UNRA OFFICIALS ARE WORSE THAN TERRORISTS

In the last ten years I have seen the improvement of a major road – Gayaza road and the addition of four new roads – including the northern bypass, around the area in which I live.

The benefits – though I take them for granted now, have included a faster commute to work, because of the better quality of the roads and because I am spoilt for choice. There has also been a dramatic increase in property prices in the area as a result.

They say, while the middle class and poor measure wealth in money the rich measure it in time. So by saving time for the people of my area it can be argued there has been an increase in economic activity. How then would you explain the creeping menace of traffic jams to my previously serene environment?

Hold that thought.

Last week two events happened on the same day that on the surface seem unrelated but not on closer scrutiny.

There was the conviction of the suspected terrorists responsible for the 2010 attack at the Kyadondo Rugby grounds, the Ethiopian Village and the failed attempt on the Makindye House.

On the same day Lady Justice Catherine Bamugemereire was handing over her report on the probe into the Uganda National Roads Authority (UNRA).

The probe which had our jaws hitting the ground every morning with new allegations of theft on an unprecedented scale during the duration the inquiry, collated all these and revealed that government lost sh4trillion in dubious contracts, which money was good for 3,647km  but the people of UNRA only managed to build 1500km. This out of a total expenditure of sh9trillion.

It is impossible to put an economic value to life. But if every Uganda accounts for about $800 in economic output a year, the death of the 76 on that night six years ago has cost us – using a straight line calculation, about $364,800 (sh1.3b). Or if we use a purchase power parity per capita GDP of $1,638, the loss to the economy more than doubles to sh2.6b.

This is understated in many ways not least of all because many of the victims were middle class Ugandans who were contributing more than the assumed $1,600 a year. Secondly, it is not inconceivable that the victims were supporting others through school, whose economic contribution may have come due. And finally let us assume too that their contribution was growing from year to year over the last six years.

Given all that let us inflate their contribution to five times or sh13b or let us go out on a limb and say 100 times or sh260b in lost economic value.

View this against the sh4trillion, the known loss by UNRA since 2008 and you have to wonder which the real tragedy was.

And we haven’t even begun to try and compute the improvements in economic output that the addition 2,100km would have thrown up if they had been laid across the country.  Or to compare oranges to oranges how  many people have died for lack of health facilities or drugs or even for from road accidents caused by roads that have fallen apart on account of shoddy workmanship or which don’t exists because some fat cats have taken their cut and subsequently what has been the loss to he economy as a result.

"If you can calibrate terrorism UNRA makes Issa Luyima, the mastermind of the July 11 bombings, look like an angelic choir boy...

White collar crime is a euphemism. It suggests that because the thief does not break into your house and bludgeon you to death with a hammer but, by the stroke of a pen shifts millions, billions or trillions in UNRA’s case, to individual accounts, it is a lesser crime.

Terrorism is a heinous crime that can neither be justified nor explained away. Its shock value comes from the drama of explosions, mutilated bodies and unpredictability. We understate the economic damage of a terror attack and even more so the social and emotional impact of human impact.

But the very fact that even despite our most ambitious calculations and we cannot even begin to compare to the loss due UNRA officials makes you wonder –no, shudder!

So to return to the possible economic benefits of the lost roads to our users.

To begin with the sh9trillion total UNRA spent during the period it is estimated would have added and an additional 5000 km of paved road to this country. Or more than doubled our current stock of 4000 km. it is possible most of our trunk roads would be completed and the ensuing economic output would not have us yawning today.

Thirty years ago to get from Busia to Bushenyi was a two day trip. You would leave Busia at  6 am in the morning and arrive in Kampala about 5pm. Sleepover and set off before dawn the next morning to arrive in Masaka for lunch, Mbarara in the early evening and Bushenyi after dark.

Better roads now make such a trip seven hour affair. Theoretically you can do three round trips in the time it took you to do a one way trip in the 1980s. Meaning you can now carry six times more passengers, matooke, cattle or milk now than then. And these increased activity feeds into the greater economy.

And what is the distance from Busia to Bushenyi by road? 515km!

Do the math!

TACKLING TERROR ONE UGANDAN AT A TIME

On Thursday the high court found eight of 13 suspects guilty of involvement in the Kampala bombings of July 11, 2010, in which 76 people died and many more were injured.

The attacks of Kyadondo Rugby club and the Ethiopian Village were one of Uganda’s worst terrorist attack.

The Lord’s Resistance Army bloody rampage through northern Uganda tops the list, the Allied Democratic Forces (ADF) operations in western Uganda, especially at Kicwamba technical college in Kasese and the bombs of Kampala at the beginning of the century have their pride of place in this grim narration of our history.

Over the last five or so years and 82 witnesses later an intricate web of intrigue, geopolitical posturing and downright ruthlessness has been drawn during the trial of the perpetrators of this crime which was planned in Somalia and executed by Ugandans, Kenyans and Tanzanians.

Among the motivations for it were the desire by Al Shabaab, an offshoot of Somalia’s Islamic Courts Union (ICU) was to as well as punish Uganda for being part of the Africa Mission for Somalia (AMISOM) wanted to win favour with Al Qaeda, by then still regarded as the top terrorism enterprise in the world.

The Ugandans who participated in the attack were systematically and consistently brainwashed over months, even years to believe that Ugandans deserved this fate because of how Somalis were suffering at home.

The common denominator among the Ugandan perpetrators – apart from their Islamic faith, was their youth and economic difficulty, as most of them were out of jobs when they came under Al Shabaab’s influence.

"Clearly a bad economy can serve as the “quarter guard” for terrorism....

