AIRTEL GAINING ON MTN, UTL FLOUNDERS

Going by recent events, the industry to watch in the next few years will be the telecom industry. Not only for the speed of innovation in the technologies employed, which is interesting in itself but also for the possible reconfiguring of the sector as the competition heats up.

The government’s UTL is all but buried.  The government’s uncoordinated troop movements not helping its cause.

UTL, which was hived off from the original Uganda Posts & Telecommunications Corporation to prepare it for privatization has been a case study of how not to privatize a state enterprise.

Already mismanaged to begin with, about 20 years ago a controlling stake was sold to a shadowy investor with implied ties to Germany’s Deutsch Telekom, who failed to come through. They then flogged off their stake to Libyan investment fund, Lap Green.

The Arab spring, the fall of Muammar Gadaffi and the freezing of all Libyan assets, put paid to Lap Green’s usefulness, forcing government to take it over in 2017 and put it under administration last year.

"The company is sh700b in the hole, with assets of around sh350b. It has failed to meet it obligations to its creditors and for all intents and purposes should be shut down, were it not for vague references to its strategic value to the country...

The public tug-of-war between the company’s administration and government makes it even more unlikely to attract a credible investor. Government is really only postponing the inevitable.

But the real action seems to be playing out between South African based MTN and Indian Airtel.

In a recent publication it was gleefully announced that Airtel, for the first time in 2017 and again in 2018, was more profitable than MTN, although the South African firm was still pulling in more revenues and continues to grow its revenues faster than its closest competition i.e. MTN’s revenue growth stands at 18.5% in the last three years vis-a-vie Airtel’s growth of 17.2%

According to the report, which was not disputed by Airtel, in 2018 they made a profit of sh338b up from sh245b the previous year, while MTN managed sh220b profit last year compared to sh152b the previous year. That trend however is reversed when you look at revenue growth. While the revenue gap between Airtel and MTN was sh282b in 2017, MTN stretched this to sh340b in the year ending 2018.

Taking the report at face value, it’s clear that the competition in the telecom industry is much more cutthroat than was previously thought. Which throws up some interesting possibilities for the clients, industry and the country as a whole.

MTN is only just recovering from a bruising run-in with the government, which inadvertently or not, coincided with negotiations surrounding its license renewal. The company had a 20-year license as Second Network Operator that expired last year and yet has not been finalized.

Government has set a $100m fee to renew their mandate for the next ten years.

So the revelation about Airtel’s recently achieved parity should have the government licking its lips for the day their own license comes up for renewal. As a public service operator it has been paying $100,000 for its license for five year terms.

But the figures also throw up another fact. For a while now, MTN has been blamed for having an adverse effect on the Uganda shilling. That every time they repatriate dividends to the parent company the shilling is hit. But clearly Airtel is repatriating more money than MTN and therefore just as “guilty”.

But for the industry, there may be lessons to learn from Airtel. The brand parented in India, has been able to manage some operational efficiencies, which allow them a profit margin of 28 percent, twice as high as that of their South African rival. And they were able to achieve this while fighting to win market share from their main rival. Could it also be a factor of Airtel’s cost sensitive business model – which maximizes returns by driving aggressive bargains with third party suppliers? While MTN has over the years placed big bets on network coverage and innovations like mobile money?

"These factors notwithstanding, from a consumer’s perspective, Airtel seems to have more pricing wriggle room than MTN and given the price sensitivity in the market, they are better positioned for a price war....

On a more philosophical note these recent events show that the industry is the perfect poster boy for the liberalization of the economy that the government launched more than two decades.

Competition has not only broadened the range of services – from voice calls to financial services, it has driven the cost of services down, without compromising the quality of service and those who cannot keep up the pace are kicked to the side.

That being said the industry can be more attractive if government leveled the playing field so that investors can make an objective assessment from afar of the viability of the industry.

In the mean time we best advised to sit back and enjoy the ride.

