EARN IT LIKE MAYWEATHER

By the time you read this column boxing’s richest payday will have been settled.

American Floyd Mayweather came out of retirement to fight Ultimate Fighting Championship (UFC) Lightweight Champion Conor McGregor on Saturday night, in an event where win or lose Mayweather was guaranteed a $200m (sh750b) payday.

The figures are mind boggling but the principles around which that money can be made are the same whether you are millionaire sports man or the man with a rolex stand at the corner.

While you might not make Mayweather’s millions here are a few lessons from his heady journey up to the rarefied heights of sporting success that can set anyone on their way.

1.       Master your craft

It helped that Mayweather’s father and uncles had been professional boxers of some repute. It helped too that when Mayweather thought he needed to get a job to help out his mother, his grandmother advised against it and urged him to continue boxing. Since he was a child he has lived in the gym, claiming his father never did ordinary things with him when he was around. They say it takes 10,000 hours of regimented practice to attain world class standards in any field, that is about four hours a day, five days a week for ten years. There can be no doubt that Mayweather, who turned 40 in February, has done his time.

2.       Own your labour

In 2006 Mayweather paid $750,000 to buy out his contract and effectively take charge of his own career. Prior to that Mayweather was like other fighters with manager who would pay him a “salary” after every fight, regardless of how much money the fight has brought in. The manager would pocket the net after paying out all other expenses. The net effect of this often times is that the manager pockets a lot more than his fighter. In the last ten years of his career, Mayweather managed his own career, which allowed him to fight less but earn more, much, much, more. In prize money he has made more $500m in his career with most of it made in the last half of his career.

Essentially unless you are a thieving official, you do not get rich from working a job but by owning the job.

3.       Play in the biggest market

"You maybe the best in your chosen field, even own your labour but if you are not operating in a big enough market you have little chance of becoming exceedingly wealthy. If you set about to sell Rolex watches in Uganda you may need to sing for your supper more often than you would care. A similar business in the $12trillion GDP US market may have you laughing all the way to the bank. You probably have more success selling our own brand of rolex here than the pricey watches.

The question has to be, what are you selling and is there a huge enough market for it within your reach?  People may have laughed at Mukwano going into the bar-soap selling business three decades ago, no one is laughing now.

4.       Muster the art of marketing

The purists had their doubts about the Mayweather-McGregor fight, but these doubts were buried under a marketing blitz that turned what would have been a farce into a global must watch event. It is rarely true that if you make the best mouse trap people will automatically make a beaten path to your door. You need to increase awareness about your product and manage the perception of your product’s perception in your market’s mind, not only so you can make the first sell but also so you can keep making those sales. It’s called marketing. Blowing one’s trumpet is frowned upon in certain circles and among some generations but if they don’t know what you are selling how will they fork out the money to buy it...

5.       Money is not for eating

And finally Mayweather is known for his lavish lifestyle. Spending millions on clothes, cars and gambling. I would like to believe these were gimmicks, that his business wrote off as marketing expenses during his career. If you want to become seriously wealthy you need to understand that money is not for eating but for making more money. There are only two ways to spend money – you either eat or invest. In the former case you will soon spend all your money and at best be left with flitting but pleasant memories about the good times you had but at worst be saddled with unnecessary expenses needed to sustain your highflying lifestyle long after you are making the big bucks you were used to. The advantage of maintaining the attitude that  money is not for eating is that the more that is reinvested in the business the more it will earn you and then you can gorge yourself to your heart’s content.

Beyond the glitz and glamour surrounding Mayweather’s life the story of how he has converted from pugilist to a businessman, taking control of his own labour, is the bigger story for me. 

GULU FIASCO, A PEEK INTO OUR COLLECTIVE LOT

Uganda has been hosting a regional secondary schools meet in Gulu for the last week.

It is safe to say that at the end of this event as a country we will not be covered in glory for the shambolic manner in which our officials have gone about the event.

At the beginning of the event key facilities for athletics, swimming and tennis had not been worked on.

Since the beginning of the week we have been served with a frame-by-frame show of development on the pool.

