate future, plans are underway to introduce 5G and other communication technologies. 5G technologies will require small cells to be installed at regular intervals for the efficiency of the system to work and these will require power 24/7. It would make sense to design the new poles in such a way as to accommodate these new technologies, which the current solar lighting poles are not designed for. By using the streetlighting poles even services like location finding would be much better than they are today and make ecommerce all the more efficient.

"One of the challenges of Kampala is that we do not have common conduits for infrastructure. That is why every time one utility or another wants to lay their infrastructure they come and tear up our roads and compounds. This is expensive and inefficient.....

If KCCA thought beyond just streetlighting, they would help in alleviating this problem. The streetlighting grid can serve as a useful backbone on which all these other technologies can ride if it uses hydroelectric power and not the current limited solar powered solution.

In the world of finance there is also now a lot of green funding as the west tries to assuage its guilt for messing up the planet. So, funding this project if well packaged might be much less costly than anything else.

And the icing on the cake for KCCA, these applications – EV charging, 5G networks and whatever other uses are planned for the future, will be growing revenue streams for the city as we shift towards electric transport and use our phones more and more in our daily lives.

And for the citizens of Kampala reduced disturbances from workers tearing up our roads every other day to lay this or the other infrastructure.