It is clear that growing income and wealth disparities leads the lesser privileged into the hands of criminal and terrorist gangs if only as a means of survival. Hence the urgency to see Uganda’s growth spread more equitably through improved service delivery and reduced corruption.

But also what came out during the trial is that certain influencers in the society are behind the scenes abetting these criminal acts either through their own warped convictions or as a way to profit, regardless of who gets hurt.

Nations are designed so that the state can be responsible for our collective wellbeing. Many times this collective wellbeing may come to the discomfort of some, the price we have to pay for peace and stability.

My delay to an important appointment is secondary to the maintaining of traffic laws or my need to guarantee my own security at home does not allow me to cut off a public road or my taste for loud cacophonous music does not allow me to blast my system into the wee hours of the morning. In denying me the right to do the above inconveniences me for the benefit of the majority. It’s an unwritten contract we sign with the state.

Inspector General of Police General Kale Kayihura in explaining the increasing presence of anti-terror police on our streets, argued that the police had to be correct all the time while the terrorists have to be correct only once to cause an impact.

Unfortunately, when the police do their job well there are not appreciated but if they put a foot wrong even once they are reviled as good-for-nothing thugs.

"Beyond the material, a common ideology has to be developed that locates us as Ugandans whose love for country comes before all else....

That is not a fashionable way to speak in a globalised world, where individual rights are in the ascendance and the concept of the nation is under threat. But in studying these young men who pledged themselves to a destructive code, economic hardship served as an opportunity, but indoctrinating them was all the more easier because the brainwashers were not replacing one conviction with another. They found these young men’s minds fallow and ready to fall for any propaganda that was pressed upon them.

Hopefully justice has been passed but this is also a wakeup call, for us to do some soul searching of our own. Living in the center of the storm, this very volatile region of ours, our economic weaknesses may be the very opening our enemies exploit to do us harm.

SON OF THE SOIL RETURNS WITH OPTIMISM

Dominic Barton, boss of global management consulting firm McKinsey & Company is tickled pink by his new Ugandan passport.

A Canadian citizen, who calls London his primary home, was born in Uganda in 1962 in Mukono, where his father was visiting lecturer at the Bishop Tucker Theological College, which is now a part of Uganda Christian University.

A visit to Mukono on the weekend, to among other things see the place where he was raised – he left Uganda 1969, was not dampened by his failure to find the actual building, “I couldn’t find my house, the place has changed, it is all built up now.”

Nevertheless he was glad to be back and he had some thoughts in the issues that the continent in general and Uganda can look forward to or guard against.

"Off the top of his head, the opportunities for future progress will revolve around our young population, natural endowments and how we embrace technology but warns there has to be a sense of urgency among bureaucrats to keep the momentum going...

 “I am bullish on Africa. It still the second fastest growing region only south east Asia is growing at a faster arte… when you disaggregate take out north Africa and all that’s going on there, and the effects of oil you see 13 economies growing very quickly, faster than before and Uganda is one of them, “ said Barton, who is also the chairman of US President Barak Obama’s African policy think-tank.

The Arab spring that kicked off in Tunisia at the end of 2011 has dampened growth in North Africa, where Libya and Egypt have also been affected. Oil prices fell to record lows in February cratering at $26 a barrel from highs of $140 a few years ago, a development has affected oil producers like Nigeria and Angola aversely.

In Uganda on his way from the World Economic Forum, which was held in Rwanda last week, Barton – who was last in Uganda in 1991 said he sees progress and senses a willingness to keep it going.

“I think the opportunities are in the consumer goods area, this is a young urbanising population, whenever you have a young urbanising population it creates growth,” he said, adding however that these youth will need jobs and the infrastructure to get their wares to market.

Barton thinks a determined push into agribusiness is what Uganda should be looking at in the short to medium term.

He says in the next ten to fifteen years more than 2 billion people will be joining the middle class, especially in south east asia, generating a huge demand for resources particularly food.

“Uganda is a bread basket. To me the model should be like Kansas, Illinois and Minnesota, which have some of the largest food companies in the world, they create great jobs, they don’t just export, they are packaging it, processing it and adding value to it,” he said.

The three states are situated in in the middle in the US and are big producers of wheat, soy beans and livestock.

And finally he thinks technology will draw more people into the formal economy.

“One of the wonderful things about technology is that people can participate, people will come to them. One of the things that Ali Baba and Ten cent has done in China it has connected small businesses all over China allowing them to be able to participate,” Barton said.

He also points out that it allows for education in new and interesting way and to maximise the use of available resources

Challenges abound of course.

He says infrastructure is a challenge pointing to the hours he spent in traffic to and from Mukono.

"But he is optimistic that the work that is being done in integrating the region’s infrastructure is good, creating a bigger market and easing movement around the region will pay out huge economic dividends....

“The second is education for employment, is what we should be pushing, not education for education’s sake…. Skills imparted in short bursts but targeted at getting kids employed,” Barton said.

And finally something else to watch for that could jettison all the good work of the last decade or so?

“Volatility. Making sure things stay stable. One of the reasons Africa has come back the way it has because it has been relatively more stable over the last 10 years. The challenge is to ensure that stays. We assess countries not only for growth but for stability.”

Barton says that the lack of inclusive growth is a phenomenon all around the world but one everyone has to face up to, he thinks the solution is education.

“But it has got to be practical education … we have to ask what is it that employers are going to need, what are the jobs that are coming and how do we train people for them? We don’t need to spend four years we can train in six weeks. Do these sprints of knowledge.”

McKinsey has some experience with that. In Kenya they have a program called generation where they take poor children, train them up for jobs in four to six weeks and afterwards all of them have got jobs and six out of ten have two job offers. They started with training sales forces for financial, retail and health services.