GOVT NEEDS TO FIND ITS LOST COURAGE, STOP FLIP FLOPPING ABOUT

Last month we looked over the budgets of the last 33 years. The budget which is a plan of how government will spend money and make it, is a good indicator of a government’s priorities.

Inheriting empty coffers, the NRM in the 1980s had to make hard, unpopular decisions to jump start the economy. They understood and rightly so, that without an economy all their talk of restoring peace and order, democracy and lifting the Uganda society out of its perennial cycle of poverty, disease and war would just be hot air.

First they got the National Resistance Council members, the equivalent of our MPs to pay taxes on their incomes. For the first two years in the house their allowances were going untaxed. Imagine trying to get our current crop of MPs to pay taxes.

The government went against other interest groups – removing taxes on coffee exports, liberalizing trade in all commodities, licensing forex bureaux, privatizing state enterprises, the 1990s bank closures.

 "Everyone of these initiatives took bravery, as they were vested interests in their perpetuation, who fought hard and dirty to maintain the status quo, even if this would be detrimental to the economy....

Government, thinking that because it was in power it could subvert the laws of economics, tried printing money to jump start the economy. This triggered an inflationary spiral that sent the economy into a tail spin. Thankfully commonsense prevailed and the madness was stopped only when inflation hit 240 percent.

With that kind of inflation, prices were doubling every three months. To give you a sense of this, if your kid’s school fees was a million in January, it would have doubled to sh2m for second term and doubled again to sh4m by third term!

If they had remained on this treacherous course we would have ended up like Zimbabwe.

In November 2008 inflation hit 79.6 billion percent per month (who was counting?). What this meant is that if you went to the ATM to withdraw money, by the time you completed the transaction the money you had requested would have lost all its value  – prices were doubling every two thousandth of a second!!!!

If Zimbabwe, which in 1982 already had a per capita GDP of 1,105, could be brought to its knees by political expediency, imagine if Uganda with a per capita GDP of $258 in 1986 had listened to the popular opinion and continued to print money as if it was going out of fashion, where would be now?

To cut down inflation government had to cut its spending. The groups interested in government continuing to let the taps flow, fought back criticizing the move as an IMF imposed policy that was bad and would cripple the economy irredeemably.  We are still here.

Government decided that in order to drive coffee exports Coffee Marketing Board (CMB), which had a monopoly to buy and sell all Uganda coffee had to be shut down. Another vicious fight ensured with the CMB beneficiaries warning of a collapse of the coffee industry and by extension the economy. Coffee accounted for more than 50 percent of tax revenues and 80 percent of exports then. We are still here.

Government decided that in order to unleash the economy’s full potential and save it some much needed cash, the state owned enterprises, only a hand full of which were operating at 50 percent capacity let alone making a profit or paying taxes, but a constant drain on the treasury, had to be cut loose. The naysayers stayed with the IMF line, complaining that the new owners would asset strip the new companies and take off leaving us with the shells. We are still here and many of the companies that were sold as going concerns are key drivers of the economy.

What is popular is not always right and what is right is not always popular. Government will do well to remember this.

"The Tenant & Landlord’s Bill awaiting presidential ascent is one search capitulation to populism, which will cause us immeasurable pain, avoidable pain...

The provisions that caught my eye were that landlords be restricted to charging in shillings and that they will not be allowed to raise rents by more than 10 percent a year.

Whichever way you dress them these are attempts to introduce rent controls, which if followed through will lead to disastrous outcomes, as night follows day.

These rent controls will serve as a disincentive to much needed investment. As it is now we have a shortage of quality housing of about a million houses. There is a shortage in commercial property too.

Contrary to popular opinion our real estate developers are still playing catch up. So with this discouragement they will slow down and create the very conditions the honorable members were trying to avert, which are a continued shortage in the market that will inevitably lead to higher rent.

The rules of the market are like any other natural laws. You can be successful at subverting them but only for a short period and at very high cost.

