WHAT IS MUTEBILE’S LEGACY?

Earlier this week Bank of Uganda governor Emmanuel Tumusiime Mutebile passed on in Nairobi hospital bringing a life well lived in the service to this nation to a close but served only as a comma in the legacy he leaves us.

When the history of the last three decades is written Mutebile will have pride of place for his central role in the resuscitation of the economy.

"But in the last week I noticed that his legacy is not fully appreciated or is in danger of going unacknowledged, shocking as that may sound to some of us...

According to the first NRM budget speech read in August 1986, then finance minister Professor Ponsiano Mulema reported that the country’s revenue collections amounted to sh402.5billion shillings. At the time the official exchange rate for the dollar was sh1,400, so we collected about $287.5m.

In the coming budget 2022/23 government has set URA the target to collect sh23trillion in local revenue. In dollar terms using sh3600 as the dollar rate this comes to about $6.4b.

If you think about it URA today would have collected the 1986 total projected revenue in half a month!

Just numbers yes, but to put them in to further context, in 1986 the population of Uganda was 14 million, today its thrice that much at about 45 million.

So if revenue collections had kept up with population growth URA’s work would have been so much easier, as they would be required to collect $862.5m or about sh3.1trillion or about an eighth of what is now expected of them.

The numbers suggest that revenue collections have grown 57 fold since 1986 or at annual compounded growth rate of about 12 percent.

Revenue collection is a useful measure to judge the growth of the economy. There has to be economic activity to tax to collect revenue, more taxes suggests more economic activity.

Of course a caveat has to be placed on these numbers.

For one, in real terms that 1986 figure is higher in today’s dollars but even if it is four times as much the progress made cannot be denied. Secondly, the economy in 1986 was mostly subsistence, we lived more from hand to mouth then than we do now, and revenue collections even measure against the low GDP then of $4b were woefully low. Revenue to GDP ratio was about eight percent compared to todays 12 percent, which is also way below the sub-saharan average or where we are supposed to be.

"The NRM when they came into power thought they could do it alone, taking a leaf from their struggle they thought they could rely on internal resources to turn around the economy. As they found out – not quickly enough, they had little to play with and almost no economy to work with...

After fidgeting about for about five years up to 1991, the reality could not be ignored and the adoption of a more market oriented economy happened.

Up to that point in lieu of revenues from the production they thought they could print money at a will to support the economy. When official inflation hit 240 percent reason prevailed.

The majority of Ugandans have no clue what 240 percent inflation looks like. It means that prices were doubling every three months. Imagine you take you child to school in January and school fees is one million, when you return for second term its sh2m and in third term you would have to shell out sh4m. Unbelievable today, but this is living memory we are talking about.

For me, this is where the legacy of Mutebile kicks in.

Mutebile and his allies, who were given all kind of names -- imperialist lackeys and World Bank running boys, argued strongly that to turn the economy around the government needed to proactively bringing inflation under control and secondly we needed to liberalise the economy to unleash the individual potential of Ugandans and the private sector. Government did not have the means (see above) to go this road alone. They also promised that if they could do these two things the aid taps would be opened and the recovery of the economy would have a better than even chance of succeeding. The rest as they say is history.

This is basic economics, not noble laureate winning stuff, so it is even more amazing that it took the uncompromising character of Mutebile (maybe something to do with him being a Mukiga) to carry this cause on his broad shoulders, debate all naysayers or barrel through any obstacles to ensure government stayed the path. And the people who he was debating were not ignoramuses like from a previous era, but studied men and women with exposure, having lived in foreign economies that work.

Ironically opposition to a liberalized economy has grown louder as we take for granted the economic growth of the last three decades.

"I hear people calling him a free market fundamentalist, but that was not my experience with him. He knew that there cannot be development, the improvement in people’s standard of living, without growth. That the government seems able to generate growth year on year even in their sleep, is a legacy the Mutebile helped happen. If we have not seen a more equitable sharing of this growth just shows that the journey still has some way to go....

I think of him as a pragmatist. And we need more of him today as we did in 1986. People who recognize that being a free-market or central planning advocate can deliver development, but a combination of both is the key.

We know that the market is the most effective tool of creating wealth or economic growth, but the worst at distributing that wealth. If left to its own devices the market gives more to those who have and to those with little even the little they have is taken away from them.

Mutebile’s contribution is that he held his conviction that a market economy is what we needed and managed to generate consensus around this from the most reluctant of contemporaries in the face of ugly, often uninformed opinion that will not let him rest even in death.

Rest in Peace Emmanuel Tumusiime Mutebile!

FAREWELLL EMMANUEL TUMUSIIME MUTEBILE

 On Sunday morning Bank of Uganda governor Emmanuel Tumsiime Mutebile breathed his last at a Nairobi hospital, bringing to a close a life well lived in the service of his nation, but only punctuating a journey he helped begin in Uganda’s economic recovery.