“A lot of companies that want to hire people but the skills are not available this program should address a lot of that gap,” he said.

“Government policy also helps. Setting priorities. Take sectors and look at how we can build domestic businesses, what FDI do we need, what education do we need … we have seen this in Malaysia and Columbia,”

"He point to tourism as a possible sector but wonders whether we are doing the right things to attract visitors and sustain the sector...

Delivery is the key. Just get it done. How do you get it done? Governments need to move at a much higher metabolic rate. Speed is important. We need a sense of urgency,” Barton urges.

WILL THE MUSANA CART BRING THE ROLEX TO THE WORLD?

Almost two decades ago two young men asked themselves what it would take to create a “Rolex” chain of restaurants.

The ideas would be take the rolex, which at the time was championed by one Sula in Wandegeya, create a menu, standardise the ingredients, upgrade the sanitation issues, license the Sula name and employ him for good measure. 

They would then open branches at all the universities – there were only three at the time and they would have a million dollar business in no time.

It was brilliant idea. But that’s as far as it got.

Actually worse. The idea was forgotten.

That is until last week when Natalie Bitature was named one of three young Uganda women innovators at the World Economic Forum (WEF), that was hosted in Kigali, Rwanda.

Natalie, daughter of businessman Patrick Bitature, came up with the idea of a solar powered street vending cart for her final year undergraduate project. She is studying social entrepreneurship at Hult University in the US.

"The rolex is our original fast food, which needs few ingredients or space to produce and deliver...

Apparently the average vendor sells up to 200 rolex a day and nets about sh25,000. The project discovered that the main driver of the low margins was the energy source. They also worked out that sales would be even further enhanced if the vendor was mobile.

Enter the Musana cart.

Still in its pilot phase, the container on two wheels, would be nothing but a pimped up push-cart were it not for the fact that it has a solar panel for a roof, which would allow vendors to cook, or refrigerate drinks or even charge phones.

Natalie and her project mates have worked out it will cost just under sh2m to buy a cart.

“Of course it could be cheaper but what about quality. It has got to work. It has to be reliable, sturdy and the solar panels must provide enough power given all that it’s a fare price,” said her father Bitature.

The project members have worked their way around it by enlisting the help of a local microfinance bank to lend the vendors the money to buy the carts.

But the project is looking beyond Kampala, where there are an estimated 100,000 vendors of whom they are targeting one percent of for their cart, but beyond the borders of Uganda. They point out in a fact sheet that there are 13 cities around the continent with populations of more than half a million people.

"The project is interesting enough that it is one of six teams in the final round of the Hult Prize, which will be awarded in September. One million dollars will given to the winner of The Hult Prize, which is the world’s largest student competition for social good, aimed at solving the world’s most pressing needs in food security, water access, energy, and education. Over 25,000 projects from around the world including Makerere were showcased in the preliminaries. The five other finalists will receive $200,000 (sh700m) to go towards starting up their venture...

Regardless of what happens in September this project is noteworthy on several fronts but most especially it is about our own entrepreneurs and innovators thinking up solutions to our own challenges.

No in is going to do it for us. This applies to challenges in medicine, agriculture and the environment. 

As a country, as a continent we need to invest more in research and development. And then we need to develop the capacity in the public and private sector to take such promising projects to their full potential.

Uganda is the most entrepreneurial countries in the world studies have shown but we also have one of the highest death rates of business, with less than one in ten businesses making it past their fifth birthday. But an even more outrageous statistic is that even fewer companies, maybe even less than one in a hundred, live and thrive beyond the original founders.

A deficit in our business ecosystem, beyond inadequate funding is to blame. In more advanced economies businesses have the support of mentors, business associations and differing financing options tailored to the stages in the business growth giving them a better chance of survival.

"The younger Bitature has clearly tapped into this more developed environment in San Francisco, fast becoming the social entrepreneurial capital of the world, and chances are Uganda will be the winner from the experience...

And the rolex too. But not with Sula as its main mascot.

UGANDA ENTERS A NEW STAGE OF POLITICS

In coming days President Yoweri Museveni is going to announce a new cabinet.

Whether the newness of the cabinet will go beyond it coming after an election cycle, have new faces and a whole new look is left to be seen.

What is clear however is that this will be Museveni’s most important cabinet announcement since 1986.

"Thirty years ago the NRM’s 48 member cabinet, while dominated by its own supporters had a liberal smattering of opposition party members and academics, a broadbased government that signalled Museveni’s intention to foster a “fundamental change”...

In hindsight it also served to co-opt many established politicians into the NRM – giving the budding political organisation some traction in places it so badly needed to establish itself, mostly in central and eastern Uganda.

It helped of course that by that time, that Uganda had not only looked into the abyss, but had actually fallen in and any leadership that would promise improvement would be welcome.

At the time a certain minimum consensus had to be developed – Uganda first and everything else after. So it is safe to say it was easier to coalesce politics’ leading lights of the time around this agenda.

Of course, the degree of commitment varied and subsequent reshuffles showed this.

Over the last three decades the cabinet has tried to remain true to the orginal broadbased nature, if not by coopting the different political parties but at least by having a broad national representation. Museveni argued in the early days when rebellion was a real danger that it was cheaper to have potential rebels in government than outside.

One also suspects a Machiavellian motive too, while he kept his friends close he wanted to keep his enemies even closer.

For the most part that logic has worked, the county is enjoying its longest stretch of peace since independence. It has been more than a decade since the LRA’s Joseph Kony was harried out of the country.

