ETHIOPIAN AIRLINES HAS GOT IT RIGHT

This month Ethiopian Airlines announced a profit of $229m (sh800b) for the year that ended in July. They are the only profitable airline on the continent.

But what was making news this week was the news that Ethiopian Airlines is signing up partnerships across the continent to set up or take a stake in existing airlines.

According to the reports Ethiopian Airlines has taken significant stakes in regional airlines, in the case of Mozambique Airlines has full ownership. Chad, Guinea, Malawi, Mozambique and Zambia have already put pen to paper. It is reported that Djibouti and Nigeria are on the verge of signing on.

"As if it was not clear yet what Ethiopian Airlines strategy was, at the beginning of the month they signed up with worldwide courier DHL with a view to making Addis Ababa the main logistics hub on the continent...

Ethiopian Airlines’ ambition is to become one of the biggest airlines in the world and to that end they intend to double their fleet current 108 plane fleet in coming years. The current activity on the continent is aimed at that target. They are off to a good start, last year they flew 10.6 million passengers to 125 destinations around the world.

Started in 1945, the airline, regardless of regime, has been run along strict corporate lines and its expansion through partnerships around the continent is the logical conclusion seeing as the airline covers the most destinations on the continent.

Already Ethiopian Airlines counts in addition to Bole International Airport in Addis Ababa, Malawi’s Lilongwe international airport and Togo’s Lome Airport as its hubs.

They more than any other airline, have reached a stage where the colonial boundaries that balkanise the continent are an inconvenience that can, and must be transcended. But they are also showing that more than high sounding speeches, trade and commerce is what is going to bring the continent together and ensure it takes its rightful place at the high table of world affairs.

In truth a continental or even regional airline will make more economic sense and therefore ensure long term viability.

Their growing capacity also means that they are now developing secondary industries like training, aircraft maintenance, which they have been doing for themselves and other airlines for years and are soon embarking on making parts for airlines. As a spin off they are already considering setting up an aerospace industry.

"Given the history of the airline, run on sound corporate lines and with a long term strategic view of the industry both locally and internationally, it is a safe bet that they will take advantage of this first mover advantage to cement their dominance of the continent’s skies....

Especially as South African Airways and Kenya Airways are floundering under the legacy of previous poor governance set ups as and Egypt Air is failing to get any traction.

Ethiopian Airlines serves many lessons for parastatals – it is 100 percent government owned, across the continent.

One, that the parastatal is created to serve clients, who may not necessarily be nationals and is not set up to serve the interests of a small connected clique.

Secondly, that for long term viability, profit cannot be a by the way. Like any business, cost effective management is critical. As it is now Ethiopia is suffering a foreign exchange crunch because of the huge debt repayments that are coming due, but the airline goes on as usual. It does not rely on the benevolence of the Ethiopian state to stay afloat.

And finally great endeavours take time. Ethiopian Airlines is in its 73^rd year. What we celebrate today has come after years, no decades, of disciplined action anchored by strategic thinking. The airline did not get where it is through wishful thinking but through a brutal and honest assessment of the marketplace at every turn of their history.

Assuming they continue as they are, but most likely they will only get better, it is not a stretch of imagination to foresee that they will be the only airline worth talking about in a decade or two in Africa.

Word on the grapevine is that they had actually offered to help Uganda set up its own operation. But the model they had sold us was one where the CEO and finance manager would be their appointees. Our people did not find palatable, for obvious reasons.

NEWS – NSSF IN RECORD 2017/18 INCOME, MEMBERS LOOK FORWAD TO GOOD INTEREST PAY OUT

KAMPALA – National Social Security Fund (NSSF) earned a record sh1.6trillion before members’ interest and taxes in 2017/18 a 77 percent jump from last year’s sh912b due to an increase in investment income and higher member contributions, the financial institution has said.

The Fund’s assets under management rose to sh9.98trillion up 26 percent from the same time last year when Sh7.92trillion was reported.

“Uganda experienced improved economic growth of 5.8 percent compared to 3.9 percent the previous financial year, which meant that generally, the investment environment saw significant improvements at macro level, “ NSSF boss Richard Byarugaba said in a recent news conference.

“We were also aggressive in the market, seizing opportunities present by growth in regional markets especially in Uganda and Kenya.”

Growth in income was buoyed by higher interest income and strong recovery in regional equity markets. The shilling’s depreciation during the period also boosted investments in the region.

“For the first time in in the Fund's history, we recorded over a trillion shillings in collections from our members. This is a result of steady rise in compliance levels, now at 81 percent over a three months’ period, and contributions from the Fund’s voluntary members,” Byarugaba reported.

The Fund, the largest in the region by value, saw contributions grown 14 percent to Sh1.05trillion from sh917b the previous year.

