IN 2015 FOCUS ON YOUR BALANCE SHEET

The year is coming to a close providing us a useful opportunity for reflection, individually and as a country.

As a country we continue to trudge along, the economy continues to grow but we struggle with how to distribute these gains more equitably. The consequence is that the rich get richer and the poor get poorer. This need not be.

To begin with, if corruption could be handled more decisively we would have better services.

A better educated population should earn more individually as the economy shifts towards more specialized and sophisticated services and products. A healthy workforce should be more productive with less working days lost due to illness. And better infrastructure should lower the cost of doing business encourage expansion of existing companies while making the country attractive to new investment.

All the above are government functions or at least, government has a critical role in making them happen.

However, we have individual responsibility for our own financial well being. It starts with the way we think about money. Our financial literacy....

As simple as it sounds the way we think about money will determine our financial station. The difference between you and the richer man is the way you think about money.

Whole books have been written about it.

But if there is a lesson to be learned it would have to be that, we need to shift our focus away from how much we earn to how much we keep of what we earn.

It is basic accounting. 

Companies and even individuals' financial health can be distilled to their financial statements. The key ones being the income statement, a statement of money coming in and money going out and the balance sheet, a statement of what is owned, owed and the net worth of the company or individual.

Payday is a big deal for obvious reasons. We even measure ourselves by how much we earn compared to our peers. But the other side of the table is the expenses. Decisions on that side of the table can reduce the highest paid executive to a pauper by the end of the first week of the month or see the lowliest paid stretch his pay beyond the next pay day.

In fact show me your expenses and I can judge your overall financial health.

Income is good but to ensure long term financial health we need to focus on our expenses.

To determine a company's long term financial health the income statement is useful but the balance sheet is critical.

A strong balance sheet with a huge asset base compared to liabilities ensures viability into the future the opposite means you will be scrapping through life rather than sliding through.

Good assets should throw off more income or at worst can be sold off in times of need. The assets are built using our expenses.

"The richer among us have their expenditure slanted more towards investment than consumption. They are ever eager to convert income into assets -- land, business, stocks or bonds. The poorer among us ---regardless of our income are just as keen, even keener to consume our income in clothing, good living and trips abroad...

The difference between the two companies or people is their way of thinking.

The rich think money is for making more money.  Inevitably as they make more money their standard of living rises and they can afford the fabulous clothing, good living and trips abroad. The poor among us think that money is for spending -- "what is the point of making the money if we cannot enjoy it".

The thinking of the two is a different as night and day, is it any surprise that the results are opposite?

We are a poor country because we have a poor mindset. Our leaders are not immune to our poor thinking and therefore make decisions that keep us in poverty.

Richer countries have a critical mass of rich thinkers that through their rich actions carry everyone along.

So in the new year let us aspire to rich thinking, shift our focus to our individual and national balance sheets from our income statement. 

For God and my country.

MAKE CORRUPTION ENEMY #1 …I WISH!

My wish for the New Year is that we declare corruption public enemy #1 and we go after it in all its variations with unbridled enthusiasm.

Don’t hold back your laughter. Let it rip!

Corruption is bad for society, concentrating resources in a few hands, making the rich richer and the poor poorer.

"So instead of 1,000 inpatients being treated at Mulago, one man buys himself a Toyota Land Cruiser VX or sends his four children to a top international school locally for a year or organises a week long holiday for his five-member family plus nanny to the Maldives or Seychelles...

What this does, is prevents the upward mobility of the lesser privileged since the ladders of public education, health and working infrastructure have been kicked out from under them.

It is not a difficult logic to follow.

Even if these corrupt officials were using this money for productive endeavour and not conspicuous consumption, the net effect may still be the same.

In fact maybe it’s a good thing that corrupt officials are eating their money alone and not trying to get into production.

If these corrupt individuals got into production they would distort the sectors in which they operate to the point that even honest businessmen would be unable to operate.

In trying to get into productive sectors like agriculture and manufacturing these corrupt officials are trying to launder their money, make it legitimate.

So the grubby fingered official goes off into the country side and starts making peasants offers they cannot refuse for their small land holdings. He accumulates great chunks of land and decides to rear cattle or plant maize or dig fish ponds or whatever is the flavour of the month, at the cocktails they frequent in Kampala.

But as with all poor people who think money solves all problems and that by throwing money at any problem it will be resolved they soon find out otherwise.

The “farm” becomes a financial black hole requiring ever increasing amounts to keep it afloat. 

Because these corrupt ladies and gentlemen have no sense of costing they undercut the genuine businessmen, put them out of business, causing irreparable damage.

Then either they decide the project is not worth it and jump onto the next business fad or, more likely than not, they get dropped from their juicy position and reality hits them: Their prized farm is just a drain on financial resources. They do away with it all together blaming lack of government support for agriculture as the reason for their demise.

Similarly for real estate or any other business they lay their hands on.

For those officials who have been around longer and gone through the full boom-and-bust cycle they stop pretending and just hoarde money under their mattresses, in their garages and in foreign accounts.

They accepted they were incapable of showing a return on investment and stopped trying.

So there really is little to no benefit to the wider society from these stolen billions.

In a world without corruption or more realistically with corruption minimised to bare minimum rather than at the endemic levels it is at now, more people would benefit and maybe, just maybe, we would stop wondering where all this economic growth they talk about is.

First of all these corrupt officials would transfer their ingenuity to the private sector where the pay is more commensurate with their talents. Hopefully they would be sanitised by proper systems and good governance protocols and turn their brains to creating value and wealth rather than pilfering it.