"The challenge now, as the President highlighted in his swearing in speech, is to ensure the benefits of economic growth are felt more broadly by improving service delivery. Given this commitment it will be interesting to see whether regional balancing still has a part to play in the new cabinet....

Related to that is the sailing into the sunset of many of the historicals – either through loss of their parliamentary seats or in expressing their wish to no longer be in government.

Two things have happened in the last few years, a new breed of Movement cadres who joined the struggle after the two zeros were knocked off the currency in 1987 have come of age and have been knocking on the door with growing insistence and shamelessness.

A population in which easily seven in every ten Ugandans was born after 1986, it makes sense to have that reflected in a younger cabinet than before, if only because if the NRM is going to continue in  power beyond Museveni, they have to keep in touch with this demographic which, while already deciding political outcomes will be more decisive in coming elections.

And finally the elephant in the room, Museveni’s succession. According to the constitution this is supposed to be Museveni’s last term, seeing as he will cross the 75 year old age limt during this term.

One can expect that Museveni’s plans for the future will be hinted at in this cabinet, regardless of whether this becomes his last term in office or not.

A pattern has formed over the years, with the constitution listing the vice president as the successor, but everybody else smiling knowingly, suggesting Museveni’s deputy lies elsewhere.

It would be interesting to see if Museveni bucks the tradition.

The opposition are determined to have a say, never mind that they lost the last presidential election and the numbers in parliament leave no room for manoeuvre.

"So they have decided to heed the words of Abraham Lincoln’s biographer Cal Sandburg, “If the facts are against you, argue the law. If the law is against you, argue the facts. If the law and the facts are against you, pound the table and yell like hell”....

They may not want to admit it, but however loud they are may not matter in forcing Museveni’s hand.

WHAT WOULD IT TAKE TO CREATE MORE JOBS?

Our economy has been growing for the last three decades, but the constant criticism is that the growth does not seem to be shared equitably.

That shouldn’t come as a surprise as the growth has been mostly concentrated in services and industry, while agriculture, where about eight in ten Ugandans derive a livelihood is not one of the sectors that has mirrored the national economy’s growth.

"The net effect of his is that the benefits of the growing economy are being concentrated in a few hands to the detriment of the majority....

The question then becomes, how does government facilitate the process of ensuring more and more people become real beneficiaries of this continued growth?

It goes without saying that the growth has to continue.

That means keeping public expenditure under control and continuing with policies that facilitate  private sector led growth.

By keeping disciplined in our public finances we have kept inflation at bay – in recent memory one moment of madness in 2011 led to inflation hitting a 19 year high of 30 percent. Inflation distorts the business environment and discourages investment.

Government has struggled with creating an enabling business environment for investors. Of course the stable macro-economic environment, improved security and steady investment in infrastructure have been useful if not critical in spurring the recent growth.

The trick has been more on a micro level and in building institutions that work impartially and objectively in regulating the business environment and arbitrating disputes.

The World Bank’s last Ease of Doing Business report shows that Uganda jumped 13 places to 122 out of 169 countries polled.

The report measures the rules and regulations that affect the business environment. Despite our stellar growth record we are literally at the bottom of world rankings in terms of our business environment.

How do we turn this around?

We need to think like businessmen for starters.

What do businessmen look for when thinking about investing in the country? Market access and the probability of making a return on the investment.

Put another way what would stand in the way of recouping the sh100m I invested in Uganda? Or how long would it take me to recover my money? Obviously the faster I can get my money back the better.

A big plus is a big market where people have disposable income to buy my wares.

Low bureaucratic hurdles from visa acquisition, to getting the relevant licenses and permissions, to about quantity and quality are critical in getting the project off the ground.

"So as a government the number one issue is to lower or remove all together the bureaucratic hurdles that prevent businessmen from setting up or operating smoothly...

This is within government’s control, or is it?

So even if we get rid of these the businessman will still need to be incentivised to set up shop here. Just because you have high returns on investment doesn’t mean the businessman will opt for you over a safer destination like South Africa or Dubai, where they are at least assured of protection of capital.

A package of industry wide incentives would come into handy. Individual deals done with businessmen only serve to distort the sector and often don’t live up to earlier promise.

But what would revolutionise the attracting of investors to our shores would be the existence of a local business class with the capacity to partner with themselves or foreign businessmen to create the industrial complex that will spur job creation.

It is easier to attract ready made investors than build this indigenous business class, and that is probably why we really haven’t exercised our mind to create it.

"Businessmen prefer the company of other businessmen who have navigated the environment rather than government bureaucrats and their statistics but who have no real appreciation of what it takes do business in their own country...

Throwing money at local businessmen will not achieve this goal. In fact it is the surest way to failure. 

As an example businessmen who have benefited from government largesse over the last few decades, do not yet have a national presence despite the huge hand outs.

There is a place for hand outs and even bailouts, but that is not the key interventions that need to be made to jump-start a local business class.

Education and mentoring would be the place to start, so that when you start dishing out the cash and the tax breaks at least you have a safe pair of hands on the receiving end.

"For the reason that we don’t have a robust entrepreneurial class and sticky fingered officials, I hesitate to suggest that government should go into partnership with other businessmen...

They say what you focus on expands. Every first Friday of the month the US government releases the Non-Farm Payroll, a measure of the number of jobs that have been created in the economy in the last month.

We urgently need a similar number in order to focus our energies on the task.

UGANDA, LETS GET ON WITH IT

Yesterday President Yoweri Museveni was sworn in for his fifth term as elected leader of this country. 

Not unlike 30 years ago when he performed the same ceremony on the steps of parliament building, challenges abound.

Three decades ago the NRM inherited an economy that had been flushed down the toilet and come out the other side. 