At the beginning of the week they were filling the pool by whatever means necessary – buckets, fire trucks, water bowsers and doing it delicately so us not to dislodge the tiles which had only just been laid.

Then they were tiling the skirting of the pool. And finally they were treating the algae-green water and officials were optimistic that the swimming competitions could kick off today (Friday). For lack of time they were going to modify the competition so as to be done by the scheduled end of the games, on Monday.

"How typical of Ugandan officialdom to leave for the very last minute such preparations for an event of such importance...

They have it down to a tee. Lobby for an international event. Win the right to host it with years to spare. Then forget about it. With months to go – in this case days to go, sound the alarm that we are not prepared and we risk a fiasco if issues are not addressed. When all seems lost and we are about to do the right thing – that is pull out of the commitment, we make a last gasp appeal to state house to rescue the situation.

Of course at this point no one is going to be going over the request with a fine comb. We cobble together a half decent event, the visitors leave and we go on with our lives, the hypertension-inducing crisis forgotten so totally as to make one wonder whether it was just a bad dream.

The formula deviates little from this basic plot.

We saw it with the Commonwealth Heads of Government Meeting (CHOGM) in 2007, we have seen it with Uganda Cranes at the Africa Cup of Nations earlier this year and with our hosting of the Africa Netball Championships a few months ago and a multitude of events in between.

For a person who has not been following the circus or unable to dot to the dots, one may write it off to the incompetence of the relevant officials. Or maybe put it down to another case of government refusing to leave up to its obligations.

But how can it be?

All the people who organise these events are intelligent, experienced officials whose competence it would be hard to fault. And the ease with each hundreds of millions are released for these events suggests that government isn’t short of money for these events.

So what is going on?

"Your guess is as good as mine. But it would not be a stretch of the imagination to believe that these delays are deliberate, designed to create public concern and panic. This would then justify an unquestioning opening of the money taps from the treasury...

It would be interesting to see a post event audit of some of these events who success was saved from the jaws of failure by a timely and over-enthusiastic cash infusion by government.

This perennial circus has a cost. It means other more crucial budget items are bumped off the agenda for one, incentivises wrong behaviour and need we say, puts money in the pockets of  a few at the expense of the majority.

Since they keep doing the same thing over and over again with no fear of being stopped in their tracks, this behaviour also points to impunity.

How else do you explain civil servants wearing Rolex watches whose minimum price is many times their monthly salary?

THE ROBOTS ARE COMING, BE HAPPY

Last year telecom company MTN in collaboration with Commercial Bank of Africa (CBA) launched their mobile money loan product.

The product allows mobile users to access loans on their phone within minutes. The loan amount depends on a mobile owners savings, use of mobile money and other services on the MTN platform. 

Loans are processed within minutes and attract a nine percent monthly fee and loans are ordinarily for a month.

Granted that the loans are for “small” sums but for a small business man sh100,000 loan can mean the difference between shutting his stall early for the day or keeping it open to sell more.

Last week CBA reported that since October when the service was launched they have lent out more than sh25b in more than a million loans.

To put this in perspective CBA total loan book in as of June 2016 before they launched the service stood at sh41b.

The real marvel is the speed at which they are able to churn out these loans.

The back end of the loan process involves evaluating the credit worthiness of a client, getting the approvals and the eventual crediting of the clients’ accounts. Our bets banks are guaranteeing us a 24-hour response time from receipt of the application to feedback, not necessarily disbursement.

"Now with the use of algorithms which can run through these process fast enough that you can see disbursement in less than 15 minutes. In Kenya where telecom company Safricom’s M-Shwari loans have been in place for longer they are lending more money for longer periods...

It is interesting how whether a market accepts a good or service or not is often a function of how close it is or how convenient it is to access.

That I can be in the middle of traffic or in my bed in the still of the night or be miles away from any recognised financial institution and still have access not only to my own savings but to credit as well is a mind bending development for people who remember a time when it took months to get credit, which credit you could not get without collateral from stodgy bankers who seemed like they were doing you a favour to lend you money.

The ease with which one can access credit is a key driver of economies that is happening ever faster every day in Uganda is a good thing.

