READING, MORE THAN AN OVEREMPHASIZED PLEASURE

Wednesday was the fifth celebration of Drop Everything And Read (DEAR) day. Commemorated on the third Wednesday of March, the day was launched in Uganda in 2013, a collaboration between the education ministry and the US Peace Corps as a way to promote reading culture and a love for learning.

At 11 am on the day people were encouraged to put down whatever they were doing to read for 20 minutes.

"One organiser was almost apologetic in asking people to read for 20 minutes, making the concession that if people couldn’t handle 20 minutes they should at least do five minutes!...

Some regular readers did not even try because if they sunk their teeth into a good read, 20 minutes just wouldn’t do and they may be tempted to extend their reading at the cost of their regular jobs.

There are numerous benefits to reading – it improves concentration, creativity, vocabulary, memory and analytical skills among many others.

Seven in every ten Ugandans above the age of ten is literate. For a third world country like our own literacy is not enough. We need more and more people reading, and not only road signs and office reports.

In his book, “Hive Mind: How your nation’s IQ matters somuch more” author Jones Garret, makes the point that one would rather be of average intelligence in a high intelligence environment or country than be of high intelligence in a country with a generally low intelligence. He used the standard IQ test to measure intelligence.

"High average intelligence nations not only create a bigger pie for everybody but by extension carry everyone along, the opposite – high intelligence in a low intelligence environment, does not help the sole genius or the dull masses....

He showed that above intelligence nations have, “the cognitive skills, the human capital, to take on the complexity of a modern economy.”

If you drill down further on an individual level, you are richer or poorer than the next man because you know something or you don’t know something they know. This knowledge can come from experience or much quicker through study – formally or informally. This knowledge is the value that the market pays for.

The Jews known for their financial savvy, it is said their houses are not complete without a library, oftentimes built over generations. Isn’t it the great author who said, “There is nothing new under the sun”?

Studies suggest that people read because they see their parents, significant others or their peers reading.

Unfortunately anecdotal evidence suggests that we are reading less and less and the youth are not taking up reading, beyond their school notes.

But can they be blamed? Their parents and significant others are rarely seen with a book in hand and they have no libraries in their homes, not even for show.

We are distracted by our phones, 24-hour television and the proliferation of entertainment spots around us. The electronic media are not unlike fast food -- they require little if any powers of concentration, abbreviate storylines, employ gratuitous violence and sex to keep the consumer’s attention. Creating a false impression about everything from the process of success to the meaning of relationships.

"We are neither building our individual knowledge base nor that of the country and if author Jones Garret is to be believed, is it any wonder that we continue to be a poor nation decades after independence?...

Before anything happens there has to be a thought, a desire, an intention. From the intangible comes the tangible. From the mental, spiritual comes the physical.

It follows doesn’t it then, that the quality of an outcome depends on the quality of the input? Garbage in, garbage out.

Clearly we are putting a ceiling on our potential by failing to feed our minds through reading. And this need not be non-fiction reading as fiction reading does a lot to stimulate creativity, analysis and comprehension, vital skills in a fast changing world.

If you have read this up to this point I am preaching to the converted. To help the uninitiated it would help to start walking around with a book --- even if it is for show!

MY FAVOURITE BUSINESSMAN

It is the stuff of legend.

The story goes that on Saturday’s Charles Lubega would mount his speakers on his window which faced into the quadrangle at Livingstone Hall and set his player to play. He would then climb down the stairs basin and clothes in hand to do his laundry as he listened.

After not so long Saturday morning at “Stone” was a heaving mass of activity as other students stopped by to sample Charlie’s latest hits.

As his popularity grew he set up at the Guild Canteen, playing on Friday’s, Saturdays and sometimes due to public demand, on Sundays as well.

He did not stop there. Buying an additional set of machines to open his mobile disco. No party was with it, without the sound of Soul.

And then Patrick Bitature, wanted out of Ange Noir. And the rest as they say is history.

This is more than a quarter century ago, but Ange Noir – now Guvnor, still lives on, dominating Kampala’s night life, after all comers have come and gone.

This is not gospel truth, Charlie just does not tell his own story. But we shall not let the facts get in the way of a good story.