"The size of the economy stood at just under $4b or about half the size it was in 1971. This from a point where in 1971 our economy was behind only Mauritius, Rhodesia, South Africa and Zambia in east and southern Africa. In 1986 a graduate entry civil servant earned $7 a month (about sh24,000 now)  while a PS pulled in $23 a month. Coffee was not only our main export earner but also our main tax revenue earner...

Of course since then employing a combination of measures that broadly included rationalising the public sector and activating the private sector, we have seen the longest duration of year-on-year growth in the history of independent Uganda.

The performance of the economy in the last three decades is nothing to thumb our noses at. The macro statistics are beginning to assume once again, an air of some respectability.

And grudgingly or not we have to give the NRM the credit for resuscitating and then fixing the broken down machine that was the economy.

"But as they say, to those who much has been given, more is expected. Nothing came to the NRM on a silver platter, but the base against which we judge progress is no longer the Uganda of 1986...

Whereas we were glad for a smooth highway out of Kampala then, we now expect tarmac roads to our door steps. While we were glad for a few hours of electricity a week, now we expect that when we hit the switch there will be power. While we were ecstatic for our weekly ration of sugar then, now we threaten strikes when the price goes up by a thousand shillings.

And we blame the NRM for these failures never mind that the government no longer manufactures sugar or distributes power.

The NRM has long been a victim of its own success and will continue to be so for at least the next five years.

To keep up with our expectations the NRM government has to continue to ensure economic growth, which our technocrats can do even in their sleep (they make it look that easy). But the bigger challenge is how to make sure it is inclusive growth, that more and more people benefit from this growth beyond being told about it during campaigns.

Economic growth is important because the population continues to grow at a rate that will see as double from the current 35 million by 2040. Essentially we need to create more of a pie to distribute.

Distribution is where the catch is.

Statistics show that while poverty levels – measured by the number of people who live on a dollar a day, has fallen to about 20 percent from more than half the population in 1992, there are such huge income inequalities that we are in the bottom quarter of the countries surveyed.

"Two things have to happen in rapid succession, preferably simultaneously, in order to improve our ability to distribute the economic gains.
We need to improve the business environment and secondly, we need to launch a determined assault on corruption...

The investments in infrastructure – physical and social is important. Good infrastructure be it roads, telecommunications, energy or institutions lower the cost of investment. The private sector is the engine of job creation not the government. One thing that the cold war taught us is that a country is only as viable as its business community.

Dealing with corruption is imperative because it not only affects service delivery, therefore kicking away the social climbing ladder from under the lesser fortunate members of society but also, and relatedly, concentrates resources in the hands of a few at the expense of the majority.

It is simple but not easy.

You can’t doubt the upheaval – political and social that would come with a full scale assault on the pillars of corruption in our society. But the alternative, a total breakdown in law and order, fuelled by disgruntled youth, making this country ungovernable once again, is a fate we would rather not contemplate.

We really have no choice but to get down to work.

LEICESTER FC’S LESSONS FOR BUSINESS

Last week unheralded Leicester FC won the premiership for the first time in their 132 year history. 

Everybody is calling their run to the pinnacle of English soccer a fairytale, and be glad you lived to see it. At the beginning of the season the betting companies had given the team a 5000 – 1 chance of winning, the same odds they gave the possibility that Elvis was alive or that rocker turned philanthropist Bono can be the Pope.

The team had shown little inkling of greatness, even though they had escaped relegation the previous season by winning six of their last eight  games. Their £48m (sh235b) wage bill is less than half of league runner ups Tottenham and only a fourth of highest spending Chelsea’s payroll.

What made the feat even more improbable is that the team has sustained quality for a whole season and 36 games. So a fluke it was not.

"The feat puts to shame all the people, businesses and governments who faced with little financial resources, inadequate manpower or other assets are content to wallow in mediocrity having convinced themselves that it is useless to even try and compete with the big boys...

So if it wasn’t a miracle, how did Leicester do it and how can the rest of us mere mortals benefit from their wonder run?

Already the book deals are being signed to explain this, but maybe we need not look further than,  “Execution: The Discipline of getting things done” written by Larry Bossidy & Ram Charan.

Bossidy cut his management teeth at the feet of Jack Welch at GE, before moving on to manage aerospace engineering firm, Allied Signal.

In the book Bossidy points out that it’s the interaction between human resource, operations and strategy that determines whether companies can get things done.

In his experience it is a rare company that can have these three elements complimenting each other to unleash the full potential of a company. Often times two of the three maybe in sync – and not always the same two or that if the three are in unison, it is not often enough to produce consistent results over a prolonged time.

Let’s try and decipher the Leicester magic.

1.       Human Resource

"What seems like a motley crew of underachievers, veterans in the sunset of their careers and big team rejects were brought together deliberately, systematically and then melded into a single unit. The whole was greater than the sum of the individual parts...

It started with the recruitment, which was based on solid statistics and analysis of the players strengths and weaknesses and how these fit into the way the team wanted to play.

They also had a backroom staff of administrators and medical staff committed to the team’s success and willing to explore the cutting edge of management and sports science to extract maximum value from their charges.

We talk about sweating assets in terms of plant and machinery, Leicester showed us how to sweat human assets. Employing the smallest team in the league, with little change from game to game and still keep most injury free.

2.       Operations

You can have the most talented staff but the operations, how these interact with themselves and their tools in pursuit of a common goal is where everything comes together or apart.

"Coach Claudio Ranieri, a bargain acquisition too, worked at creating a family atmosphere in the team, discouraging big egos, promoting the mission over the individual and emphasising the process over results...