However for our entrepreneurs bank lending still falls short of their real needs, which is patient capital that can see them through the growing pains of a start-up enterprise.

Financing a start-up can be done using savings, contributions from friends and family. It is generally not encouraged to use bank loans as they just serve as an added cost to the business. They are better for businesses that have attained some maturity and have consistent cash flows.

"Beyond personal savings and that of friends and family, venture capital is the type of finance small businesses require to grow to the next level...

A venture capitalist often offers capital to small businesses for a share of the business, just as important may offer managerial support and access to other markets and experts. They play a handholding role, with their payout coming when they can sell their stake to another investor.

Essentially unlike the banks they share the risks of the business, help it grow to its full potential, including injecting in more funds or attracting more financing if the need arises. It is a high risk game where in 20 ventures only one may come through, providing adequate return to pay for all the other misses.

It’s a specialised field of finance that has only become really organised since the Second World War unlike banking or securities which have been around for centuries.

It is the glaring gap in our financial ecosystem and one which needs to be urgently filled. If there is one thing we are not scared of as Ugandans it is starting businesses the challenge is keeping them going. What we need is some help getting past the initial stages of the business.

Evaluating a business that has not begun to make money, assessing whether its management is adequate and what gaps remain to fill, meanwhile doing this in a cost efficient way that improves the possibility of return at the end of the day.

Venture capitalists while they have a framework through which they can process potential clients it is a largely reliant on human judgement.

But with the increased crunching power of computers, breakthroughs like the mobile loans may not be in the very distant future. And then we will really take off as an economy.

LAND, THE CHICKEN ARE COMING HOME TO ROOST

Last week land minister Betty Amongi got a rough reception from the people of Amuru. The minister had gone along to launch the surveying of land intended for a sugar operation in the area.

Protracted discussion with the political and traditional leaders had been going on for some time up to that point and it seemed as if agreement had been reached. Or so It must have seemed for Amongi and her people.

On arrival they were greeted by an agitated population – mobilised by area MPs, who thought all their issues had not been addressed.

It was back to the drawing board for the government.

On the weekend maverick army man Kasirye Gwanga on his own admission sent developers scurrying for cover when he claimed they were trespassing on his land. Setting ablaze an earth mover that had already started levelling the land.

The common denominator is land.

"We have kicked this tin so far down the road and now it seems it has come to a point where we have to handle it one way or another....

To unlock the full value of our land we need to resolve the land issue.

It is one thing that our land tenure system is complicated but also that our land is largely untitled. One of the major fallouts of this is that we are wasteful and unproductive with our land.

Because our yields are so low we need more and more land to produce not much more than before.

To illustrate. According to the Uganda Coffee Development Authority (UCDA) the average yield per hectare of coffee on our farms is half a ton. However over in Mityana there is a farm which produces 2.5 tons a hectare. The difference is that our farmers not only use poor farming methods but then go ahead and lose a significant portion of the crop through inferior post-harvest handling.

"When land rights are not clear either because many people are actually squatters on the land they are on or because land is held through some community consensus that is hard to defend in law, it becomes difficult to invest in it and therefore push up the productivity of the land...

As a result we are in the interesting situation in Uganda where eight in every ten Ugandans own the houses they live in but we still have a per capita income of less than a thousand dollars.

The two facts are related.

If land is properly titled it can either be leased or sold or invested in to extract its full value. So I can sell it or if I can’t till it but still want to hold on to it, I can lease it to someone with means to make it more productive. Or I can borrow money against the land to invest in fertilisers, better workers or capital equipment to improve yields.

Interestingly the more productive the land is the less people will be dependent on the land for a livelihood, as increased incomes will allow people to educate their children who move on to better paying jobs or mechanise their farms and hence need fewer workers.

The challenge is that land reform of any sort is fraught with political risk. It often means going against the entrenched interest around land, which in Uganda’s case is not really the big land owners but  the millions of small holders hanging on to their holding like grim death for lack of an alternative asset to call their own. Who look on attempts to regularise the tenure system with a jaundiced eye, scared that you might be trying to dispossess them using cunning and smoke screens.

Of course there are the elite who are not averse to exploit this mistrust to earn leverage against the government or establishment.

