THE CASE FOR ILLICIT ENRICHMENT

This week the Inspectorate of Government (IGG) is pushing for former prime minister’s office principal accountant Geoffrey Kazinda to be charged with illicit enrichment.

Essentially they will be seeking to prove that Kazinda was living way beyond his means, way beyond the capacity of his known incomes could sustain.

In relation to this they will show that he possesses property valued at about sh3b and cars worth sh770m property he could not possibly afford on his sh2m a month official salary.

The IGG has rarely invoked this section of the Anti-corruption act in the past in trying to prosecute suspected thieves, partly due to the difficulty in proving it.

"To prove a person as illicitly enriched him or herself according to the Anti-Corruption act it has to be proved that he must control or possess property that it is doubtful they would have acquired with through their known income or endowments...

Suspects have come up with numerous dodges of how to shelter their ill-gotten wealth, registering it in relatives’ names or in corporate entities which would be difficult to trace back to themselves.

However if investigators went beyond possessions to audit the suspects’ lifestyles they may have better luck. And that seems to be what they are doing with Kazinda.

It seems a no brainer.

"If a man’s known income is one million shillings and he wines and dines at our finer hotels and when the spirit moves him he might hole up in their presidential suite for a week or two or three and when he is not using his designated vehicle he tools around Kampala in a Rolls Royce Phantom, you have to wonder...

It is a schizophrenic society we live in where we know, beyond intuition, that so and so is living well above his pay grade but we not only suspend disbelief but celebrate these types, giving them pride of place in our churches and wilfully put our children under their care.

Our public officials have got away with so much that they no longer feel the need to hide their illicit wealth living in a life of glitz and glamour the rest of us mere mortals are content to watch on TV, paying cash for their children to study abroad and changing their passports annually for lack of space in them for new visas.

In the US the integrity of the financial system is so critical to the smooth running of the country and the credibility of the dollar as a reserve currency, that you can get away with murder in the US but find it much harder to get away with financial impropriety. As one of our politicians found out the hard way at the end of the last century.

Tax evasion, currency counterfeiting, money laundering and general fraud are nipped in the bud not out of any moral superiority of the society but because they cannot allow the rot to entrench itself in the system to the point that it is a matter of national security.

In fact the secret service, which protects the US president and his deputy is also tasked with protecting the financial system of the US.

"You cannot overemphasise that corruption goes beyond depriving services to the public but is also a disincentive for hard and diligent work, distorts markets and readjusts society’s moral compass towards crime...

That the IGG is now looking to go the way of lifestyle audits is a welcome move, long overdue and could put a meaningful dent in the endemic that is concentrating public resources in a handful of individuals’ bank accounts. 

EGO: THE PLACE WHERE POTENTIAL GOES TO DIE

One of the continent’s best speakers on issues of entrepreneurship – if not the best has to be South African Vusi Thembekwayo.

A world champion public speaker there is little you can fault about his delivery.

I thought of him when one of his latest tweets on the subject of business popped up on my screen, “Ego,” he declared “(Is) the place where potential goes to die.”

That stopped me in my tracks. It sounds counter intuitive. Isn’t it big egos that build big businesses? Isn’t that the conventional wisdom?

"The thought is not original to Thembekwayo. Jim Collins in his book “Built to Last”  identified the ambitious leader as key to building of companies with enduring success. But the ambition of these leaders is not for themselves but for the companies or enterprises they build....

Ambition for the company as opposed to oneself would manifest in how the leader is willing to delay his own gratification to build the company; in how he is willing to promote his company above self and in how he is focused on long term sustainability over short term gain.

Ego is defined as a person’s sense of self-esteem or self-importance. The question then is if you are interested in building an enduring business how do you put your ego aside?

We will return to that in a moment.

Last year Thembekwayo in a TED Talk “The big lie of small business” he gave in Namibia outlined the motivations for building businesses.

He said the motivation behind most businesses is to support the lifestyle of the owner. The challenge with these is you can only consume so much and once you have met your needs and wants there is nowhere to go but down.

The other motivation is to build a business to extend your lifestyle to the next generation. But the same issues as before put a cap on how big this business can become.

Then third motivation is to build a business for sale. When this is a major motivation business owners think differently. To build a business for sale you have to build or acquire assets, develop systems that will ensure the business will be able to run without the founders input in future and record all this in a way that is intelligible to buyers.

Of course you can build a business without all these and still sell it but know you will have left money on the table.

And the final motivation is because the business you are building is being employed in the service of a philosophy held by its founders. So for instance when Google declares the philosophy behind its model is “Don’t be evil”. The point is, that this motive is higher than even the desire to sell and if it is to better humankind, such a company can endure for generations.

"So clearly if you want to build an enduring company which not only support your lifestyle and those of your progeny, makes you heaps of money and does good, you have to be motivated by goals outside yourself or beyond your basic needs...

And once you transcend ego you will find the endurance to go past all the speed bumps that life throws in your way – unsupportive friends and family, no cash, trying economic environments  to name a few.