He was aided by a management that was confident to give him his brief and let him run with it. He was no amateur and in hindsight may be credited with laying the foundation for Jose Mourihno’s winning teams at Chelsea.

The technical team threw the training book out the window, emphasising explosive workouts and ice boxes to speed up player recovery between matches – explaining their low injury downtimes.

3.       Strategy

It starts with the strategy – what is your vision? How are you going to achieve it using what you have?

Clearly Leicester while they might have aspired to greater things, knew their place. With a relatively small wallet they went shopping for good value selling at a discount, both on and off the field. On the pitch they eschewed possession for efficient, counter attacking and trained with that in mind. Is it possible they lost early in other competitions to focus on the league, because they had the smallest team and couldn’t afford to rotate them?

Of course this does not even begin to scratch the surface about what went on behind closed doors at the club.

"But if there is any moral to this story it is that a team, business or country, can over turn the tables by having a good understanding of their place in the greater scheme of things, question and be unafraid to buck conventional wisdom and to practice unrelenting discipline in executing their strategy....

Of course  a thorough examination of their human resource practices would be instructional – their identification of what they need, the systematic way they went about acquiring it and what will be a true test for them going into the next season,  their ability to retain that talent.

TIME HAS VINDICATED THE SAPS

Imagine a situation where your income is dwindling while the demands on that same income are rising – rent, food, fuel and family. For a while you try sticking your head in the sand and ignore what has to be done.

The truth be told you know what you have to do --  cut down on spending and/or get a better job.

 After a while of postponing the inevitable, things have become unbearable enough and you call in your friend who has expertise in finance, who to help you out insists that you put your house in order first.

His prescription? Move to a cheaper house/neighbourhood, downgrade children to Kyanamukaka PS, reduce meat eating to Easter and Christmas (it had got that bad) and if you must drink replace marwa for your favourite Black Label.

The basic idea is that by cutting down on your spending you can stretch the few shillings you have a bit longer. The resulting surplus can be used to service the debt your financial guru friend may organise.

Uganda’s situation in the 1980s was not unlike the fictional one described above.

The economy had contracted by almost half since 1970(income was low), the population had doubled (family members up) and you had a huge public sector that was bringing little income but consuming most of your budget (huge staff doing nothing at home).

"With empty coffers, a backfiring economy and at its wits end, the government, like almost all others in Sub-Saharan Africa, turned to the International Monetary Fund (IMF) and World Bank for help.
In order to access lifesaving loans and grants it was prescribed that we cut public spending and raise revenues, unpopular recommendations wherever they were proposed....

We cut spending by retrenching civil servants, shedding non-performing companies off our books and cutting out other expenditures we couldn’t afford but could live with out – closing embassies, reducing the government fleet among others.

In order to raise revenues we sold our companies to more efficient operators, opened up the market to more competition and set up URA.

We take it for granted now but there was a time in our recent past when people got paid without working and once paid did not pay taxes.

Of course what was going for the NRM at that time was that it really didn’t have any political opposition to make the prescriptions unworkable.

And thank God for that.

Since the economic reforms started in 1990 we now collect 1000-fold more revenue, we finance 80- percent of our own budget, which was the opposite then and we have a more vibrant private sector, which not only have boosted revenues but are more efficient at delivering goods and services – can you believe there was a time it took months, even years to get a telephone line?

"We have short or selective memories, but those reforms proposed by the IMF then have to a large part got us to where we are now, which is a more robust economy and a good launching pad for the next stage of our development journey....

On Tuesday this week the IMF launched the Regional Economic Outlook report in Kampala and in a discussion with senior economists, it was clear that while Uganda has come a long way there still remains a lot to be done.

The time for resting on our laurels is not yet here.

The world economy is stalling as China, which has provided most of the demand in recent years sees output plateauing, while the US, Europe and Japan are still trying to work their way out of the after effects of the global financial crisis.

The net effect of this is that demand for commodities, which most African countries rely on to boost their accounts, is at historical lows and prices have plummeted. Their currencies have followed suit, making it hard for them to meet their international obligations.

The countries that will come out on top are those which will hold the discipline of cost management, while at the same time creating the environment for business to thrive and therefore raise more revenue.

Ironic as it sounds, we will stay out of the IMF’s clutches if we keep doing what they recommended.

To return to the analogy of your household, once you have swallowed your pride and moved into a smaller house, ejected all the hanger ons, adopted a spartan diet, increased your income and climbed out of your earlier depression, now is not the time to throw a party and return to the ways that got you in the hole in the first place.

"You need to hold the course so that you can accumulate more of a surplus that will hold you in good stead to push more ambitious reforms through or for when the next crisis comes along, because for as night follows day there will be another crisis soon enough...

CLEARLY WE ARE NOT READY FOR OIL

You can’t have missed our honourable members machinations to have taxes on their allowances waived. MPs are hopping to save more than sh5m a month in taxes with this provision they muscled into the Income Tax bill.

These manoeuvers were necessitated – in our honourable members’ minds, by a February high court ruling for them to pay taxes on their allowances like all other workers of Uganda. They somehow weren’t paying since 2004.

"Following a public uproar about their self-serving ways they, last week threatened to hold all of us ransom by refusing to pass the budget if they were not accommodated. Not unlike the toddler throwing its toys out of the play pen in a tantrum...

I am not hopeful that we can stop our honourable members in their quest for tax free living.

However this kind of attitude does not bode well for the country’s future.

All around the world, when politics comes up against economic, politics wins and often to disastrous effect.

Last week Uganda made the decision to pass the oil pipeline through Tanzania and not through Kenya as was earlier expected, which brings us one step closer to oil production now, now expected for before 2020.