"Entering a market that was almost non-existent, raising standards incrementally, building the barriers to entry unilaterally, to the point now that there are many revelers who will not settle for less, at home or abroad...

Ange Noir has not only maintained a loyal crowd from the 1990s but has added subsequent generations of merrymakers and all without being tempted into race-to-the-bottom marketing gimmicks. This has ensured that standards have remained high – be it in the quality of the playlists, the ambiance or service.

So popular is the industrial area hangout that attempts to create some price discrimination and stratify the clientele by pocket size have fallen flat.

For a long time he has been my favourite businessman, but more and more I am liking what Lawrence Mulindwa is doing off Entebbe road.

Mulindwa last week unveiled a new coach, Portuguese Jorge Miguel Da Costa Duarte for his Vipers Football Club.  This came fast on the heels of an announcement of a sh500m Roofings Ltd sponsorship deal. Only days before his brand new 20,000 seater stadium at Kitende was cleared by the sport's African football authority, CAF, to host continental matches.

But what we are seeing is the finished product, or at least the rough outline of not only a great sporting establishment but a first class business too.

Initially there was the school St Mary’s Kitende, which has not only taken over domination of school soccer from Kibuli and Old Kampala, but has gone on to dominate the East African regional school competitions as well.

But he didn’t stop there, buying and converting stragglers Bunamwaya FC into Vipers FC as a preliminary destination for his school talent to settle.

"The last part has already paid dividends as at least a dozen players are already plying their trade abroad, with the most prominent of them being Farouk Miya, Lwanga Kizito and Yunus Sentamu who are playing professional football in Europe...

The stadium, the biggest stadium built in this country in 20 years, is just icing on the cake.

In a sporting business the main asset class is the intangible assets, where players would lie. 

Manchester United in 2016 reported total assets of about $1.95b of which intangible assets accounted for about half the total assets at about $900m. Fixed assets which include Old Trafford, the stadium, came in at about $300m

Looking at the whole Mulindwa operation from this perspective, he not only has a top team but has a rich pipeline of talent coming through from his school, which for all intents and purposes is the equivalent of a soccer academy in the Europe.

The beauty of this is that not only are the players developed from an early age, but when they are sold off the sell price is almost all profit.

Of course, there is a lot of work to do moving the operation away from one driven by its founder and chief backer, to a fully-fledged corporate organisation, which hopefully will outlive Mulindwa.

The lessons from my two favourite businessmen are many but a few stand out.

One, think long term. Don’t clamour for the quick gains. Be willing to forgo the good for the better and be willing to do the time and put in the work.  And relatedly don’t be content to being a big fish in our little, small pond. A few million shillings is plenty in Uganda, but with a million-dollar or even billion-dollar vision will make a world of difference. A business can only grow as big as its promoters dream, the bigger the dream the bigger the company.

"These heroes are important if only because when everyone is hemming and hawing, whining how it is difficult to make it in Uganda, they are keeping their noses to the grinding stone and showing how it can be done. In the process serving as inspiration for hundreds of thousands of businessmen in urgent need of local champions...

Charlie remains atop the Busharizi honours list, but only just.

IT’S A DISASTER THAT WE DON’T WRITE

In the last month we have had three of our eminent citizens go to meet their maker.

Last month two businessmen Heny Bugembe Luggya and Bonny Katatumba and this month elder statesman Jehoash Mayanja Nkangi passed on.

Of the three only Katatumba published a biography of his life, an inspiring narration of how he rose from selling banana juice to becoming a billionaire and diplomat.

That Luggya and Mayanja Nkangi did not put pen to paper about their lives makes it a double loss for us and generations to come.

In his book “Guns, Germs and Steel” author Jared Diamond attempts to explain why the north -- Europe and America is rich and south – Africa, is poor. He lists several factors – orientation of the continents, the agrarian revolution and the domestication of animals among others. But the one relevant for us is the development of writing.

"With the development of writing events could be transmitted across time and distance accurately and effectively. This was a revelation because it meant that the communities with reading and writing skills need not reinvent the wheel every time they came across transportation challenges....

Isaac Newton is supposed to have famously said “If I have seen further it is by standing upon the shoulders of giants” His coming up with the laws of motion that laid the foundation for mechanics with near universal application in everything from cars to aviation and electricity generation.