Take the law of gravity for instance, what goes up must come down. But airplanes – tons of steel and rubber take off every day and stay in flight for hours at a time, but this is at great energy cost. The designers of planes however, understand the laws of gravity and work with them and several others – the Bernoulli principal for instance, to keep the plane in flight. They do not ignore these natural laws and hope to attain their aims, rather they work with them.

"Our honourable members have good intentions, but we also know that the road to hell is paved in good intentions....

If MPs really wanted to help the “suffering” tenants, they should be focused on how to help increased supply of housing or commercial properties.

They could exercise their minds on how government can help lower developer costs and mortgage rates.

But even in that they need to understand market dynamics.  It is not rocket science.

GOVT NOT HELPING HOUSING SECTOR WITH PRICE CONTROLS

Parliament last week passed the Landlord & Tenant Bill 2018 which was first brought to the house in 2016.

While the bill had some laudable provisions to regulate relations between landlords and their tenants – notice for eviction, security deposits and the landlord’s right to access the premise, it had some potentially regressive clauses.

But first a bit of context.

Three decades ago there was an acute shortage of housing in Kampala and the country generally.

"In Kampala a garage was considered acceptable accommodation for the corporate types of the day, there used to be a phenomenon called “goodwill” where people paid seating tenants to move out of their flats in Bugolobi or Bukoto and intending tenants paid up to a year in advance to secure an apartment...

All these have changed for the better as the stock of housing has increased. Classic supply and demand economics. When the supply is low the owners of the houses can set the price but when the supply increases the bargaining power shifts towards the tenant.

The increase in housing has been little thanks to government development, who have barely built a thousand units in the last 30 years. Individuals and private investors have jumped in to fil the gap, which while it is reported that there is still a deficit, it is much less than it was before.

That private sector players have jumped in to fill the gap did not happen by mistake.

For one, real estate development being a long term investment the relative peace of the last decade has made it a viable option.

Just as important was government’s resolve top fend off calls in the 1980s for it to institute rent controls or to discourage of payments of rents in hard currency.

The call for rent controls was because the rates were high – the aforementioned garages were being rented out for the equivalent of $200 in some places. The politicians of the day thought this was unfair and thought they could curb the landlord’s “greed” by fiat.

No one has dollars so why are you charging in dollars they argued then. But many landlords were absentee landlords and didn’t want anything to do with the inconvertible Uganda shillings, which was being ravaged by inflation rates of up to 240%, so as a hedge they asked of rent in dollars.

"By refusing to what seemed like commonsense but was disastrous economics, government gave the private sector the confidence that if they invested in the real estate sector they would get a fair return....

So they went out and built and as they did rents became more manageable and the quality of housing improved. Which corporate worker now rents a garage?

This context was clearly lost on the MPs last week when they passed provisions banning the charging of rent in dollars and capped rental increments at 10 percent annually.

These measures were intended to keep rent affordable but could very well have the opposite effect.

Nothing good ever comes from subjecting the market to non-market forces. Let’s assume the MPs get their way and landlords cant charge in dollars and are restricted to a maximum of ten percent annual increments, how will the land lords react?

First off the people borrow in hard currency not because it is sexy but because they can get lower borrowing rates and the exchange risk can be passed on to the client.

The exchange rate has been relatively stable in recent years – except in 2015 when the shilling depreciated 40%. So the landlords will continue to borrow in dollars but will now raise rent every year by the required 10 percent as hedge against future fluctuations in the currency. What this means we can expect rent to double every eight years. The crazy thing though is that if I am a landlord in the same location and I will increase my rents like my neighbor even if I don’t borrow in foreign currency.

For intending landlords they may very well decide that the economic gymnastics of trying to stay ahead of the dollar would be too much and decide to invest elsewhere. So there will be slow down in rental properties in the market and in classical supply and demand style rents will go up everywhere as the bargaining power switches back in the landlord’s favour.

What if the MPs had thrown out the proposals for landlords not to charge in hard currency and to restrict rental increments to 10 percent, what would happen?