Costs continue to be kept under control with the cost to income ratio declining by a percentage point to 12.6 percent from the previous 13.4 percent. Costs of administration remained unchanged at 1.3 percent of total assets.

Benefits pay out rose to sh360b from Sh278b in 2016/17.

Members eagerly await the announcement of the interest on their savings which will be unveiled at the 6th Annual Members meeting set for Tuesday 28^th August in Kampala. The Fund has committed to paying at least two percentage points above the 10 year inflation rate moving average.

Last year the Fund paid its members 11.23 percent.

ENDS.

MAKING SENSE OF UGANDA POLITICS

So if you jetted into Uganda and asked “What’s Going on?” depending on who you were talking to you would get two answers that broadly follow these lines.

In no order of preference.

Story One – The ruling NRM is facing an existential threat. Their unpopularity is growing. 

Honourable Robert Kyagulanyi alias Bobi Wine is perceived as the lightning rod for this dissension and his challenge should be snuffed out. There is a critical mass of people who want a change away from the NRM and in this situation of growing inequality and economic sluggishness, is the time to strike.

Story Two – The opposition is scrambling for relevance. They need to create a state of tension literally or at least create the perception of it. Having failed to make political gains in the house or at the local government level this is their last ditch attempt. Bobi Wine committed a crime, his political importance or not, and he is not such a major factor nationally as the opposition wants us all to believe.

As you are chauffeured from the airport both narratives play out.

On the one hand you can see evidence of a poor country. The standard of housing. The unpaved highway. The small enterprises by the road side. The age of the cars, trucks and mini-vans. The street kids with their emaciated, supplicating hands once you reach Kampala. You wonder about all those gun totting policemen.

On the other hand you can’t help but notice the bustling energy of the people. The Entebbe expressway, while pretty standard engineering, the green that straddles it takes your breath away. 

Kampala city when you get to it seems organised. And thankfully you see little evidence of a personality cult being rammed down the people’s throats by the president of the day.

As with everything in real life the truth is a mixture of both. And is why we are where we are today.

"When history is written all we are going through now, the uncertainty and sense of confrontation will, if it makes the history books, be summarised in a sentence. Something to the effect that growing unrest in response to a slowing economy and long administration of the NRM set in motion  a series of events which led to blah, blah....

Or that in the third decade of the NRM administration protests intensified but were soon neutralised as the economy improved and the government focused on narrowing the economic inequalities by curbing corruption and increased investment.

Which of the two scenarios will play out history will tell.

The point is that we are living history, which while it will be abbreviated into a single line in the textbooks it will cost time, lives and property. Not forgetting reputations and ambition. We are in the forest, we can’t see the forest for the trees. We can’t see the broader picture because we are too enmeshed in the detail.

But if history is to be our guide and assuming prosperity and democracy are to be the end result, we probably aren’t even seeing the light at the end of the tunnel yet.

A lot of things still have to go right.

"The economy needs to shift more towards industry, which is our hope of employing more of the tens of thousands of youth flowing out of education system annually. When we have the majority of the population gainfully employed in the economy, our politics will change. It may not be that we will have the traditional stratification of labour versus capital, but hopefully there will be some cross cutting issues about the economy or environment that will transcend our tribes and religions, that will act as the bedrock of a new political order.

But before we get there the drama will continue fuelled from within and without, stocked by the political actors desire to remain or gain power. Depending on the economy the youth bulge will either peak in a decade or two or continue to mushroom, with real consequences for our politics.

Or it could all go wrong and we descend into a dystopian bleakness from which there is no return.

Only time will tell.

RWANDA OR THE REST OF THE EAC, WHO IS RIGHT?

This week the US followed through on a threat to suspend Rwanda’s duty free exports of textiles to its shores.

The suspension comes following a demand by the US earlier this year for the East African Community (EAC) to shelve imposing higher tariffs on second hand cloth imports. EAC countries had resolved to ban the importation of second clothes by 2019, starting by increasing taxes on their importation.

The EAC is a major second hand clothes market accounting for 13 percent of global imports of second hand clothes or about $274m (one trillion shillings) in 2015. So a halt to this trade would move global markets in the second hand clothes industry.

US lobby group Secondary Materials & Recycled Textiles Association (SMRTA) did not wait around to see what would happen, petitioned the office of the US trade representative. They argued that this ban would cost up to 45,000 jobs – a figure that has not been verified, and $124m in exports from the US.

Of course they did not mention that the reason the EAC was going down this path was a means to resuscitate the textile industry, which employed tens of thousands a few decades ago, as a means to climb out of poverty to the level of middle income economies.

"Uganda, Kenya and Tanzania capitulated and will not been banning second hand imports. Rwanda stuck to its guns and hence the suspension...

On a purely technical note the US is within its rights to demand that if it allows free access to its market they should expect the same. But if there was any genuine desire to uplift the EAC out of poverty then the current action paints another picture of what their “development” agenda is.