He built on the works of Nicolas Copernicus, A polish mathematician who first pointed out that the sun, not the earth, was at the center of the universe, Italian Galileo Galilei the “father of scientific method” and Johannes Kepler, German mathematician who did work on planetary motion.

These three were not only not contemporaries but also came from different nations. Europe is now easy to traverse by road, rail or sea but in Newton’s time England was as far away from Italy as maybe New Zealand is to Newton’s old haunts at Cambridge today.

But since his predecessors had a written record of their work Newton could continue from where they left off. This applies to any subject’s development that you can think of.

Our elders who are going to their graves without writing out of humility or even ignorance, may think their experiences does not amount to much but if enough of them wrote at the bare minimum we would benefit from a history that is multisourced and an eventual true account of history.

Unfortunately it is not a situation unique to Uganda and is probably at the heart of the question of why the western economies get richer while we the poor southern economies continue to flounder, lurching from crisis to crisis and failing to make significant progress.

According to a report by the United Nations Education, Science & Cultural Organisation (UNESCO) African countries at the bottom of the list of books published annually which is topped by China, US, UK and Russia. The highest ranked African county is Egypt at 38, then South Africa (45), Nigeria (63) and Morocco (68).

Another list reported in The Guardian newspaper in 2014 tallying books published per million in 2013 had the UK at the top followed by Slovenia, Australia and the US.

"The point is that even though literacy levels are near universal now in many of our countries we use them for little else than to pass exams and get around. We still fall back on our oral traditions, see how we have the highest rates of voice phone usage of any region in the world...

It is essential, even critical for our very survival as a people, that we document our doings and save them for posterity.

That it is a bad omen to write your memoirs or autobiography should be dispelled.

Many years ago an older man narrated to me the changing motivations that drove him threw his life.

At first he wanted to go to school to become a primary school teacher, because he worked out that it was primary school teachers who could own bicycles. Then he thought he needed to read some more, pass his o-level because then he could work in an office at the district headquarters and drive a car. 

Eventually he studied the natural sciences because he wanted to do forensic science and become a detective like Sherlock Holmes.

His story has also gone begging. But in that simple narration he would have given millions of boys and girls inspiration to push on, deriving courage from the small steps they make every day that they may also lead to bigger things in life.

And by extension as a nation if we are going to move to the next level of development we need for our people to document their lives – it is much easier now with the ICT tools available to all of us.

CORPORATE UGANDA NEEDS TO READ UP ON WARREN BUFFETT

US billionaire Warren Buffett last week released the annual report of his company Berkshire Hathaway.

Beyond the big numbers – net earnings were down marginally to $24.07b from $24.08b in 2015 and the announcement that his company has $86b in cash and near cash stored up, his annual letter to his shareholders always makes for good reading as it lays out his thoughts on business, corporate governance and investing.

This year he wrote about his confidence in the US economy’s prospects and about his more than half a century investment philosophy.

For the uninitiated Buffett is the world’s richest investor having built his wealth over the last 70-odd years threw shrewd investments in everything from insurance, manufacturing, media, consumer goods, energy and railways.

He has led his company Berkshire Hathaway for the last 51 years. He has almost all his $76b of net worth in the company. He built the company from a failed textile mill into a conglomerate now valued at about $440b through a series of equity investments and outright company purchases.

His stellar record as an investor – his company value has sky rocketed about 9,000-fold over the last half century, his having come out not only unscathed but stronger from every major financial crisis of the last half of the 20^th century means that when he speaks everyone, who is anyone listens.

"Corporate Uganda is currently suffering through a trying economic environment. Falling revenues, thinning margins and unrelenting competition from regional and international competition are making for many sleepless nights...

Buffett’s thoughts on the economics of business are insightful and well delivered but where he really stands out is on his emphasis on corporate governance as grower of company value is what sets him apart from many.

He thinks it all begins with company culture.

“Cultures self-propagate …. Bureaucratic procedures beget more bureaucracy, and imperial corporate palaces induce imperious behaviour. … As long as Charlie (Munger, vice-chairman) and I treat your money as if it were our own, Berkshire’s managers are likely to be careful with it as well.