At peak production Uganda expects to be piping out 200,000 barrels a day. To put this number in perspective using $40 a barrel, our exports of goods will double from around $3b annually currently. 

Of course all these monies will not find themselves into the national coffers but our share of the price of a barrel, the taxation of oil companies and the revenues from supporting industries will amount to a very tidy sum.

"As incredible as it sounds, if our political leadership is not focussed on the long term benefits of this windfall and only see the short term gains they can milk from the situation, we will soon be worse off than when we had no oil...

Hard to believe?

Well, Ghana established commercial viability of their oil find in 2006 around the same time as we did. Their fields were off the coast so easier to evacuate the oil. In the excitement and driven by bad politics – an election was around the corner, the government leveraged future revenues to raise public service salaries by 50 percent in one fell swoop, in addition to other jumps in consumption spending.

A populist move that has cost them dearly, because now with the collapse of oil prices from highs of $140 a barrel in 2007 to around $40 now, Ghana finds itself looking to International Monetary Fund (IMF) for help in paying for its imports.

Across the pond in Venezuela, during the oil boom, the Latin American nation initiated many populist social programmes and even had time to thumb its nose at the US. Since then prices have plummeted and the country finds itself unable to sustain the programs, with inflation jumping to 500 percent. It has become so bad in fact that last week it was reported that the government is running out of money to print more money to keep up with inflation.

It would have been funny if you don’t think about the man in the street there.

In all these crisis you can bet there were politicians – like our own honourables, throwing caution to the wind, disregarding basic economics to plunder the treasury regardless of the plight of the country in general.

You can bet the representatives in Ghana and Venezuela are also hatching plans to increase their pay as you read this.

But the winner has to be neighbouring Equatorial Guinea. This little country has proven that it is not population size but political management that is key. With a population of about 760,000 they have the highest GDP per capita on the continent of about $20,000, however its populations is among the poorest on the continent with more than three in four  living on less than a dollar a day.

President Teodoro Obiang, his family and cronies have squirrelled away hundreds of millions of dollars in western banks (maybe why he is the longest serving president on the continent) and squandered it on high living. But you can bet there are politicians in the country who have been co-opted into the racket in total disregard of the people.

"Politicians all over the world are the same, they will always be on the lookout for personal gain, their baser instincts tempered only to the extent that strong institutions, societal censure or basic good manners prevails...

The correct thing to do is to invest these windfalls so the returns from the investment can pay for improvements in the wellbeing of the people.

Investments in social services, which improve the quality of the human capital, or building infrastructure, which reduces the cost of doing business are better than raising MPs salaries, which is not an investment but a price we have to bear to keep up appearances of a democracy and maybe more expensive than the bother.

A fly on the wall reveals that reeling from the public backlash MPS are now trying to extend the tax exemption to teachers, doctors and other public servants, so that there plan is not seen for what it is – a shameless grab for resources which, on close scrutiny,  they have no right to over the rest of us.

BAILOUTS? GOVERNMENT IS DAMNED IF IT DOES, DAMNED IF IT DOESN’T

Last week Standard Chartered Bank got a court order to put Steel Rolling Mills under receivership for their failure to honour their debt obligations.

The Jinja based industry became only the latest casualty in a hostile environment that has been buffeted by rising lending rates, shilling depreciation and an underachieving economy.

The steel manufacturer is facing closure following refusal of the commercial court to issue an injunction temporarily stopping the bank from shutting it down pending the main suit. In the main suit the company is challenging StandardChartered’s bid to put it under receivership.

In 2014 Steel Rolling Mills borrowed two loans of sh18b and $10m (sh35b) to purchase a sponge iron plant, which turns iron ore into steel. However, last year the bank recalled the loan in its entirety but the company argued that the loan was for 96 months and that the 45 days’ notice to repay was unreasonable.

Company officials argue that unforeseen developments in the economy have made it difficult to service the loan properly but point out they have already paid about sh26.5b of the loan.

“A combination of things – a drop in demand form the construction industry, falling steel prices, rising interest rates, currency depreciation and increased cost of production, all unforeseen at the time of taking out the loan have made it difficult,” Steel Rolling Mills’ Sami Alam told Business Vision.

Economic growth is expected to come in at five percent, down from the projected 5.8 percent. The shilling has stabilised in recent months but last year peaked at a historic high of sh3,700 to the dollar from below sh3000 at the beginning of the year. The shilling has since clawed back some value and is now trading in the ranges of sh3,300 to the dollar on the open market.

Lending rates also jumped following the central bank’s raising of its key Central Bank Rate, which serves as a benchmark for commercial lenders. The CBR peaked at 17 percent in February this year from 11 percent twelve months prior, this had the knock on effect of raising lending rates to as high as 25 percent for prime borrowers.

The Bank of Uganda felt it necessary to raise the CBR to head off potential inflationary pressures.

The enterprise under threat is the only one in Uganda which converts iron ore from a company owned mine in Kabale and from artisan miners into steel at their Jinja plant.

The company, which also trucks 250 tons of iron ore daily from Kabale and produces 4000 tonnes of steel a month, also employs about 4,000 people directly and indirectly.

Industry leader Roofings Ltd produces about 350,000 tons of steel products a year from imported semi processed steel.

But the multi-million dollar investment is not the only one creaking under the weight of hard economic terms.

"According to a senior businessman small businessmen who owe sh40b and are failing to pay are in danger of losing up to sh120b in assets pledged as collateral for the loans...

Everest Kayondo the boss of the Kampala City Traders Association (KACITA) could not confirm the figure but said the pain was real.

 “The high interest rates in a situation where business is declining means many of our members have seen their businesses going into receivership,” Kayondo said.