We might even collect more taxes, which increased monies would be directed to better social services and infrastructure. We would have better educated and healthy children and a more vibrant economy where the cost of doing business would be far reduced.

That is a utopian logic that would find it hard to exist in our world.

"Our tolerance of corruption comes from the wrong analysis that all wealth has its basis in crude accumulation by the elite...

So we look the other way because we are keen to build this wealthy middle class, which will serve as the bedrock of future productivity and stability. After 50 years of independence not a single public servant has broken through to be a serious industrialist or capitalist or build a business empire of any reckoning.

So clearly there is something wrong with that model of development.

Let us revert to the colonial model. We facilitate the education of our children, the treatment of our mothers and smooth out the kinks in our economy for our businessmen. At the bare minimum we will swell the numbers of the middle class and provide a more viable market for our businessmen who can then use this as a launch pad for national, regional and even international ambitions.

It is a bit naïve to believe this shift in thinking is within the realm of reality, but as they say when you have eliminated all the possibilities and are left with the most improbable solution then that is the right one.

Have a Happy New year!

ONLY FOOLS DON’T CHANGE THEIR MIND

Last week was a big news week in Uganda, what with the surreptitious return of General David Sejusa and the breath taking machinations within the ruling NRM party. These our enough to keep were blood pressure ticking up the scale.

Drama aside both events will be major landmarks in the political evolution of our country.

Sejusa’s return was a bit of an anti-climax.  After the General fled the country last year claiming there were plans to assassinate some of the army leadership for their opposition to a plot to manoever first son Muhoozi Kainerugaba to succeed his father.

Just prior to his escape there had been a fire fight outside Mbuya baracks, which it was later suggested, was an attempted coup and somehow linked to the fleeing General.

Of course, once in the UK, Sejusa became the flavour of the month, hosted on radio and television, fraternising with the usual suspects, making serious allegations about Kampala and threatening to use whatever means necessary to oust President Yoweri Museveni’s government.

Once the media moved on, Sejusa’s cause fizzled out and it came as little surprise to observers, when he slunk back into the country in the dead of the night.

Jostling for headline space was the unfolding saga of the reorganisation of the NRM, for all intents and purposes a done deal by the time the members turned for the delegates conference on Sunday. Meetings of the Central Executive Committee and the National Executive Committee the previous two days had endorsed proposals to the make the secretary general an appointee of the chairman as well as other key officials.

"The story, which had been simmering from the time Amama Mbabazi was made Prime Minister, came to a boil with the Kyankwanzi resolution of the NRM Parliamentary caucus to have Museveni as flag bearer in 2016, finally bubbled over with his being dropped from the cabinet and may have run its course with Mbabazi’s eventual dropping as secretary general of the ruling party...

Stranger things have happened, but the events of the last week may have sealed or will prove a major speed bump in the two men’s political ambitions.

Their travails as well as those of another major challenger for the top office of the land, Kiiza Besigye provide useful material in trying to tell what it would take to ascend to the presidency.

Two things stand in way of any challenger.

One, Museveni himself, naturally. Love or hate him he is the only politician with a record to run on, everybody else would have to refer to his record for lack of their own. Of course he has been at the helm for coming to 30 years and so none of the current crop of politicians has his credentials, but it can be argued that he has not held on to power for lack of trying by others to oust him.

One may question the elections he has won – 1996, 2001, 2006 and 2011, but it is a hard argument to sustain since unlike his counterpart in Paul Biya, in Cameroon who is mostly out of the country only coming in to swear in as president, Museveni hits the campaign trail, pressing the flesh and kissing babies.

He has nationwide face recognition. Sometimes that’s all it takes when it comes to ticking your candidate of choice.

In the last three decades perfection or even excellence, has been far from a hall mark of this government’s programs and policies. No one is rushing to beatify the NRM and its leaders. But they have achieved enough to the point that 28 years down the line, it has not reached the point where the majority of the people would vote for a jerrycan rather than Museveni, as was the case with former Kenyan president Daniel arap Moi at the end of his 24 year rule.

Secondly but more importantly, there is nothing comparable to the NRM in nationwide presence or organisational structure.

If the truth be told, the NRM often enough look like a house divided against itself and even manages to look very shambolic and clumsy most times, but when it swings into action every five years it assumes the stature of an irresistible force.

You may argue about how the party sustains itself but you can have all the money in the world, but with a solid organisation that money may count for little.

"There is a symbiotic relationship between Museveni and the NRM, but he would have an uphill task running roughshod over the opposition if he were to be divorced from the party...

And clearly that is what Mbabazi understood very well.

The NRM forged in the heat of the Luwero triangle and melded into multi-million person organisation since 1986, has made itself indispensable for anyone who has serious political aspirations in this country.

Which is a good thing, to an extent.

In the 1980s Milton Obote taunted opposition leader Paul Ssemogerere with the words “Where are your generals?” The generals are still important – even critical, but in addition you need a political structure and the numbers to back it up to lay claim to the ultimate prize.

That is where Sejusa went wrong in attempting to launch an opposition movement abroad. Not since Ayatollah Khomeini in Iran returned from exile to take over the leadership of Iran, has there been anyone who launches a credible challenge to power from abroad.

And his second capitulation doesn’t help the good General.

But as former UN secretary general Bhutros Bhutros Ghali said, “Only fools and God don’t change their minds!”