Last week President Yoweri Museveni commissioned the third
phase of Roofing’s Group $280m (sh782b) steel plant in Namanve.
According to reports the plant will churn out 400,000 tonnes
of assorted steel products annually, employ 1500 people and generate an
additional $100m in hard currency a year.
Seeing as the founder Sikander Lalani , has built this
enterprise literally from scratch starting in 1994, we would not begrudge him
some chest thumping and back slapping on his achievement.
What we can take away from the Lalani experience is the
willingness to dream big and work towards it one step at a time. Success like
his does not happen by accident. The size of our achievements will be
determined by the size of our vision.
But even more interesting is the fact that Roofings now have
an equity partner, Yodagawa Steel Works, the second most valuable steel company
quoted on the Tokyo stock exchange where it is valued at about $800m.
In fact the ripple effect of this equity involvement may be
felt for many years to come.
The officials who go out to promote Uganda’s investment
potential even the president himself may talk themselves hoarse in the four
corners of the world about the merits of setting up in Uganda but nothing
speaks more to a potential investor than the interest that indigenous investors
have shown in their own country.
The logic is simple. A local investor has better knowledge
of his market, a greater appreciation of risk and an intimate understandings of
the dynamics of his market and probably how to manoeuvre within that context.
So if a local investor has shown long term success and committed serious
resources to his venture he can pique the interest of the real big hitters.
This is important because given our disruptions in previous
years we are really short on everything – capital, human resource and know-how,
and it’s these shortfalls that are making us fail to exploit or bountiful
resources for our own benefit.
We have a choice to attempt to go it alone and spend years
even decades trying to get our capacities to a reasonable level or attract
foreign businessmen, leverage their capacities where we fall short and in so
doing short circuit the process of development.
So the challenge for any self-respecting government is how
to build this stock of local investor so that we as a nation can tap into the
greater pool of resources out there.
In no particular order a strategy to nurture an indigenous
entrepreneurial class would involve improving transport, communication and
energy infrastructure, improving the productivity of the human resource through
quality education and health services and improved accessibility to affordable
capital.
The bureaucrats are more likely to push for a government
setting up of companies – see the revive Uganda Airlines movement, more to widen
the surface area for patronage than anything, the more intelligent thing is to
create the environment for businesses to thrive. And to do that there has to be
a determined effort to understand the mentality of a businessman.
The recent emphasis on infrastructure is laudable and if it
can be sustained for the next decade or so will go a long way to bridging
existing gaps.
Another huge deficiency has got to be the lack of relevant
financing for businessmen. As it stands now we only have commercial bank loans
– which are short term funds impractical for start-up or long term projects.
In more developed financial markets there is financing for
startups, equity financing, industry specific financing – agriculture, real
estate and industrial and then the capital markets, which serve as an efficient
vehicle to pool resources and direct them towards the most deserving players in
the market.
A robust financial market is a useful piece of infrastructure that
governments can play a critical role.
Once it is all set up beyond regulation, governments are
best advised to step aside and let the entrepreneurs do their thing.
There maybe political motivations for not wanting to build
an indigenous business community, but they are informed by short term expediencies
that do not fit into the longer term vision of this country.
It’s a chicken and egg situation.
More than 30 years of investor promotion has attracted a lot
of service industries but very little of the kind of labour and capital
intensive industries we require for economic transformation. Partly because of
the deficiencies in our infrastructure but more because we do not have enough
Lalanis.