"The point is we are going to have to bite this bullet, sooner rather than later. If we are to transform the economy away from a largely agricultural to a modern one based on industry and services. If we think we can do this without resolving our land question we are living in a fool’s paradise...

THE ELUSIVE QUEST FOR DEVELOPMENT

In recent weeks the press has been awash with updates on ongoing projects.

The Entebbe Express highway is months away from completion. East Africa’s biggest hydro-electric power dam the 700MW Karuma Dam will in 12 months bring 200 MW to the grid. The 183 MW Isimba dam will come on line by the end of next year.

In addition a revamping of the health system’s infrastructure is coming to a head with the completion of renovation and expansion of Mulago hospital. One of the centrepieces of the new development is 320-bed maternal and neonatal complex.

Meanwhile there is an ongoing exercise to revamp secondary schools too.

There is also work going on roads, bridges, flyovers, railways and ports. A veritable explosion of activity that if completed on time is bound to change not only the way the country looks but the economy as well.

"Improvements in infrastructure should lead to the quicker movement of goods and services around. These efficiencies translate into economic growth...

Given the benefits of such infrastructure – any economic student can count them off his fingers, why has it taken so long to get around to it?

There are many reasons but financing is at the top of the list.

Two things have happened.

Locally our revenue collections have grown. Secondly and related to the first, the financing options have increased with the rise of China as a major financier of development across the globe.

In the early 2000s the government wanted to build two dams simultaneously at Bujagala and Kalagala. Western financiers objected to the building of two dams at the same time arguing that there was not enough demand for the power.

Secondly, bowing to the environmental lobby they cancelled the development of Kalagala if Bujagali was to go ahead. Around the same time the prospect of a dam at Karuma was mooted by a consortium led by Norwegian developers.

But the financiers stuck to their guns refusing to back to projects simultaneously.

Even for Bujagali with its meagre 250 MW of power hey had then energy minister Saida Bumba scrambling around the region, jumping through hoops, to get written commitments from our neighbours that they would be willing to take on any surplus that Uganda was unable to consume.

"With the Chinese has come a difference of perspective of what drives growth and therefore development, as they had had first-hand experience from 1978. The western donors’ experience with driving development around the world is far from laudable...

A graph of the growth of Chinese GDP per capita shows a curve inching up, only hitting $2000 in 1990 where a tipping point seems to have been reached, with per capita GDP quadrupling over the next three decades to the current $8,000. No western economy mirrors such progress in the careers of existing development aid democrats.

As I f the statistics are not enough previous experience with telecommunications, road networks and even power consumption suggests that there is huge suppressed demand in the population for the services that come with infrastructure.

That being said it’s important that we get value for money in all these new projects that costs are not inflated, good quality work is done and works are completed.

However infrastructure can spur economic activity the challenge still remains that this growth is spread equitably across the population.

If there is growth but widening disparities in income and wealth it is often an indictment of the government of the day, and jeopardises the chances of long term growth too.

Government through effective taxation of the wealth created finances not only the infrastructure to keep the wealth growing but also social services like education, health and social security to ensure that more people benefit from the growth than the captain of industry and their lieutenants.

An educated and healthy population is a more productive one.

"What gets in the way of this service delivery is corruption. Corruption has the effect of concentrating resources in a few hands....

A few years ago it was reported that at least sh500b is lost annually that would have been the equivalent of treating about three million in patients at Mulago. Currently Mulago budgets for less than 200,000 inpatients annually.

Even if 3000 corrupt officials an their accomplices helped themselves to sh500b it means that each was wolfing down the resources of a thousand Ugandans in need of urgent medical care.

Related to that all this spanking new infrastructure is good to show off on social media but it needs to be manned or optimally used for all of us to benefit.

During a tour of Mulago last week NRM officials were told that the nearly half of the 3000 staff complement of the “new” Mulago remained unfilled.

Beautiful buildings, roads and airports are all very nice but if hey are not manned then we will be as good as having done no work.

IN POLITICS HOPE IS NOT A STRATEGY

In the last few weeks there have been three important votes taken on the continent.