“Our compensation programs, our annual meeting and even our annual reports are all designed with an eye to reinforcing the Berkshire culture, and making it one that will repel and expel managers of a different bent. This culture grows stronger every year, and it will remain intact long after Charlie and I have left the scene.”

Isn’t the challenge these days that many managers or employees don’t see the company’s fortunes as tied to their own? That what is good for the company is good for them? That the attitude seems not to be about building legacy but plundering the company as fast as possible, hopefully before they get caught?

And Buffett recognises that beyond culture the next filter for improved corporate governance is in the recruitment process.

“In looking for people to hire, look for three qualities – integrity, intelligence and energy. And if they don’t have the first, the other two will kill you...”

Enough said.

As a logical follow-on he puts a high premium on reputation – his own and his company’s.

“The priority is that all of us continue to guard Berkshire’s reputation. We can’t be perfect but we can try to be. As I’ve said in these memos for more than 25 years: “We can afford to lose money – even a lot of money. But we can’t afford to lose reputation – even a shred of reputation.” We must continue to measure every act against not only what is legal but also what we would be happy to have written about on the front page of a national newspaper in an article written by an unfriendly but intelligent reporter.”

And he doesn’t stop there.

“Sometimes your associates will say “everybody else is doing it.”… It is totally unacceptable when evaluating a moral decision. Whenever somebody offers that phrase as rationale, in effect they are saying that they can’t come up with a good reason. If anyone gives this explanation, tell them to try using it with a reporter or a judge and see how far it gets them.”

And finally he argues that companies may get away with poor corporate governance but the day of reckoning is never far behind.

“When the tide goes out you will know who has been swimming naked...

When the economy is in good shape everyone looks like a fantastic business manager. But the boys will be separated from the men in hard times, with those coming out the other end being those who have beefed up their systems, managed their costs and have enough built in buffers to weather the storm.

Buffett has been writing and speaking for more than a generation. The Chinese say that if you want to climb a mountain study all the possible routes and then ask someone who has been there.

Corporate Uganda would be doing itself a big favour if it read up on Warren Buffett aka the Oracle of Omaha.

THE EALA CAMPAIGNS SHOW THERE IS HOPE FOR UGANDA YET

The just concluded east African Legislative Assembly (EALA) final campaigns made for interesting television but on a much broader level suggested there is still hope for Uganda yet.

On Tuesday the EALA nominees made their last pitch to an animated parliament. MPs caught up in the occasion were chanting, cheering and heckling in equal measure and one couldn’t help feeling they were glad, gleeful even relieved to be on the giving rather than of the receiving end of the attentions they endure during their own campaigns.

It begun with the NRM nominations. As is now normal with NRM contests they were spirited and just only managing not to tip over in to nastiness and chaos.

For we on the sidelines we wondered what was all the fuss about. The East African parliament seats hundreds of kilometres in Arusha, Tanzania and while their deliberations have far reaching consequences for the rest of us mere mortals, they get so little coverage as to be literally ignored.

Of course the chief benefit is financial.

On the one hand members of EALA do not have to suffer the unwanted demands of their constituents and on the other hand by whatever measure you use these members can look forward to fat paychecks.

"According to reports the legislators can expect about $15,000 monthly (sh54m) in basic salary and allowances...

This is a lot of money.

But interestingly our brightest minds or most prominent businessmen showed little interest in putting themselves up for election to EALA.

In the late 1980s some really quality people put themselves up for election, suffering the ignominy of people lining up or not behind them up the levels of the political process to get a chance to get to the legislature.

One can argue after many years of being shut of the political process by shrewder operators and eventually the army, the elite of Uganda saw this as a chance to contribute to the country’s progress through politics.

However one has to remember that paychecks all around were wanting, while the consistent pay and easy living of government officials were there for all to see. In a depressed economy where the civil servant was the biggest working class and the parliamentarians were not grappling with consistent payouts one can see how politics was a credible enough meal ticket.

Fast forward to the present and the employment options are such that the best and brightest would rather take less pay than join the rough and tumble of politics.

Looking down the list of nominees to EALA it was safe to say the productive sectors of Uganda will not miss any of them.

This is good.

