UGANDA: POPE FRANCIS VISIT A WELCOME RELIEF FROM CAMPAIGN FEVER

Pope Francis visit to Uganda, a trip steeped in history, at the end of this week, threatens to bring much needed relief to a country in the throes of its most competitive presidential campaign in decades. Pope Francis will be the third Pope to visit Uganda when he touches ground…

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WHAT I WANT TO HEAR DURING THE CAMPAIGNS

Last week I spent a day at the inaugural Nordic East Africa Summit, the plan is this will be a forum for businessmen from the region and the Nordic countries to link up, understand each other and hopefully cut deals.

As proceedings at the Nordic Business Association’s  organised event went along It was interesting to notice how many times these cross cultural interactions have people talking at almost cross purposes. It is not difficult to see how that may be.

For one the Nordic countries – Denmark, Finland, Norway and Sweden are a $1.1 trillion economy with a combined population of about 30 million people. There are more than 50 companies from the Nordic countries on the Fortune 500 list – the definitive list of the world’s largest companies.

Our lesser developed business class does not match up, which has real implications beyond the wealth disparities, issues of business practice, of general appreciation of business people and systematic and strategic government support for the private sector.

"In addition to the passage of time you have to wonder how 26 million people, a quarter of the population of the East African Community (EAC) can generate the kind of demand that will build 50 multi-billion dollar companies...

Which brings me squarely to what I want to hear my candidates on the campaign trail talking about.

Increased growth of the business community is the silver bullet to sort out all our problems – political, economic and social and I am sorry I am not hearing enough about what our candidates will do for business.

We should not let our cold war hangups get in the way of economic logic.

The private sector – oftentimes despite the official barriers thrown in its face, is what creates jobs, pays for our general security, infrastructure and social services. To the extent that the country has a viable business community is the extent to which the people will enjoy a good standard of living.

For starters I want to hear our campaigners talking about how they are going to improve the ease and cost of doing business in Uganda. In the most recent Doing Business survey Uganda was ranked 122 out of 189 countries. While this was an improvement from last year’s 135 ranking, being in the bottom half of the index is nothing to write home about.

Measured against a broad measures of indicators relating to licensing and regulations government would do well to focus more on ease of pay taxes, registering property, trading across borders and protecting minority interests in businesses are the measures against we not only fell back but rank poorly.

Interestingly against the measure of getting credit Uganda improved by 86 positions, while we still have high lending rates the introduction of competition in the sector must account for this improvement.

The pricing of credit like any other good or service is subject to supply and demand. It would therefore follow that our lending rates are high due to a shortage of lendable funds. One way to increase lendable funds would be for government to amend how much of workers’ salaries goes towards social security. Currently workers are supposed to save five percent of their income adding just one percentage point would mean a few more hundreds of millions a month going into the banks. 

A figure that will grow as more and more employers sign up.

"That aside government can invest in and encourage business advisory services for businessmen, especially small businessmen. The knee jerk reaction when businessmen are asked what there biggest challenge is to complain of access to finance and the cost of finance. But given how the majority of our businesses do not last past their first birthday however well capitalised they are, suggests a more fundamental inadequacy...

At the Nordic East Africa summit it came through too that finding business partners with a culture – adequate book keeping, strategic processes and operational systems foreign partners could decipher or fit in with, was one of the major deterrents of linking up with local partners.

One participant lamented that because many local businesses are diversified it is difficult to get a true picture of their books, often times an investor buys into a company only to find some hidden liabilities included in the companies valuation they were unaware of.

Sometimes we are just our own worst enemies and we don’t know better than to behave like this.

So yes I want to hear our candidates being more specific on how they will help lift our businesses to higher heights, avert a quick death or getting started on a solid foundation.

THE PARIS TERROR ATTACK, RELEARNING OLD LESSONS

Last Friday a coordinated terror attack on French capital, Paris left more than 120 people dead its wake and the world reeling with shock and groping for answers.