Neighbour Rwanda went to the polls last week. Predictably President Paul Kagame won the election with consensus figures.

On Tuesday this week South Africa’s President Jacob Zuma faced down his critics in his eighth no confidence vote in parliament, winning but not coming through unscathed, prompting the BBC to cheekily declare that he was now on his ninth life.

On the same day Kenyan President Uhuru Kenyatta stood for re-election, running against perennial contender Raila Odinga in an election that many pollsters said was too close to call.

"In each case the incumbent came through. And in each case we were taken by “surprise”. But we shouldn’t have been surprised...

In the case of the Rwanda Kagame’s hold on power seems not to suffer from the attrition of time. It was a different case in South Africa. While Zuma continues to confound the critics, this time a court ruled that the vote should be by secret ballot emboldening some of his own party members – about 30, to vote against him.

On Wednesday Kenya’s Independent Electoral and borders Commission (IEBC) had ruled that they would announce the final result next week. This came after Odinga announced that the IEBC’s system had been hacked after initial results streaming in had Uhuru firmly in the lead.

At the time of writing this column with 1,000 of the 40,883 polling stations’ results yet to be announced the IEBC website reported that Uhuru had crossed the eight million vote mark. Raila was at about 6.6m votes of the 19 million registered voters.

Except in the Rwanda case, in the other two votes the thought was widely entertained that there maybe an upset.

"Clearly we got suckered by the media or the loudest voices on social media....

In Kenya results showed that both houses in Kenya – the national assembly and Senate will be controlled by Uhuru’s Jubillee party overturning the majority that Raila’s ODM held in both houses. A situation Raila has not challenged so far, but which lends credence to a fair and square Uhuru victory.

It is a development we have seen in Uganda since 1996. The media and now social media, is a useful ground to occupy but actual work on the ground is more important. Proof that not enough work has been done on the ground shows up in the parliamentary numbers.

It seems because we have not learnt the lesson we continue to take the class.

The opposition in all these cases, except Rwanda, manage to create a perception that the incumbent is weak and on their last legs, only to suffer “shock” defeats when the votes are tallied. The defeats are often comprehensive enough that it is difficult to sustain the rigging narrative.

Either because resources are in short supply or a lack of willingness to do the work needed to create a genuine groundswell of opposition to incumbents – or both, the opposition takes to the media and now even more, social media to create the perception that they are credible, strong and able to upset the applecart.

"The strategy seems to be, if we create a perception in the public that we are winning, this perception will lead the public to vote for us. A kind of feedback loop between cause and effect...

Either they are not executing the strategy very well or it doesn’t stand up to rough and tumble of real time politics. Either way the result is the same.

A worse crime is that they begin to believe their own press.

In South Africa the opposition called upon the ANC MPs to vote with their conscience and not the party. They hoped that the secret ballot would convince enough of them to break ranks against the party and Zuma’s presidency. They were left to put a positive spin on a loss, that while it may have weakened Zuma in the perception of the press and social media, still left him firmly in charge of Africa’s largest economy.

The point is, in politics, as in many other aspects of life, hope is not a strategy.

WITH BUSINESS YOUR BEGINNING MAKES OR BREAKS YOU

It had a promising start. The business tapped into the growing need of the now affluent middle aged, middle class to get healthy. It grew by word of mouth and had generated a loyal enough following that it had begun to show a positive cash flow.

Then the founders fell out.

Differences about how to run the business, the long term vision and of course how to share the spoils put paid to the dream.

So they have broken up. One of the founders swears that from here on now there will be no partnerships without written, formal agreements.

Business is not unlike pumping water out of a borehole. In the beginning with the airlock having grown in the pump the first pumps are hard, near impossible. But once the airlock has been worked out the pump lever can be worked by a child.

"The way we start our businesses, selecting partners, financing the business, demarcating roles and determining how the benefits from the business will be distributed – in the event that we start making money, often determine the long term viability of a business....

Ordinarily we see an opportunity, do some cursory brainstorming around the subject we the nearest person around and we jump in with both feet, our eyes firmly placed on the future pot of gold at the end of the rainbow.

Soon reality sets in.