"If a society’s incentives are slanted towards public administration and not the productive sectors – agriculture, manufacturing and services; If the brightest minds highest ambitions are to work in the public service; if our brightest and sharpest are forgoing the meritocracy of the private sector for less in the public sector, then as an economy you know you are in trouble...

This can happen if the private sector is on its knees and therefore the economy is in dire straits or if the government is the only game in town, as in the days of communism, which means the economy is in the toilet anyway.

To everyone their own.

It therefore makes sense that for politicians to protect their tough they need to keep the economy ticking along so business can flourish and employ more and more people and even if MPs increase their pay the attraction will be limited for other potential, but otherwise gainfully employed people.

The Uganda economy has a long way to go – we are still not a middle income economy, but as an indicator of how far we have come, the EALA campaigns showed that there is still hope for this country.

AFRICA HAS DEVELOPED, AND CONTINUES TO DEVELOP, THE WORLD

Last week Gerald Capland writing in The Mail and Globe in response to his prime minister’s Justin Trudeau’s intention to rethink Canada’s African strategy pointed out that the west has been ripping off Africa for 700 years and that would be a good place to start from.

And he says beyond the colonial era the plunder continues and has in fact accelerated. In 2012 Africa received $1.3trillion from the west this includes aid, investment and income. But in the same year $3.3 trillion flowed the other way. We gave away more than we received.

If we go back in history colonialism was about extraction of raw materials to fuel home industries and to ease the pressure for jobs at home. Of course it was couched as a humanitarian effort to civilise the black man, but don’t tell that to the Congolese or South Africans or Algerians who suffered the worst excess of the era.

"The second world war so severely drained the colonial powers that they allowed independence to happen but by that time they had so rigged colonies to continue serving them that independent Africa continued to supply western industry and to serve as a cash cow for them...

For instance the infrastructure from the producing areas to the ports are better developed than the infrastructure between towns in our countries.

Of course the few leaders who took independence too seriously got overthrown or paid the ultimate price.

Fast forward to the present and many of Africa’s nations had shaken off the post-independence economic down turn and were beginning to look up again – with leaner governments, increased revenues and booming private sectors.

However, taking Uganda as an example we still continue to export raw coffee, cotton, tea and any number of commodities along the same roads and railways, to the same ports that the colonialists built.

This is important because development history shows that before you can become a great exporting nation you need to be able to trade with yourself first. This happened with US, with the European Union and even with the Asian nations. But somehow we are going to turn history on its head and become export led economies without being able to trade with ourselves first?

The global financial crisis was a god send. With demand for our exports falling in the west, the East African common market kicked in. To the point now that Kenya is Uganda’s biggest trading partner and a leading source of investment and not the UK or Europe as was the case before.

"But to subvert our independence there had to be willing accomplices. The elite in these nations who had gone through a colonial education system and continue to take lessons at the feet of the master either actively subverted efforts for greater self-reliance or unknowingly helped the project along, content with the status quo and unwilling or incapable to question why things are the way they are.
And this last scenario is particularly worrying...

As a nation we are poor because we are unable to aggregate our great wealth and employ it for our benefit.

They say that the estimated value of all the extractable natural resource in the Democratic Republic of Congo is worth $12trillion. This the equivalent of the USA’s GDP. But Congo’s per capita GDP is about $500. And why can’t the Congolese harness this wealth to benefit themselves?

In Uganda we have almost half the region’s arable land, about a fifth of our land is under water and we have two planting season’s annually but right now we are in the throes of drought induced starvation in many parts of the country.

The same can be said for any number of countries on the continent.

And why don’t we aggregate these resources of ours – human resource, land and capital? Because it is too difficult when factored against the handouts we get from abroad.

About a decade ago when we were making tentative steps towards beefing up our treasury bond and bill markets – avenues for domestic borrowing, those opposed argued why should we bother when donors can lend us or even grant us multiples of the money we could raise locally at much lower rates.

The detractors were ignoring the long term good of having the local mechanism to mobilise resources versus the expedient option to raise money from donors.

Thankfully the promoters of developing our local bond markets soldiered on because as sure as night follows day we continue to fall out with donors and they keeping cutting off or threatening to cut off their aid.