The landlords would continue to borrow in dollars and charge in dollars. They would build more units increasing supply and reducing their bargain power. A situation would reach where landlords would be forced to find alternative hedging mechanisms against the currency fluctuations or get out of the market all together as tenants would resist pay in dollars.

"If MPs wanted to achieve their goals they would use an understanding of the market to keep rents low. It’s really about increasing the rate of real estate development.I They could legislate against the impediments hobbling the construction sector.

They could for instance mandate government to subsidise or take over the laying down of infrastructure in real estate developments, which costs can account to up to 50 percent the building costs. They could capitalize the mortgage finance industry, lowering their cost of capital and therefore bring mortgage rates down. They could provide other tax incentives for developers and investors in the sector as a means to increase the pool of housing and brig down rents.

The temptation to resort to price controls in its various forms is always high, but it is bad economics and eventually turns out to be bad politics as well.

The fact that MPs could pass such a law tells me that they are not enough landlords in the house. Previous laws which have gone against the producers tells me too that there are not enough producers in the house.

That means that MPs are dominated by consumers, unwilling to make the hard decisions in favour of producers or landlords that will take this economy forward. That is a very scary thing.

UGANDA SHOULD THINK THROUGH NATIONAL HEALTH INSURANCE SCHEME

It was announced this week that government had given the health ministry the green light to bring a national health insurance bill to parliament.

According to the proposed bill workers will have to fork out five percent of their income and their employers top that up with another five percent.

There was an immediate and loud reaction against the proposal by the workers.

Their protestation revolved around the cost of the new tax on their income. Some arguing and rightly so, that under their private health schemes they pay much less than the government is looking to extract from them...

The argument that as an insurance scheme, which will mobilise the largest pool of insurance funds in the country, the five percent monthly levy on their gross income was extortionist. Especially since they have little faith in the government’s ability to utilize these resources optimally. The government’s corrupt record not helping the cause.

In Kenya they have the National Health Insurance Fund (NHIF) which was started in 1966 as a department in the health ministry until 1998 when it was converted into a state corporation to provide affordable health care for Kenyan adults.

At the highest tier – Kenyans earning more than a monthly Ksh100,000 (sh4m), pay Kshs1,700 or 1.7% of their salary as premium to the fund.

Rwanda has a health insurance scheme where every adult is expected to contribute according to their means, with the highest contribution being about $8 monthly (sh30,000).

National Health Insurance is not a new phenomenon, its traced back to pre-World War I Germany, so one wonders why our planners are looking to gorge out our eyes with their proposals.

No one is against a national health insurance scheme as most formal employees are already beneficiaries of an existing scheme, it’s the rates that are clearly ridiculous and raising suspicions.

As suggested earlier if there are at least two million workers in the formal workers one should expect the premiums on the health insurance to fall drastically compared to what is being paid in the private sector.

One other concern was that given the poor state of government facilities formal workers would have to pay twice or now thrice – incomes are taxed for PAYE, taxed to support national health insurance and employers would still have to subscribe to private providers anyway.

But in countries where the national health insurance has worked membership to it entitles card holders to service in private facilities as well, so those concerns would be put to rest if our health ministry is planning the same.

"If done well this may even serve the purpose of widening the tax base, removing the burden on formally employed workers and even increase the economy’s productivity....

If every adult is supposed to pay at least sh100,000 let’s say, it will force some of those Ludo “champions” crowding trading center verandahs to become gainfully employed in order to pay their health insurance dues.

It would also be wise to take the fund out the health ministry to administered separately.  This may help allay the people’s fears that the funds will be managed by the health ministry. Of course we would expect that the new agency’s administrative costs don’t balloon out of reason. NSSF would be a good model to emulate.

This may also help improve standards in the health sector. A requirement maybe that to qualify for payouts from the fund health facilities need to meet certain basic criteria of infrastructure and staff.

A well run agency can actually be a game changer in improving health standards in this country.