The Islamic State (IS), fighting for control of the parts of Iraq and Syria claimed responsibility for the attack, in retaliation for French operations against them in the aforementioned countries.

"IS as a terror organisation is so brutal in its methods that even Al Qaeda, responsible for the September 2001 attack on the Twin Towers in New York, retch at their methods....

But unlike Al Qaeda which relied mostly on a shadowy network of financiers to fund it’s nefarious enterprise, IS has control of oil fiends in Syria and Iraq that continue to pump fuel and find ready buyers on world markets.

At one point it was estimated that IS was selling as much as 10,000 barrels a day, shipping it out of its territories in kilometre long convoys in to Turkey and then further afield.

This development is disturbing on many front. The two issues that immediately jump to mind are how are they able to produce any oil – it’s not as if you go around the house with a bucket and come back with oil? And secondly how are they able to sell any of it to anybody in this totally connected world?

Uganda is jumping through hoops to get its oil fields ready for production. When all is said and done it will cost as much $20b in infrastructure development in the Albertine region and beyond. And when we are done one probably be able to see from the moon that we have oil fields in western Uganda never mind that at full production only about 60,000 barrels will see the light of day daily. Nigeria can do about 2.5 million barrels a day currently.

So how is it possible with all those high-tech jets wheezing around the middle East that the IS can continue churning out enough crude to actually run a welfare state in many of the places under their control? Reports have it that public workers are leaving their jobs to  go and fight for IS because it not only offers better pay checks but as part of the benefits pays allowances for wives and children.

When the Africa’s “world war” was raging in the early part 2000s, western do gooders came together to ban mineral exports from the Democratic Republic of Congo on the irrefutable logic that it was fuelling the conflict and causing untold suffering for the everyday person in mainly eastern Congo.

The truth be told the campaign merely dented the trade but at least they went through the motions.

Campaigns to restrict these oil exports do not seem to be gaining as much traction as the campaign to shut down export of illicit gems from Africa.

The truth be told, Oil is an essential commodity and normal rules don’t apply to it. But then we find ourselves in a catch -22 situation, on the one hand we want to shut IS down while on the other we can’t wean ourselves off their oil.

"It is not a stretch of logic to say we are actually financing terrorists’ attacks against ourselves by refusing to muster the moral will to clamp down on their oil...

Of course it would be a lot easier if this was only a moral equation. The interconnectedness of world markets means that who is to say that oil from IS is not landing on the bottom lines of some of our most respectable oil traders? And for the sake of profit everyone is pointedly looking the other way?

It is a scary not altogether farfetched scenario, which not only means no one is innocent but also raises the spectre of increased, seemingly random terror attacks around the globe in coming times.

ENTREPRENEURSHIP THE UNDERAPPRECIATED FACTOR OF PRODUCTION

This week is entrepreneurship week, a series of events which will highlight, celebrate and inspire this underappreciated factor of production.

Underappreciated because beyond lip service we do not appreciate the skill of the entrepreneur, because yes, it is a skill not some metaphysical or genetically passed on trait that is the preserve of a small minority among us.

Elementary economics teaches that the factors of production are capital, land and labour. What constitutes each of the above has been undergoing alteration in years. Capital has moved beyond cash, plant and machinery, land too has grown to include things like internet domains and other networks – physical or virtual. Labour has graduated to human resource, because muscle power that the industrial age economists may have been referring to has morphed more into the use of brain power.

Some people have added to these entrepreneurship or the ability to manipulate the previous three factors to show a return on investment.

"Thankfully in Uganda going into business for oneself is not looked down upon. In fact it is expected. Research bears this out...

In 2006 a World Bank sponsored research showed that Uganda was the most entrepreneurial country in the world. A subsequent research put us second only to Chile and more recently a UK research group confirmed our entrepreneurial proclivity.