“It is particularly painful when as we predicted the banks are showing healthy profits, but at the same time they are treading on dead businesses.”

Banks, which have released their results recently, have shown that they are bringing their bad loans under control, provisioning less for them last year than the previous year, while profits have mostly come in higher in 2015 than in 2014.

A closure of these businesses would put thousands out of work and compromise the ability of local businessmen to create more jobs.

Already big names like supermarket chain Uchumi have been placed under receivership and WBS TV has been taken over by URA. Meanwhile the classified pages are inundated with properties being auctioned to redeem bad loans as numerous small operators have sunk quietly out of sight in recent months.

Inevitably when such economy wide distress arises calls for government intervention are not far behind.

“This is not a normal situation,” agroprocessor Andrew Rugasira told Business Vision.  “When you are in a situation of recession pressures government has an important role to play in assessing distressed loan portfolios to reduce the stress either by having the financial sector restructure these loans or by injecting liquidity into the economy.”

He argues that the cost to the economy in terms of jobs lost, loss of business to support companies and a general lowering of demand make the case for government intervention important.

Politics will always be a factor in how government intervenes in the economy, benefiting some who may not be deserving of government help to the detriment of those who are but who might be at odds with the establishment or not have the correct connections.

“There will always be politics. There is no perfect scenario. But the discussion must be had and systematic, orderly way for government to lend hand come out,” Rugasira said.

Opponents of government intervention are hard to find.

"The classical argument is that companies should be allowed to fail, that to intervene is to distort the market’s ability to allocate resources efficiently and only serves to perpetuate the inefficiencies that led to the collapse in the first place...

Governments around the world are having to rethink this orthodoxy.

During the global financial crisis that started in 2007, the US, European and Japanese governments pumped money into their respective economies and partially nationalised some of their biggest financial institutions as a way to climb out of the crisis.

Only last week The Financial Times reported that the UK government was going to re-nationalise up to a quarter of distressed Tata Steel and lend them hundreds of millions of pounds to the firm which had threatened to close down after suffering substantial losses  for years.

The UK government cited the 40,000 jobs under threat and the strategic importance of the steel industry to the economy as the reasons for interventions.

THE OIL PIPELINE:ITS ALL ABOUT THE OIL, OR IS IT?

Last week Uganda decided that the oil pipe line from the western oil fields will go south through Tanzania rather than through Kenya, as was earlier expected, a decision that served to open up old wounds and threatens to shift the region’s economic center of gravity.

The Kenyan route through Lokichar and onto Lamu, was discarded on account that it would be more costly to develop due to expensive land compensation claims, its passing through environmentally sensitive areas and the state of unpreparedness of the Lamu port, which was deemed too shallow and exposed to high tides, less than ideal conditions for oil tankers to operate in.

The route through Tanzania to Tanga port was shorter – though not by much 1500 km through Kenya as opposed to 1,410 km through Tanzania. This would be factor though as the waxy nature of Uganda’s oil which solidifies below 40 degrees centigrade necessitates heating plants every so many kilometres. In addition because all land belongs to the state in Tanzania compensation would be kept to a minimum and leases secured faster.

It also helps that Tanga port is already up and running unlike Lamu. This would mean Uganda’s first oil exports have a better chance of being realised before 2020 using the southern route.

"And it did not help that Kenya has not established commercial viability of their oil finds in the north...

This was important for both countries but more so for Uganda, because if Kenya didn’t have viable quantities to ship out Uganda would find itself carrying a disproportionate portion of the piping costs.

While Tanzania has no oil deposits of its own to share the pipeline there gas reserves are convenient as heating fuel for the length of the pipeline. In addition the development of infrastructure through southern Uganda as a plus given the unexploited iron ore deposits in the region.

Of course Kenyan officialdom and the business community were left unamused at the latest development. Some commentators went as far as to accuse Uganda of playing off its neighbours against each other, sticking it to Kenya over some unresolved and unclear past slights and threatening to jeopardise the joint multi-billion dollar Standard Gauge Railway(SGR) project.

The Mombasa to Nairobi leg of the SGR is already underway and will cost about $5b while the $8b has been earmarked for the Malaba-Kampala leg.

The economics of the project were lost in the hysterics.

It is understandable that Kenya Inc should be concerned.

"Fashioned as a colony the British never saw themselves ever leaving, like South Africa or Zimbabwe, the other territories around it were fashioned to feed into Kenya’s industries, leading to its regional economic dominance, a situation that persists to date...

However with Uganda’s economy finding its feet over the last three decades and Tanzania’s embarrassing wealth in natural resources – natural gas, gold and other minerals, means Kenya is increasingly having to see itself as first among equals rather than the 800 pound gorilla straddling the region.

Channelling Uganda’s oil, the fourth largest reserves in sub-Saharan Africa, through Tanzania threaten to redress historical regional economic imbalances. Uganda’s reserves are estimated at 6.5 billion barrels of which about 1.5 billion are recoverable.

It is not unreasonable to believe too that the accompanying improvements in infrastructure along the pipeline will make the much neglected Tanzanian route to the sea more attractive for Ugandan, Rwandan and Congolese commerce, a worrying situation for Kenyan transport interests.

And finally with tensions in South Sudan beginning to ease off -- rebel leader Riak Machar was sworn in as Salva Kiir’s  vice-president, the issue of an oil pipe line to the coast will be revived, only this time there will be an alternative through Tanzania to the Kenyan route.

"It is safe to say that when history is written the events around the evacuation of Ugandan oil to the sea will be seen as an inflection point in the region’s geopolitical alignment...

It is not only about the oil, but then again it is.