For development – the general improvement in the people’s welfare to happen two things must happen – Economic growth and improved household incomes.

Both have to happen because you can have economic growth without a general rise in household incomes, but it is near impossible to have an increase in people’s incomes without economic growth.

The mere building of roads, dams and railways can move the needle on economic growth. It is then how efficiently this infrastructure and the institutional capacity surrounding is employed to improve the business environment that creates jobs and therefore raise incomes.

"Viewed against this is Rwanda correct to stick to it guns? President Paul Kagame also argues that it’s a matter of dignity, how can Rwandans dress in the cast offs of other people? Or Kenya, Tanzania and Uganda showing greater pragmatism in forgoing internal markets for the promise of the huge US market?...

Kenya already exports $600m worth of textiles to the US annually, which is not a figure to thumb ones nose at especially for little economies like ours. Their local industries have been totally decimated by the second hand clothes market. They are probably calculating that if they can get a firm foothold in the US market they will be able to increase investment in their textile industry more than if they had tried to sate the local or regional markets.

Rwanda on the other hand is thinking that if it can protect its local market it can serve as a launching pad into export markets. Also that in the event of fall outs with the US or European markets their local market while not absorbing all the output of their industries would serve as a useful buffer, keeping the industry afloat as they wait for a change in relations. But given that its neighbours have done a U-turn on banning second hand clothes, Rwanda cannot count on its neighbours as market for its textiles and apparel.

It will be interesting to see how these two scenarios unfold in coming years.

That being said the US market is not one to pass up, its challenge is the volumes and strict timelines it demands of its suppliers. The Kenyan press recently reported that the textile exports to the US were beginning to slip because they clients were demanding increasingly shorter turnaround times from time of order to time of delivery.

"As a country if we are going to take maximal advantage of the Africa Growth Opportunities Act (AGOA) – since we have ceded out internal market to the second hand clothes industry, we need to check the whole value chain, from research into high yielding seeds, to farm practices, post-harvest handling and manufacturing to the logistics of getting it to US markets....

This is important because while second hand clothes trade will show up on GDP growth figures it will not create as many jobs as a well-oiled cotton to textile industry would, hence there will not be a significant increase in general income levels.

Economic growth is good, desirable even critical but wit will mean nothing to us if it does not show up in our wallets and purses.

YONA WAPAKABULO: QUIETLY CONFIDENT, CONTENT TO LET HIS WORK SPEAK FOR HIM

It always bugged him when people did not apply themselves, “Monkeys!” he called them.

Born on 8^th January 1972, he was a Capricorn and had the characteristic self drive of his star sign. He needed little to no external impetus to achieve his ambitions and often succeeded in spite of the outside circumstances. Hence his impatience with “monkeys”.

After a life first in Tanzania, where his father worked at the East African Community secretariat in Arusha and then in Papua New Guinea, Yona returned to Uganda with his family in 1986.

He first came to the attention of his homeland through his exploits with bat and ball, first at Kings College Budo, then Makerere College School, during which times he moonlighted for local clubs, played for Uganda where he was the linchpin in the team that won East & Central Africa Council in 1991.

In a 1992 league match he left an indelible impression on the history of Ugandan cricket, swatting away the opposing team’s attack to put on 212 runs in a single innings for his club Wanderers, a performance that had never been bested before or since....

After his A-Level he took a gap year to further his cricket ambitions in England. But Yona had lost time and, by his own admission, could not be competitive in a way that he thought he should be at the highest level of the game.  With some prompting from his father he went back to school and got his degree in marketing before returning to Uganda.

Never one to dwell on past glories he left his cricket accolades in his past to pursue a career in sales, marketing and communications.

It is testament to his success in this field that in the biography in the order of service book at his funeral, his cricket success occupied only two lines of the whole narration.

He really came into his own when he joined fledgling PR firm WMC Africa Ltd in 2003. Following the death of the founding partner, the affable Andrew Wandera, two years after he joined the firm, Yona took over the reins and led the firm to the next level.

Unimpressed by big names, he managed to cobble together a formidable young team, that now represents such blue chip companies as Stanbic Bank, Multichoice, The Bill & Melinda Gates Foundation but previously MTN Uganda, British Airways and Umeme.

His greatest legacy may still be that he built WMC ltd into a admirable business that, one of his contemporaries remarked, was growing when other industry players, squeezed by the economic downturn were cutting back on activities and staffing.

Given his achievements in his first and then second life, it would have been easy for Yona to be an insufferable braggart but he wasn’t. Gauged against where he wanted to be, he often said there was nothing to boast about, yet.