Success in the market is not inevitable. Some statistics show that fewer than ten percent of the startup businesses survive beyond their fifth year. That dismal figure then puts as at distinct advantage as a country because if we can generate a thousand startups we can expect that maybe 100 will survive that is much better than starting 100 a year and only ten survive.

Our figures also show that entrepreneurship is not a congenital attribute, that a whole society can show a tendency towards it, debunks the notion that it is “in the blood”.

Our underappreciation of entrepreneurship comes from the misconception that – beyond that it’s a genetic condition, it takes money to be entrepreneurial. This attitude explains why we are all saving to start a business “one day”. While it is true many businesses collapse because they are undercapitalised it’s also true that many businesses have flourished while kicking off with the most meagre of resources.

"In trying to understand entrepreneurs, people have come up with all sort of personality traits that one has to have or develop to be entrepreneurial. Top of the list is that they have to have an appetite for risk. This has been scoffed at by the same entrepreneurs, the most successful of whom say that instead it’s the ability to manage risk that is key. They are always covering the downside...

The most successful of them have learnt this over years of experience.

And there are no shortcuts, despite what the movies show. When we see our successful businessmen, we are witnessing the finished product, we have no clue of the hardship and failure they have had to overcome, emerging from each stronger in spirit even if down on their knees financially.

Maybe that is the most outstanding feature of successful entrepreneurs, that while to the rest of the world they look like they are suffering debilitating losses or failure, to them they can say “I never lose. I win or I learn,” leaving the rest of us mere mortals shaking our heads at their “madness”.

You can’t pin down the essence of entrepreneurship but the management of risk and the ability to get up again and again from setbacks have to be at the top of the key criteria for entrepreneurs.

"For a country like ours keeping this pipeline of entrepreneurs is critical. Governments do not generate wealth it is entrepreneurs that do. If the history of the world has shown us one thing, it’s that nations are only as viable as their private sectors, read entrepreneurs...

Entrepreneurs ferret out the opportunities and manipulate resources around them to not only create material gain for themselves, but to provide society with essential goods and services.

 We need to celebrate and encourage the entrepreneurs among us and with us the entrepreneurship week as good as any place to start.

EUROPE HOPES TO PAY ITS WAY OUT OF IMMIGRANT CRISIS ….GOOD LUCK?

This week the European Union leaders met to discuss among other things the unabating flow of immigrants into their countries.

Focusing mostly on African immigrants a suggestion has been mooted for a $2b (sh7trillion) fund, which will among other things pay governments to take back their people as well as finance some projects to kick start their respective economies.

African diplomats speaking on the sidelines of the meeting have pointed to double standards on the EU’s part, which continues to accommodate immigrants from Eastern Europe and the Middle East. Secondly, they doubt the plan will get any support from African governments because remittances from their people abroad constitute critical revenues, that in many countries are their largest foreign exchange earners. In most cases these inflows are greater than all the aid these countries receive.

It does not take a rocket scientist to see why this plan is dead on arrival.

"This plan cannot work if only because it ignores the historical context of the desperation of these immigrants and it will exacerbate the very situation that create this exodus...

According to some statistics the EU is receiving up to 200,000 immigrants from Africa annually, a quarter of all the immigrants from around the world, of these seven in every ten are from Eritrea with other big numbers coming in from Nigeria and Sudan.

These immigrants are mostly fleeing economic hardship in their countries. So the logical sustainable solution would be for the continent’s economies to improve, create jobs and opportunity so that the flow northwards can be stopped or at least slowed.

Africa’s plight has historical perspective that led on to the current predicament.

Colonialism set the stage for exploitation of African resources to enrich the north. Post colonial Africa saw governments serving as agents for the continued exploitation at best or total destruction of value at worst. The rich north unwilling to wean itself off the Africa’s cheap bounty has led to widening of wealth inequality between Africa and the developed world.

Physics tells us that fluids move from a place of high pressure to low pressure until a balance is achieved. This rush of immigration is following the same law, with people moving from areas of high economic hardship to wealthier areas of the globe. The only way this will be stopped is if the continent grows to a level economic development that makes it unnecessary for people to flee Africa.