On the other hand it might be the very thing that brings the health sector to its knees. The verification of claims and the pay out of those claims can be a huge source of corruption. They could on one hand connive with health operators to inflate costs and put huge pressures on the fund. On the other hand they may accumulate huge arrears to the sector and fail the health sector altogether. Operators in other industries from logistics to telecommunications to electricity have horror stories to tell about arrears they have had for years with government that go unpaid.

We keep our fingers crossed that it will be the former rather than the latter scenario that plays out.

WE NEED TO GET OUT OF OUR WAY

Last week I had the privilege of interacting with exporters of agricultural produce and was pleasantly surprised to discover that there are people in this country who while they may have reservations about how the country is run or the economy is behaving, have decided they will make the best of the situation anyway.

One exporter told me he exports a ton a day of bananas – matooke, bogoya, gonja and ndizi, through Entebbe airport but estimates that at least two Fuso trucks of bananas fly out of Entebbe daily. A FUSO truck does about eight tonnes so that would be 16 tons daily.

Following the meeting I went to the Uganda Bureau of Statistics web page and found that in 2018 we exported 16,336 tons of bananas. This comes down to about 45 tons a day, assuming we are exporting every day of the week.

As I learnt at the event, “The Uganda-UK Agri-connect conference” organized by the Uganda Export Promotion Board (UEPB) and the UK’s Department for International Trade, that these numbers which have grown over the last two decades are in spite of huge challenges of policy and infrastructure faced by our people.

Banana exports are a good test case for us. Uganda is the largest producer of bananas in the world after India and the highest producer by a mile in Africa. Tanzania produces about three million tons to our 12 million tons. So we are exporting less than a percent of our production.

There is a worldwide demand for ndizi and bogoya as a fruit but who buys matooke and gonja abroad I wondered. I was duly informed by one exporter that apart from the Ugandan diaspora there is great demand from the Congolese, Rwandans, Burundians and West Africans.

So there may be scope of increasing exports by a factor of ten, to one percent of our production or 120,000 tons annually. The possibility is mind boggling.

Last year we earned $6.4m from the export of bananas.

Why the banana statistics caught my eyes is that these were being exported in quantities I never imagined, through Entebbe airport.

But a cursory look down the list of non-traditional exports shows the untapped potential of non-traditional agricultural exports. Fish led the pack bringing in $210m in export receipts, followed by maize, $147m, beans and legumes, $144m.

And as mentioned earlier this is in spite of this government’s inadequate support and sometimes obstruction of this progress.

"High freight charges out of Entebbe were a big issue, but officials of the logistics industry who were present in the conference pointed out that if there was as much freight coming in as was going out, for one, the rates would fall...

However, the greatest impediment to the long term development for the export of perishable agricultural products was the inadequacy of the cold storage facilities at the airport. Exporters complained of their consignments being held up for ours in the blazing sun because of the limited capacity of the cold rooms at the airport.

Exporters consignments are often rejected by their clients because he goods are spoilt when they arrive at their intended destinations. One exporter complained he had lost $30,000 just the previous week because his goods were rejected in Europe.

I came away from the event with two major learnings. That the cliché that we are not living up to our potential is true and obviously understated.

While challenges still remain in generating the quantities, up to the standards and quality required in markets, this can be easily surmounted with correct strategy and execution from the national to the farm level.

"But my biggest take away was reinforcement of the belief that the one of the greatest legacies of this government will be that they liberalized the economy. That an individual can see an opportunity and organize himself or herself to take advantage of it without recourse to higher authorities is what has spurred this exponential growth in non-traditional exports. None if any is driven by government agencies ....

Nontraditional exports overtook traditional exports – listed as coffee, cotton, tea and tobacco by UBOS in 2001 and have never looked back, to the point that last year we exported almost five times as much in non-traditional exports $3b than traditional exports of $659m.

Liberalizing the economy unlocked individual initiative which was stifled by the giant state marketing monopolies which were not even doing a decent job.