Why ego is not useful is because, ego is what fears embarrassment – which will inevitably come in pursuing great endeavor; ego is what allows you to be distracted by the mice along the hunting trail when you going after an elephant and ego is what determines that there is no need to achieve more because where you are at is “enough”.

One of the major lessons of “Built to last” is that the most enduring businesses see themselves as offering a useful service to society. And for them growth, beyond being a survival strategy, means offering their service to more and more people.

So “Ego: The place where potential goes to die” adds up and explains why many of us cannot get our businesses to exist beyond the first generation of owners.

Anyone who has built a business or any enterprise of substance can probably relate to Thembekwayo’s admonishment.

"When you do it for you, you can only go so far, when you do it for family a bit further. Few of us have built businesses for eventual sale but those who have had can attest to how hard is to not only get the business up and running but also formalise it to the point where you can extract maximum value from a sale...

And finally to build a business which is true to a philosophy is even more testing and leaves no place for ego but promises that if you are true to the process the rewards can be beyond ones wildest dreams.

Food for thought!

HOW MUCH WOULD WE SAVE IF GOVERNMENT MANAGED ITS FLEET BETTER?

This week there was disturbing picture of 11 motorcycles abandoned at Karugutu health center IV in Ntoroko district.

The motorcycles, which looked on the surface in fairly good order had grass growing from under them and were badly cobwebbed.

One can only guess that the motorcycles may have got some reparable mechanical fault but for lack of funds or nearby garage have been mothballed.

And this is not an isolated incident. Hundreds of cars, pick up and even ambulances are rusting away under the elements, in districts around the country, and even in parking yards in Kampala, out of neglect.

"It’s funny though, how the big bosses never lack for a powerful, four wheel drive vehicle, while transport to aid the public have a disturbing frequency of breakdowns....

A few years ago a friend of mine was looking into brokering the outsourcing of the management of the government fleet to private operators.

As he explained it a fleet manager would come in take charge of the government fleet, assign vehicles to officials according to their needs – so no Prado VX for people who are just doing city runs, they would optimise the fleet according to the demands – so its not unfeasible that some departments may have vitzs only and would manage their use via on board computers – so finally government would be able to enforce the no vehicle out after dark rule.

My friend explained that the savings to government in fuel, maintenance, repair and replacement costs would plummet – he suggested that by as much as 70 percent and these savings could be deployed in more critical areas than to pamper government fat cats.

He estimated that government had thousands of cars wheezing around, hundreds of which were surplus to requirement or boarded up. By rationalising the numbers alone he foresaw billions of shillings in savings that is even before we put each vehicle to its intended use and restricting their movement.

That was three years ago. I doubt whether my friend is still waiting around.

It is not difficult to see why. Those planned savings are somebody’s extra income somewhere, somehow. It is not difficult to imagine that a network of public officials and suppliers, from everything from vehicle dealers to financiers would be determined to maintain the status quo.

For example it wold not take a newspaper photograph to alert the powers that be the, that they were out of service. It is even possible that the fleet managers would have been alerted about the condition of the bike before it finally conked out. They would either have called in the bike for pre-emptive work or sent out a mechanic to sort the issue out on site.

As it is now the officials – maybe an agricultural extension worker or an outreach nurse, the vehicles are assigned to are probably grounded at headquarters twiddling their thumbs content to collect their pay check at the end of the month anyway.

What is most likely to happen now is that the bikes will be replaced, the abandoned bikes sold off on as is basis at throw away price and everybody will be happy except the ultimate beneficiary of the services that would come with the bikes. The tax payer may not suffer because he will be blissfully ignorant of these shenanigans.

And this wold happen to the abandoned ambulances, tractors and trucks abandoned all around the country.

"Numbers were hard to come by on what government spends on managing its fleet of vehicles but a full fledged commission of inquiry may well be long overdue....

ARMY GENERAL’S ARREST RATCHETS UP TENSION AHEAD OF UGANDA POLL

The weekend arrest of General David Sejusa and his appearance before the court martial on Tuesday has raised concerns ahead of the 18th February poll, which it is believed will be the most hotly contested in more than three decades. Sejusa who is still on the army roll, was charged…

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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.

OF MODERN DAY SLAVERY AND NATIONAL FAILURE

Last week we read about the suffering plight of some of our workers abroad, specifically women. The stories were harrowing and footage circulating on the net was even more gruesome.

And of course our bureaucrats were falling all over themselves to stave off the PR disaster that these mostly ladies revealed about their experiences.

"How as a country did we come to the point that we are unable to employ our able bodied men and women, release them in to the wide world where they are seen as nothing more than units of production? Expendable units of production...

In the 1970s and 1980s we had mostly two kinds of immigrants --- political and economic. The former category had fallen foul of the powers that be and the latter just couldn’t make ends meet here. With political stability over the last three decades we have had more of the latter and less of the former.

In hindsight it looks like it was easier to sort out the politics of the country or at least stabilise it, than it has been to ensure that economic growth is translated into improved livelihood – development, for the wider society.

Official figures show that by some measures – GDP per capital has doubled to $571 from $258 in 1986 and that people living on less than a dollar a day have plummeted to about 20 percent from about thrice that figure in 1986.