Blowback defines the unintended adverse results of a political action or situation. This flood of immigrants is blowback.

"Out of political expediency they have decided they will pay off the countries to restrain their masses, which it does not take a crystal ball to know will bring out the worst in our governments as they try to restrict our freedom of movement...

But even worse these hand outs to the continent’s Big Men will only aggravate the problem by ensuring that the bad politics that leads to the bad economics that lead to the flight of people north, will continue.

One of the problems of the continent is that we have all had all this money sloshing about either from the sale of commodities or donor handouts, which means our governments do not have to exercise much budgetary discipline but also that they are not accountable to their own people.

"The worst thing that can happen is for more donor money to flow in as this new plan suggests...

If the solution was easy we would not have wandered in the development wilderness for the last half century with little to show for it.

But clearly we have to produce more. With greater production we can trade more and sustain industries that could add value to our produce, creating more jobs and ensuring higher returns for us.

This can only happen if the quality of our people is raised through education, better health care and improved infrastructure to allow them access the opportunities in the market.

Clearly this has to be a long term plan, which should have started decades ago.

The more sustainable thing for the rich north to do now, is to take in these immigrants and settle for an average lowering of living standards to accommodate them. A smaller price to pay than the cost of the social unrest that would ensue with a forced return of these immigrants to their countries.

THE ECONOMICS OF POLITICAL CAMPAIGNS

Last week was presidential nominations week. On Tuesday President Yoweri Museveni and former Prime minister Amama Mbabazi were nominated and the Wednesday FDC (Forum for Democratic Change) flag bearer Kizza Besigye too was give the green flag to run his fourth consecutive race.

In a show of force each marshalled their respective supporters to come out as a demonstration of the credibility of their campaigns.

The multitudes who came out dancing, singing, screaming and waving tree branches were not your average white collar professional, many of them were unemployed youth or blue collar workers.

The rest of us “serious” people could barely hide our irritation at their processions as they held us up in traffic – especially on Wednesday night.

While we looked down our noses at these unwashed masses we wondered whether they had any jobs or had any responsibility to their families or planned for their future retirement. Our attitude was that they were wasting time and we who had slogged through the day at our desks were the ones who were on the right side of the economic equation.

But maybe we should think again.

"The difference between the wellbeing of individuals from place to place are determined by political boundaries, imaginary lines in the sand that make the difference between whether your children go to school or not, whether you can find work or not, whether there is enough peace and security to allow you to protect and grow your property....

How society is managed is determined by the political elite who run the country on our behalf enabled by our voting them into power or by our succinct approval of their stay in power even if we had nothing to do with it.

The challenge is that the elections are not a test for competence in economic or political management. Political processes often reward those who have the resources to project their will.

So back to our roving masses. We might thumb our noses at them but they are leveraging the process for their own betterment. Whether this materialises or not is another thing altogether.

They recognise that their welfare – beyond the few shillings they will get for escorting one candidate or the other, is dependent on the person in power and they express their support in the best way they can.

It’s like in the village if you cannot donate bunches of banana or beef to your neighbour’s function you can donate your labour to support the cause.

"The point is those masses standing by the aspirants are determining the economic direction of the country. You dismiss them at your own peril...

In more developed democracies, economic interest groups determine the candidates’ agenda. So the labour unions will back one candidate against another on the basis of guarantees on minimum wages and other employee benefits. The captains of industry will back another candidate in exchange for favourable tax legislation and a roll back of costly worker benefits. Depending on how well organised either groups is will determine whether a candidate wins at all and if he does what the tone of his administration will be.

So in western democracies who gets most support will determine whether working environments change or whether the rich get to keep most of their money at the expense of the rest.