In his book The Start up J-Curve, Howard Love says that the progress of a start up follows the trajectory of a J-curve. Soon after you start you descend into “the valley of death”, the market’s acceptance of the “revolutionary” product can at best be described as luke warm, the expected sales are not coming through and even if they do, the cash is not flowing because – as we quickly find out, no one pays cash.

This is where most businesses fail. “The valley of death” tests the resolve of the business owner or owners, disagreements erupt, some slink quietly off to do other things. Friendships have been shattered in the “valley of death”.

Coming out the other side only happens if the product has gained wide acceptance by the market and a business model – how the money will be made, has been established. There is no standard time frame for going through the “valley of death“ but all business experience it, whether the promoters are experienced or not.

Oftentimes a business succeeds because despite all external experiences it is able to hang on long enough to come out the other side. Not that problems are over once you have.

"At the start all the business promoters should seat around and really thrash out what their motives are, what their responsibilities will be, what each’s contribution will be – often a mixture of cash and some sweat equity and when and if, the cash taps start flowing how they will pay themselves....

The founders of health promotion business above, should have sat down, detailed all the above before going into business and they would have had a better chance of surviving.

Synergy – the sum of the whole is greater than the sum of the individual parts has been lost.

My money is on one over the other to survive and maybe even thrive in the long term. But I know neither of the break up businesses will be as good a concern as if they had not broken up. Reducing either’s chance of survival.

No doubt that to survive “the valley of death” it helps if you don’t do it alone. But there has to be a unity of purpose beyond greed, the desire for enrichment, to hold it together.

A plan to eventually sell the business – either in whole or partially as a way to get paid is a good motive. Delayed gratification will have to be exercised as the promoters of the business go about building the systems that will make it attractive to a future investor.

A deeply held philosophy or far reaching goal, shared by the promoters -- to alleviate poverty through financial services for instance, may be strong enough to not only ensure your business services the “valley of death” but ensure your partnership is not dashed upon the rocks of unfulfilled expectation.

Even for sole proprietors the time comes when you need to expand or grow out of the “valley of death” and the selection of partners would make or break your business.

A friend is in such a situation. He thinks he has the business model sorted out and now wants to scale up his operations. However he is careful to get only partners who can share his long term vision of the business.

Barring any desperate need for a huge chunk of cash soon, which wold see him stampeded into taking on the fast moneybags or selling the business altogether, I am confident he will find the right partners in due course.

FOR EVERYONE'S GOOD, KAMPALA BOSSES SHOULD RESOLVE THEIR ISSUES

The tarmacking of the Kitala-Komambogo road has been in the works for a few months now. So it was with much relief that the contractors set to work a few weeks ago and we can now drive on a smooth road.

And now horror of horrors, we even have street lighting now.

This is the latest in the tarmarking of three roads – Bukoto-Kisasi, Bahai road, Komabogo-Bahai-Kyadondo road, Kyebando Ring road, in the area that have come since the Kampala Capital City Authority (KCCA) came into force in 2011.

"As residents of the area we are ecstatic and half under our breaths we think that anything else KCCA does for the area will be a bonus. We are fine....

Interestingly we are not the only ones. All the divisions of Kampala can report an improvement in the road network and general cleanliness over the last six years or so.

It doesn’t take a genius to map these sorely needed development to KCCA executive director Jenniffer Musisi’s tenure at White Hall.

We can therefore not be the only one disturbed by  reports such the recent one where KCCA councillors want President Yoweri Museveni to terminate executive director Jennifer Musisi’s contract for defying a directive by minister Beti Kamya to raise their salaries.

Never mind that the finance ministry rejected a request for a supplementary budget from Musisi of sh3.6b to give the councillors a 30 percent bump in their pay.

And now the minister has threatened to institute a probe against the executive of KCCA following stories she has heard of their being a lack of transparency and professionalism in how KCCA goes about its work.

Just when we thought we had put the days of malaise in Kampala City behind us then this. One cannot help but feel there is a malevolent spirit hovering over Uganda’s capital city, determined to keep it in chaos, disrepair and confusion.