They also show that the country’s Gini coefficient, which is a measure of income inequalities is at 0.43 the best in the region is Tanzania with 0.35. The Genii coefficient scale runs from 0 to 1, the closer the figure is to zero the less income inequality there exists in a country.

Essentially this supports the anecdotal evidence that a lot of the economic growth gains of the last three decades have been concentrated in a few hands and these are mostly in the urban areas.

"To address the income inequalities a combination of continued economic growth, increased investment, reduced corruption, improved labour law implementation and better education for a workers should do the trick...

We cannot get rid of poverty by throwing money at the poor --- although unemployment benefits can cushion the worst hit until they are back on their feet.

Which brings us full circle to our abused immigrant workers. We have let them down. Not only because we do not represent them effectively wherever they are in the far flung reaches of the world but because we have not created a local environment that would make going abroad to do menial jobs would not be their plan A.

On a purely humanitarian note if we better appreciated the numbers surrounding modern day slavery we would not be keen to have our citizens go abroad to forage for work.

Slavery encompasses everything from bonded labour (people working to pay off debt) to sex slavery to child labour to forced migrant labour.

It is estimated that this totally unregulated industry racks in $35b annually or almost double the size of the Ugandan economy.

These slaves do alot of the work the more developed citizens would rather not do out of dignity or because it pays way below their minimum wage levels. By definition these kind of workers work outside the official parameters and a run by illicit gangs for whom human trafficking and modern slavery are just one line of business in an illicit menu that may include drug running, arms dealing and smuggling.

"To hear the stories of the sub human treatment meted out to our fellow Ugandans is heart rending and tear jerking. That they are not a political priority is not because their numbers are relatively small compared to the general population but because and relatedly because once they leave for outside shores they have no one to bat for them at home.We  need to think about that! ...

THE FOURTH REVOLUTION AND WHAT IT MEANS FOR US

The Word Economic Forum closed at the weekend. The annual event held in Davos, Switzerland brings together the leading politicians, businessmen and intellectuals to discuss the world developments.

One of the themes this year was the Fourth Industrial revolution. In human history we have seen three eras that have seen human productivity achieving quantum leaps in technology and they seem to happen every 100 years.

From 1784 the harnessing of steam and water power to cause mechanical production was the first industrial revolution.  Division of labour, use of electricity and mass production starting in 1870 heralded the second industrial revolution. And then in 1969 with electronics, IT (Information Technologies) and automated production has brought us to where we are now.

Following on from our current circumstances thinkers see a world of “cyber physical systems” where not only will all our devices be connected but it is not inconceivable that we will be connected to our devices.

The possibilities are at once incredible and scary.

On the one hand imagine a situation where we would be able to tap much more easily than we do now,  into the data bases of the world, increasing collaboration and reducing the time between innovations. On the other hand there is the possibility of the creation of super smart robots, which raises apocalyptic visions of robots running amok and seek to exterminate the human race, a la Terminator.

"The key thing is that with greater access to information due to better connectivity, worldwide human productivity will increase and usher in the fourth industrial revolution...

About 30 years ago futuristic thinker Alvin Toffler talked about the evolution of power down human history. First it was the strongest man in the cave who was the leader. With the creation of money it soon became the man with the most money who led the society. Physical force is good for coercion but with money not only can you buy the means of coercion but you can actually induce behaviour to your liking by paying for it. And finally he said we were living in the third wave – with the first two trends being the first and second wave. In the third wave it is the man who can generate, store, process and disseminate data that will rule the world.

It is already happening. We talk of the wealth and income disparities in the world. Oxfam ahead of the Davos meet said one percent of the world’s population already control more wealth than the bottom half  combined. At the bottom of this material disparity is an even greater disparity in data generation, storage, processing and dissemination.

This disparity exemplified by the digital divide is what sustains the material inequalities.

However as we have seen with the mobile phone, this increasing connectivity if we adopt it with openness and foresight can help us leapfrog into the 21st century.

For example our challenge now is how we industrialise. People who should know argue that our best bet is to develop our agro based industries. However there are impediments to raising farm productivity, access to the cutting age biotechnologies, access to markets and even tapping into the billions of dollars in finance swirling around the world in search for a home.

Better communication will bring these things much closer to home for us than the Asians in the 1970s or the Europeans at the time of the agrarian revolution.

"With better communication being a landlocked country will not be death sentence as some old school economists have concluded...

But the rising up to this potential is not inevitable. We can miss the bus entirely by refusing to open our communications space to new technologies, drag our feet on rejigging our education system and generally failing to see that some concessions will have to be made now to see benefits well into the future.

Our post-independence governments made the error of stifling the private sector, frustrating capital growth and hoping in effect to distribute poverty. As a result the continent is lagging far behind the rest of the world on every measurable index.

We are on the cusp of a new era, where a break from the old thinking of carving out small spaces and defending the despite overwhelming evidence to the contrary, will make the difference between a better life for our people in the future or existing at sub-human levels , beaten down by poverty, disease and war.

We need to open ourselves to the consumption of these new technologies but also create the manpower to able to adopt these technologies to provide solutions to our own unique challenges.