As an example I met a lady who is doing a rip roaring business exporting sugar cane to Germany! Shipping out a few tons a month to serve a juice bar chain in Hamburg.

UBOS has no entry for sugar cane exports in its official statistics.

That being said there is a lot more government can do in facilitating the whole agricultural value chain. Production needs to and can be pushed up several fold across everything we produce through improved farming methods, irrigation and improved post-harvest handling. Huge improvements are need in infrastructure to improve access to markets. Paved roads and improved feeder roads are good but a functioning railway to significantly reduce costs is critical. Export promotion and other support for exporters needs to be beefed up as many of these exporters cannot break into foreign markets unassisted. In the same vein we need to commit to some sort of agricultural financing model that does not use existing commercial banks as a delivery model.

Another impression I got is that apart from paying lip service to the fact that most of our people -- at least seven in ten Ugandans, derive a livelihood from agriculture, government is behaving as if we have all the time in the world to tap into this bounty. That it will always be there for us to exploit....

A case in point is the fact that the UK imported $1.8b in coffee products last year, Uganda’s share of that figure is $1.8m or less than a percent. If you think about it as the largest coffee exporter on the continent, Commonwealth member state, how can’t we manage at least five- or even ten percent of the UK market? It boggles the mind!

TO PRINT OR NOT TO PRINT, THAT IS THE QUESTION

All hell broke loose last week when social media came alight with the story that there was a high level investigation into the possibility that senior central bank officials may have printed excess currency for their own use.

If the social media narrative was to be believed these officials had a side deal with French currency printers Oberthur Fiduciare to print an extra sh90b – actually sh87.5b to be exact.

We are able to establish this because the 20 pallets that contained the “official” currency consignment had sh350b (this is not BOU information, so where did it come from?) so by simple arithmetic the “extra” five pallets had sh87.5b.

This is not your run of the mill conspiracy theorist who would get everything from spelling to punctuation wrong, they at least whipped out their calculators to make the story real.

To go further down the social media narrative, the officials then had the whole consignment flown to Uganda. But things begun to unfold for the officials at Entebbe Airport, in their very own backyard.

Some pesky official from URA or Security Aviation who, when they opened the cargo hold immediately noticed --- I imagine after doing a finger count, that there were five more pallets. Which puzzled him because he knew there were supposed to be 20.

The “officials” noticing that this airport official was brighter than normal, then cobbled a few dollars together among themselves, to try and help turn this officials head, make him look the other way.

"But the official would have none of it and woke the Bank of Uganda governor (he has him on speed dial?) from his bed to tell him about the mess...

So assuming each pallet had sh17.5b. Assume further that these had wads of sh50,000 exclusively, then each pallet had 3,500 wads of sh50,000 notes. Assuming these were batched ten across, ten high and 35 wads deep one would need a container truck or a Fuso to truck at least to get them out of the airport.

So somehow the bank officials managed to brush aside the peeping tom whistle blower, strong arm their way past customs,  airport security and loaded the five pallets into their truck and drove into the night to destinations unknown? Wow!

The social media narrative somehow also does not explain how they got extra currency to be printed off the books at the Oberthur Fiduciairie plant, where our notes were printed. How did it happen did one of our officials while bumming a cigarette from a printer at the plant, with a wink of the eye, convince him to add an additional something-something? That they haggled about whether he could do 20 or 10 before settling on five, which he could get away with? And what was the greasy handed (I imagine he also had ink under his nails) printer’s cut on the deal?

Once the sneaky French printer (again I imagine they would be Frenchmen) had done the deal they had to surreptitiously load the five pallets onto the truck for them to get away.

But wait. How heavy are these pallets? Can they be tossed around a factory, moved around when the supervisor turns his back or goes to the loo? Or maybe there was an organized loadshedding at the factory in France, blacked out all the lights and security cameras etc?