So if Uganda is still lagging way behind on its development indicators it is an indication on who are the major pressure groups in our political processes. It’s not that your semi-literate cousin in the village deserves a lesser living standard than yourself but he probably does not know better to press for more. And because he does not insist on more his candidates need not exercise their mind too much in how to improve the general welfare of the population.

"In short, even if you have decided that politics is a dirty game, it’s the only game in town. And those who are leveraging the system to their own ends, whether these be detrimental to the general economy, are getting their way...

As an example, with our first growing population, which is doubling every 20 years, we need to shift progressively and consistently away from subsistence to commercial agriculture. So we need to be supporting all our farmers to make the transition through better infrastructure and extension services.

However to make this transition what needs to happen? Their needs to be land reform and distribution, more people have to be brought into the tax net so our huge infrastructure deficit can be bridged faster.

All unpopular measures that may alienate a candidate from the rural masses and cost them votes.

Ideally if a government panders to the productive forces of society – the manufacturers and other businessmen, the economy would become more productive and everyone would benefit from the improved public goods the government can offer as a result of the increased taxes.

IS THIS UGANDA'S YEAR OF THE PRESIDENTIAL RUN OFF?

A presidential candidate needs to win 50%+1 vote of the popular vote to be declared winner. If this is not achieved by any candidate a run off is scheduled in which the two top contenders face off.

Since 1996, when the current constitution was in effect, President Yoweri Museveni has been in little danger of suffering a runoff. His best showing was in 1996 when he won 75.5 percent of valid votes and his worst showing was ten years later in 2006 when he managed 59.26 percent of the vote.

In more advanced democracies these numbers would qualify as resounding or even landslide victories.

Following nominations Museveni and Kizza Besigye will face off for the fourth time in as many outings, but this time former Prime Minister Amama Mbabazi has thrown his hat into the ring.

Mbabazi’s previous prominent position in the NRM, made him one to watch out for, but observers were dubious about the credibility of his challenge divorced from the structure of the NRM.

Mbabazi’s rise to prominence as the possible single opposition challenger and the size of his post-nomination rally at Nakivubo sent strategists back to drawing table. Mbabazi, known more as a backroom operator than a presser of the flesh, may have raised the very real possibility of a run off for the first time in the last twenty years.

"A caveat on political rally numbers as they relate to voting patterns is in order at this point.
Besigye and his predecessor then Democratic Party president Paul Ssemogerere have always managed to muster massive crowds in Kampala and around the country but have struggled to manage a third of the cast votes when ballots hit the box...

Rally crowds are good for building the perception that one is a real contender but the crowds that make up these rallies include non-voters, curious types who just want to see the candidate and even people from other camps, including those drives who have to go along with the crowd to get to where they were going initially.

That being said however, in all elections since 1996 no third candidate was able to create a crowd that rivalled that of Museveni or Besigye, which puts Mbabazi in a special position, as king maker if he can sustain the perceived momentum.

Perceived because one campaign rally does not a full campaign make.

Museveni has canvassed this country multiple times in the last five years, Besigye has done it at least once in the same period,  when he was campaigning to be the flag bearer of the FDC (Forum for Democratic Change) party their crowds were par for the course.

Hypothetically speaking we know who make up Museveni’s crowds – establishment supporters who have done well in this administration and want a continuation of the good times (the same as supporters of the status quo around the world). Besigye’s support base is made up of those who have found themselves out in the cold, and have worked out their best chance at the high table is to upset the status quo ( like any other major political challengers around the world).

Then the question would be where would Mbabazi’s numbers come from?

The tone of his campaign suggests that he is targeting the disgruntled in the NRM, as well as opposition members who think a Besigye challenge will end in predictable defeat.

"There is an interesting number that one imagines all the candidates are watching and that is the number of those who are registered voters who do not vote. These fence seaters have been growing in proportion since 2001 when it was at its lowest of 25 percent. In 2011 the figure was about 45 percent...

Conventional wisdom has it that these are normally aggrieved with the government but see no worthy alternative for their vote.

Is this the year that the ambivalent come off the fence?