He was greatly ambitious for his business, spurning a juicy offer for the purchase of the business a few years ago; ambitious for his family, his children – Myles, Zora, Aurora, Diah and Shalom, who he was keen to give every opportunity to unlock their potential and he was ambitious for himself content to delay gratification to build a greater future.

Yona had no qualms denying himself for future progress, arguing that even if he passed on there would be someone else who would benefit from what he had laid down.

His worldview, shaped by his success at cricket and business, was that in order to do what one wanted to do, one first had to do what they had to do, the often unglamorous, grunge work and sacrifice, many are unwilling to do today.

"He was not flamboyant, by design, choosing to work his magic in the background, often spurning the praise and visibility that came with success, content in the knowledge that the ones who matter would notice...

Yona, averse to the limelight, took some convincing before he put up a signpost at his company’s recently acquired plot 101, Bukoto street, office block. He argued that he had no walk-in clients, laboring under the romantic notion that if his company was any good it wouldn’t need a sign post. He worked to that end.

Fiercely competitive and quick to voice his opinion if he needed to, no one who knew him thought he was a pushover or anyone’s fool.

A regular at the Lugogo Tennis Club, he often spent Sunday afternoons there with one eye on an ongoing cricket match. He was keen to support the club – supporting an interclub doubles competition and founding a Saturday morning children’s tennis clinic overseen by the legendary John Oduke.

He had his faults, not least of all that he did not suffer fools gladly, among friends or family, blacking them out with a dismissive waive of his hand. Prone to introspection, some thought he was proud and aloof.

Felled in his prime by infective endocarditis on August 6^th, some solace maybe gained from the Greek saying, “Those who the God’s love, die young”

Farewell Yona!

AFRICA’S OPPOSITION WILL TAKE THE CLASS UNTIL THEY LEARN THE LESSON

This week Zimbabwe had its first election in more than 30 years that did not have Robert Mugabe on the ballot paper.

After a tense campaign for the presidency, 23 candidates but, which for all intents and purposes was between President Emmerson Mnangagwa and the Movement for Democratic Change (MDC) Nelson Chamisa, voting took place on Monday.

Mnangagawa was running as the candidate for a revitalised ZANU-PF, which he wrestled from Mugabe last year while Chamisa is the heir to Morgan Tshvangarai, who gave Mugabe his sternest test at the polls in the last election.

The first results in showed that ZANU-PF had won an unassailable majority in the house and despite Chamisa’s loud protestations, it’s hard to see how the presidential vote would go the other way. By the time this column went to press the winner of the presidential poll had not been declared.

It was déjà vu all over again.

"A youthful opposition goes up against an entrenched incumbency, plays up its chances of victory, the media always likes an upset and pumps up the narrative for all its worth, only for a “surprise” victory for the incumbent to happen...

We saw it with Mugabe. We saw it in Kenya. We saw it in Tanzania. We have seen it here in Uganda.

The advantage of incumbency cannot be overstated and more so when it is in the hands of weathered politicians like Mugabe or Kenyatta or the Chama Cha Mapinduzi (CCM) or even Yoweri Museveni.

They are adept at building nationwide support networks, that occupy ground and deliver when activated. It is useful that they have state resources at their beck and call, which means they can cover massive ground, especially long before the campaign season even opens.

This is important because our countries are largely rural, with dispersed settlements. Secondly, we are not all wired to radio and TV networks, which would make it a lot easier for opposition candidates to project themselves without physically visiting every nook and cranny of the country.

Uganda for instance is only 22 percent urbanised. While Kenya and Zimbabwe are more urbanised, they still have at least two thirds of their citizens in the rural areas.

So the opposition in all these countries have concentrated on urban voters, especially the capitals of these countries.

"These populations connected among themselves and with other international networks are then able to create an impression, disproportionate to their numbers, convincing themselves and international watchers that they have a good shot at the prize...

And when the results are announced they have set the ground for charges of an unfair elections, topping it up with the claim that the government stole the vote.

The script is largely the same, only varying in the detail.

Of course the governments in question are not made up of choir boys. It would be naïve to expect they would not take advantage of incumbency. But we have seen it before, when it is time for the old guard to exit the stage there is no amount of tampering or intimidation that will save them at the polls. Even on this continent.

"For fear of looking like blaming the victim, in all these cases it is clear that the opposition does not have a credible nationwide presence. In the period between elections there is little to no work being done to extend their influence, they are often content to heckle the government in the capital, trick them into some brutality which plays “well” on TV  and any other number of grandstanding antics.
In the short campaign period they make enough noise for those looking in from the outside to think they have a real chance at the chair. But alas....

There are no shortcuts. Work has to be done recruiting more grassroot support, nurturing and sustaining it in between elections, for real impact to be felt when the campaigns roll around. Will it be easy? Nothing worthwhile ever comes easy.

Until this happens I am afraid the opposition will continue to take the class until they learn this lesson.