"Simple arithmetic suggests that each pallet would weigh 350kgs! Or seven bags of cement or 50kgs sack of sugar.

So this had to be a major operation involving cranes, trucks and not a few men – Frenchmen or not.

The Swahili say ”Hakuna siri ya watu wawili” directly translated there is no secret of two people. This five-pallet-conspiracy took six weeks to break. Six weeks?! In Kampala?

The central bank last week said they reported the incident because there was a discrepancy in the inventory on the plane.

We have since learnt that there were other people’s cargo that should not have been on what was thought to be an exclusive charter flight. How that came about security said, is the subject of investigation.

This missing-five-pallet theory has kept us entertained for the better part of this week, except the Bank of Uganda of course.

But it doesn’t stand up to even the most cursory scrutiny – as above. It was fun while it lasted but probably time to shut it down.

IT’S NOT ABOUT THE MONEY

We have patronized this Asian business for at least five years. It had been in operation at least two years before we happened upon it.

They have never displayed any signs of distress -- service falling off, creeping lapses in cleanliness or stocks running out. And then it struck me the other day, that I have never seen an advert by the business.

A friend I was with suggested that one thing the Asian businessman can do is withstand the initial losses for longer, up to four years he hazarded. Our business may not be capitalized enough to survive the first six months.

"While inadequate capital is cited in most studies of business failure, I think it shouldn’t be given that much prominence...

While it’s possible the business is well capitalized, a casual analysis of the Asian business also shows their customer service is consistently good – you will be surprised what a “Hello Paul” when you walk in and “See you next week” as you walk out makes a difference; their food is consistently good – nothing like ordering for the same meal and you get served a different taste every time; They treat their workers well or at least better than elsewhere – the waiters are the same for all the time I  have been there with an addition here and there.

The mistake we make is to think that business is the getting paid for the good or service we are peddling, but actually it is more than that, it is everything you do or have to do to get paid.

And because we are so fixated on getting paid we think the main problems of our business is lack of money or inadequate access to credit.

This same analysis I suspect informs government’s attempts to help business startups or the youth.

In his budget speech finance minister Matia Kasaija said he had committed to sh40b to be lent to Small and Medium Enterprises through the Microfinance Support Center. In addition he earmarked a total sh162b for a skills program for women and the youth.

Everything costs money, so the minister cannot be faulted for allocating money for such projects.

But what our entrepreneurs really need is education, training on how to run a business.

"I remember many years ago an engineer telling me that the one thing they did not learn at the technology faculty was how to run their firms. They knew the technical part inside out but could rarely run a firm profitably and sustainably for any given length of time. Again all the things one needed to get paid and once paid to keep the money coming in and the business open was the trouble.

By investing in training – not the kind where you are ticking the box, of the recipients of this money government would be helping to shorten the learning curve and make sure it is not so steep. Without this it will be like throwing good money after bad and even worse breed a generation that is dependent and useless to itself and society.

Government’s program Enterprise Uganda is one such program that could be rolled out much wider than it currently is.

For the last decade or so enterprise Uganda has been demystifying what it means to be an entrepreneur – especially cash as the starting point of the business. By now a few thousand youth have gone through their programs, mostly in and around Kampala.

It would be interesting to see a study of their methods and outcomes. I am willing to bet that he attrition rate of those who chose to be businessmen is much less than if people went out and started a business without prior information.

Money is always good. But I think government should be focusing on effectiveness and efficiency. A well oriented businessman would be a better bet than someone trying to wing it, to make it up as they go along. They may even be successful eventually but just think how much time, money and other resources they would save if they were properly oriented from the beginning.

This is important even critical because as the minister reported that 600,000 new workers enter the job market every year and that 4 in ten youth are unemployed.

The creating of business that are sustainable and growing is key. In more developed economies it is the SMEs creating jobs, fostering innovation and driving economic growth. There is no reason why this can’t be our reality.

But for that to happen government needs to stop thinking dishing out money is the way to go.

But then again maybe I am howling into the wind!