The idea between the creation of the KCCA was broadly to extract the running of the city away from the vagaries of politics. Politics was getting in the way of implementation of much needed development projects in the city which was fast deteriorating into a filthy, congested and insecure hovel, not befitting of the country’s centrepiece.

KCCA has got off to good start and the residents of Kampala were holding their breath that it may last a little bit longer.

"Musisi and her lieutenants have faced down many challenges, all of which had the cynics rolling out the silver and gloating that competence can never be allowed to thrive...

In the last term a knotty contest between Mayor Erias Lukwago and Musisi, while it did not bring progress to a standstill, hung like a dark cloud over the city’s affairs. An obliteration of the ruling party in the city, as has become tradition, had local politicians pointing fingers at KCCA, the argument being that the Authority’s good work in cleaning up the streets, putting UTODA in its place and generally improving our collective wellbeing cost them votes!

KCCA is living testament to that saying that, “No good deed goes unpunished!”

KCCA’s corridors are not populated by angels. The people of kampala would care less how the most recent impasse is resolved as long as the authority can be allowed to keep doing and better, what it has been doing.

We cannot be blamed for looking upon anyone who seems to be in the way of this development with a jaundiced eye.

Never the less blood need not flow in the streets over this. Let Kampala’s top bosses, who incidentally are ladies – Thank God! Resolve what seem sto be a breakdown in communication and get on with the job of making Kampala great again!

BE PROFITABLE BUT DON’T FORGET NET WORTH

I am deep into Brad Stone’s, “The Everything Store: Jeff Bezos and the age of Amazon” a fast paced narrative of how Amazon, which started as a bookseller and now sells almost everything, was built.

The company which survived the dotcom meltdown of earlier this century has grown over the last 23 years to the point that last week, for about half a day, founder Bezos was the richest man in the world last week.

But just before that I also read “Alibaba: The House that Jack Ma Built” which as kind of prescient because the richest man in China visited Nairobi and Kigali only days later.  Alibaba is a giant website which brings vendors and customers together to facilitate trade in almost anything. What makes the Alibaba story so interesting is that it was founded in China on five years after Amazon and it’s not inconceivable that in less than a decade it may be the biggest internet company in the world.

There are quite a few similarities in the growth of these two companies and just as any dissimilarities.

"But the common denominator between the two is the way they have been managed to gain market share, with profitability coming years later. The loss making was not caused by the wastefulness of the founders...

Related and also of interest is how both founders extended the personal frugality in their lives to the company, which allowed them to focus resources on building the company rather than themselves with the eventual outcome that they became exceedingly wealthy from their shareholding in their respective companies.

For Amazon more than for Alibaba, their very existence was threatened when the markets in the west went sour on the dotcom companies, for which Amazon, was a poster boy. Were it not for the company’s focus on customer satisfaction it might have gone the way of the thousands of dotcom companies that burnt through billions of dollars, flaming out before they showed a profit for their investors.

In Uganda we don’t need a dotcom boom and burst cycle to know about business failure. Only one in 10 companies make it to their fifth birthday. Beyond the issue of the questionable products or getting into crowded markets, the failure of the Uganda company can be seen in the financial statements.

The key difference between Amazon and Alibaba and our local floundering businessman is that while the former shift revenues increasingly towards building their assets bases – hardware and distribution networks, with the expectation that these will not only lead to the capturing of more and more market share and an eventual rise in revenues, our local businessman however tends to keep these much needed funds, needed for expansion, for himself. They pay themselves first, rather than the business they should be trying to build.

"So for instance our local shop keeper who while he makes a profit, given the margin on every good he sales, fritters off this profit by dipping his hands into the till every so often to finance his personal needs. Unfortunately these needs grow with his growing sales and rarely fall back if sales begin to falter...

Given a similar scenario Bezos or Ma, would restrict their raiding of the shop till, while pushing more funds into growing his stock, the size of his shop or the area that he dominates. In very real terms this means that he will put off to a later date the move to a more expensive neighbourhood or the VX he has been dreaming of or the visit to Old Trafford to see Manchester United play.

But we don’t have to look to the US or China for lessons how to improve the durability of our companies.

