FACEBOOK, UTODA AND THE UGANDAN BUSINESSMAN’S FATE

Facebook last week announced that its much anticipated share sale was going into its final stages. The Initial Public Offering (IPO) when it comes to the market could value the hugely popular social interaction site at as much as $100b. The original concept was hatched to slight an ex-girlfriend in 2004 out of founder Mark Zuckerberg’s university room.

Zukerberg, whose interest in the company would be valued at upwards of $18b – or larger than the economy of Uganda, is only 27.

Nearer to home multi-billion shilling concern UTODA (Uganda Taxi Owners & Drivers Association) saw their knees chopped from under them when KCCA took over the running of Kampala’s taxi parks.

UTODA, which was set up ostensibly to represent the rights of taxi owners and drivers, has run – or run down, the parks since 1993. By losing the contract UTODA will go into the record books, next only to mobile provider Celtel, which ceded its control of the mobile phone industry to MTN at the end of the 1990s, as a company that took for granted and let slip a Godsend of a deal.

While UTODA is a test case of how not to run a monopoly, Facebook is very much the opposite.

Last week Zuckerberg wrote a letter to his shareholders outlining his company’s reason for its existence, its vision and explaining why facebook is going public.

“Facebook was not originally created to be a company. It was built to accomplish a social mission – to make the world more open and connected. … Most great people care primarily about building and being a part of great things, but they also want to make money. …These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits,” he said.
Three things stand out in the above that successful businesses are created to meet human needs, secondly great business are driven by great men motivated by creating great things and finally, that profit is not the be all and end all of business.
And the kid should know. He has built a company bigger than the economy of East Africa from a standing start in 2004.
Obviously this letter came too late for the old men of UTODA.

In a new publication “50th Uganda; Past, Present, Future” published by the Vision Group and currently on the shelves, I suggest that the Ugandan businessman as we know him now – single proprietorship, running a local operation and continually plundering the business capital, will be extinct in the next half century.
Years of instability and questionable national policies have not helped the indigenous businessman. With the collapse of national borders the Ugandan businessman has no time to go through the usual evolutionary processes, he has to quickly identify his competitive advantages, aggregate their resources to become more formidable enterprises and be pen to partnerships with foreign investors.

Nationalistic sentiment will balk at the idea, but the way things are going there is a real threat that Ugandan businessmen will be relegated to corner shops or as bit players in the economy. And they can rest assured the consumer will not be in their corner especially if foreign concerns are providing satisfactory service.

What does it matter if our local businessmen get swept off onto the dung heap of history? Local businessmen are more likely to opt for local over foreign suppliers, local businessmen are more likely to reinvest profits in the economy and local businessmen will be less aloof of local politics, interested in continued and sustainable stability.

As a start local businessmen would do themselves a lot of good to refocus themselves towards providing a service first, in the faith that once this is done profit will be the welcome byproduct.

By focusing on a goal greater than themselves issues of forming partnerships for example, will not seem so abhorrent.

In Asia, in the middle of the last century, some governments forced some companies to merge in order to compete and were favoured as national champions to expand out of their respective countries.

For that to work however you have to have a firm entrepreneurial base otherwise government as often happens, will end up throwing good money after bad.

Back to UTODA, there is unlikely to be any tears shed for their demise, which is not a good place to be for any business to be, because at the end of the day the business’ clients are the best guarantors of its survival.