Where would we be if NSSF had not been launched in 1985? The fund now has assets totalling sh6.6trillion the biggest in the region. While most of NSSF’s assets are concentrated in fixed income products – bank deposits, bonds and bills, a process is under way to ensure more investments go towards companies and real estate. However a lot of the money the banks have to lend to the public come from NSSF. In fact since NSSF mechanism in place government to aggregate more resources should raise member contributions to seven percent of the income up from the current five percent.

A two percentage point increase in worker savings can increase monthly contributions to about sh80b or s120b a year. A net benefit of this may even be a lowering of lending rates.

"The point is that we have been made to believe that we are helpless, even hopeless. That we cannot develop unless we are helped from abroad. That our challenges are so vast that trying to mobile our resources will be wasting time so we should look abroad...

And we with our degrees, MBAs and PhDs have swallowed this thinking, hook, line and sinker – of course the token consultancy fees, free business class flights,  big salaries we earn as big fish in the small ponds we paddle in, are enough to deaden our thinking.

But then day of reckoning is fast coming.

AGRICULTURE IS WHERE IT IS AT

In his book Acres of Diamonds author Russell Conwell tells of the man who sold his land and went out to seek his fortune. After years of work and travel he returned convinced that making a fortune was not for him, only to find that the new owners of his land were now working a diamond mine on it worth multiples of what they had bought the land at.

As analogies go, that perfectly mirrors Uganda’s experience.

Last weekend the Vision Group had its inaugural Agriculture Expo at which suppliers and practioneers (actual and wannabes) came together to share and learn from each other. It was a wildly successful event – long overdue for an “agricultural economy” and a good eye opener to what opportunities are literally lying around us.

The numbers roll of officials’ lips – at least two in three Ugandans live off the land, agriculture accounts for at least 30 percent of economic output, the country has almost half the region’s arable land, we are blessed with two rain seasons annually (which maybe something we may have to revise in future) and so on and so forth.

But in those numbers is the explanation why income and wealth inequalities are widening.

"If 70 percent of your population is sharing 30 percent of your output that means there is a 30 percent that is wolfing down 70 percent of our output. Interestingly Uganda’s urban areas account for about 30 percent of the country’s population...

It is not a stretch of logic to see that most of Uganda’s GDP is generated and consumed in the urban areas.

How can this be?

To begin with urban areas mean concentrations of people. These people are easier and cheaper to serve with social amenities – education and health services and infrastructure – roads, power and telecommunications than the more dispersed rural populations.

The net effect of this is that urban populations can do more and more with less and less, while the opposite is true for their rural cousins. So for example for a cook in the village they have to gather firewood, light the firewood – whose heat cannot be regulated accurately, start cooking with flour which has been ground manually and then …. You get my drift. The amount in time, leave alone energy needed to prepare a meal means other activities have to be put on hold. A similar housewife in an urban area can whip a meal in a fraction of a time it takes for her counterpart in the village leaving her free to help with her children’s homework or go to evening school or just hang out with girls.

Its those time saving devices that make people more productive in urban areas and by extension richer.

There is very little our rural cousins can do about population densities in the short term. But they can improve their production methods immediately by using modern farming methods. And we are not talking about mechanisation.

Simple things like using good plant spacing, inter cropping, improved seeds and reducing post- harvest losses to begin with, would be a good start.

I remember about a decade ago the quality of coffee farmers’ harvests and hence their income, in the  south western Uganda improving in leaps and bounds because instead of drying their coffee on bare ground they were laying a tarpaulin on the ground before they poured their coffee on it. This was in the 21^st century...

We can do all this before we even start talking about inorganic ferterlisers, irrigation systems and value addition.

We are a small holder agriculture economy because the colonialists opted for that model of agriculture production than the plantation methods used in Kenya, Zimbabwe and South Africa. Which while it means our farms are less productive, also means we are more in control of our own food security.

It also means that improvements in farm productivity would directly benefit the average man than some big time farmer with hundreds of acres under ginger.

While we whine about being poor as a nation, pander after mineral wealth that is hard to exploit and wonder what curse has befallen our nation the acres of diamonds lie under our feet. And isn’t it true that we are already abandoning our lands to find our fortunes in the cities and abroad? And who will come from outside to show us what we left behind?