The Asian community were dispossessed of everything nearly half a century ago. They returned in the 1980s and 1990s, rebuilt their businesses and now account for almost seven in every ten shillings of revenue paid to the taxman today.

Interestingly many of our more successful businessmen have apprenticed at the feet of one Asian businessman or another.

It should be clear by now that a basic understanding of how financial statements work is imperative for any businessman.

How do I pay salaries? How do I replenish stock? What happens when I withdraw money? What happens when I bring money into the business (as many of our corporate types do)?  How do I pay taxes? How can I minimise my tax liability (without evading it all together)? Should I take a salary? How should my books look like to make them attractive to bankers, investors?

It is not rocket science. But it is the one thing that is dooming our businesses to short life spans.

"Even the businessmen with the best of intentions, who are not extravagant or even allocate assets properly, run into trouble because they are not thinking from a financial statements perspective. If they are doing badly, they can do well. And if they are doing well, they can do better....

And the beauty of it is that unlike a two decades or so ago there are a lot of young accountants around who can help make sense of any business’ numbers.

It bears repeating. While profit is good building a business’ book value is better. That is where company durability comes from.

POOR POLICING TO BLAME FOR MULTIPLE UGANDA MURDERS

In the last three months or so 11 women have died gruesome deaths at the hands of, what seems to be, a criminal gang in the Kampala-Wakiso area.

The latest on Monday this week was Rosette Nakimuli, a salon operator who was waylaid in the dead of the night, raped and murdered, her body dumped in a banana plantation in Kitala zone, Katabi town council.

"The fact that the criminals are seemingly going about their business unmolested points to a failure of security, beyond the narrow confines of the police force’s mandate...

In terms of fighting crime the police serve three broad purposes – they act as a deterrent, their presence dissuading any criminal activity. Secondly they are meant to foil crimes as they are being committed, which would be a function of their intelligence gathering capabilities and finally once a crime is committed they should be able to catch the perpetrators, a function of their ability to investigate crime.

It would be safe to say that where there is a police presence they serve as enough of deterrent to criminal activity. Witness how very little thuggery happens in broad daylight. This could also be a function of the fact that the Ugandan public tends to mete out swift and brutal justice if criminals are caught in the act. I suspect it’s more because of the latter than the former.

Criminal activity increases during the night for the obvious reason that the cover of darkness is convenient for the perpetrators.

Beyond that is the fact that once a criminal gets away with the act it is more likely than not that they will not be apprehended.

We never cease to hear stories of how the police are undermanned, underfunded and under resourced and a sequencing of how to distribute the merger resources to bridge these deficits gives headache to its top brass. But evidently there needs to be greater investment in intelligence and investigation.

"As it is now when a major crime is committed and the police are in danger of being embarrassed they swoop on the affected area and detain dozens of people to help them with investigations. Talk about using a sledge hammer to kill a fly. This hit-or-miss style suggests a failure in intelligence and investigation with the police trying to eke, or beat out, out confessions than use available evidence to pin the crooks...

Such action arguably causes disgruntlement with the police and establishment, which would make police work more difficult in future.

But beyond the police, such frequent and clearly not random acts of violence points to a failure of community policing. The breakdown of the LC system could be blamed for this, as local authorities used to provide some leadership in keeping neighbourhoods safe.

Reports indicate that residents of the affected areas have reported the presence of some unknown men in the areas around the time of the perpetration of these crimes but their seems to be a slow response to the reports or, even worse, no follow through after the crimes have been committed. And this goes for other crimes as well.

In the absence of civilian organisation, the responsibility to mobilise local populations for popular vigilance would still fall to the police.

In some areas around the Kampala the use of social media among residents, led by the respective police posts in their areas, even with the slow response times of the police, has proved useful. It does not cost much to mobilise people for their own security what is clearly lacking is the leadership.

While we have individual responsibility for our own security, the building of the police’s capacity to stop crime from happening or apprehending the perpetrators when it has happened needs to be looked into urgently.

"As an aside a revisiting of the issue of payment of graduated tax too needs to be looked into. As it is now we have a lot of youth hanging around doing nothing except honing their Ludo skills in our trading centres...

One wonders how they make a living in the day?