Fortunately or unfortunately the majority of us have no clue the depths from which our economy has come in terms of our economy. About eight in ten Ugandans were not born in 1986.

We came from a place where bar soap, sugar and paraffin were luxuries; where it took six hours to get to Jinja from Kampala by road, because there were more portholes than tarmac and where loadshedding was more frequent than not.

"The enormity of the task of turning the economy around would have drove lesser men to tears....

Hard decisions had to be made to turn around the economy, which included tightening on government spending, privatizing public enterprises, layingoff thousands in the public service and a breakup of the “kibanda market” by liberalizing the trade in foreign exchange. All this was being done when the NRM was trying to win the population over to its side.

It took a man of firm convictions to ensure government stayed the course even if the popular thing to do was to do the easy thing.

First as PS finance and secretary to the treasury and for the last two decades as Bank of Uganda governor Mutebile has been the constant in Uganda’s economic recovery other than President Yoweri Museveni.

In recent years critics have complained that the over reliance on the private sector has among other thing exacerbated the wealth inequalities in the country. Their prescription, a return to the day of state control of the economy as a way to even out inequalities, proof that the thing we learn from history is that we do not learn from history.

"Mutebile was not infallible and criticism of the economic path we have taken merit some attention. But we have the luxury of having that debate because of the economic foundation set under his watch...

His work is not complete by any measure – we are still among the poorest countries in the world, but he always knew the transformation of the economy was a marathon and not a sprint. Many economists have been mentored by him and we can only hope that his legacy is secure.

Rest in Peace Emanuel Tumusiime Muteble.

THE MORE THINGS CHANGE THE MORE THINGS REMAIN THE SAME?

In 1979 I remember along the Kampala-Jinja highway the few fuel stations – they cannot have been more than five, had no fuel. But every so often you would come upon a jerrycan by the roadside, often plugged by a finger of matooke, and filled with a liquid either red but more often green.

If you needed fuel you stopped at the jerrycan and someone would emerge from the surrounding plantation or a nearby hut and you would negotiate. You were often so relieved to see fuel, because by this time your fuel gauge would be flashing red, its quality was the last thing on your mind.

I couldn’t help remembering this state of affairs from more than 40 years ago, in the light of the fuel “crisis” we suffered in the last week.

Truckers in protest over Uganda’s insistence they do a covid test before entering the country, had piled up at the border causing a fuel shortage.

Prices hit record highs with reports of petrol in western Uganda going for sh12,000 a liter!

"What we have known for a long time now, is that Uganda’s pain threshold is considerably lower than 1979. A few stations out of fuel and it’s a full blown crisis. Which is how it should be. When progress or development happens, what are counted as bare essentials rises...

In 1979 no petrol in the stations, no sugar, no soda was acceptable, try that now and see.

However, some of the solutions offered by politicians and the public also show that what we learn from history is that we don’t learn from history.

The suggestion by some sections that government should control the price of fuel, was one of those. Thankfully government was not entertaining the suggestion because it would cause more harm than good.

For starters it would aggravate an already bad situation, increase the shortages and push the prices higher as a parallel or black market in petrol emerges, a return to the days of the lonely jerrycan on the roadside.

It’s a simple supply and demand logic, when supplies fall, demand rises and prices will follow suit. This is not a manmade law, it’s a natural law and you can only subvert it temporarily and at great cost to yourself or in this case to the economy.

The law of gravity will work whether you like it or not. But for brief periods aeroplanes, for example, beat the law but at what cost?

A Boeing 737 weights about 70,000 kgs or 70 tons while fully laden. To keep it in flight costs 3400 liters of fuel per hour. A truck hauling the same amount of cargo would not consume 50 liters per hour.

The same goes with the laws of supply and demand.

"Politicians can huff and puff all they want but as long as there is an imbalance between supply and demand price will go where it will...

.

So while it looks like common sense for government to dictate price, traders will look at the cost of bringing the fuel to market compare it with government price. If it makes sense, meaning government price is higher than cost the traders may supply but as soon as it shifts the traders will turn off the taps or find a way to get their product onto the black market and the price goes up anyway.

Reminds me of when government liberalisd the foreign exchange market by allowing forex bureaux. The naysayers warned that even the little forex we had would be sucked out of the economy. But the opposite happened, more forex flowed in, the exchange rate found its level and the black market disappeared.

So what to do about the fuel crisis, using the laws of supply and demand?

Thankfully with agreement reached with the truckers,  supplies will be restored and prices will revert to the normal.

That being said a discussion around beefing up our national reserves would be something parliament may interest itself in. As it stands I hear we have fuel reserves, both public and private, to last us 10 days and this figure is falling every day as our fuel demands increases.

An investment in increasing our reserve capacity beyond ten days supply – The US petroleum reserves can last them a month at least, would come in handy. The cost of storage is the price we will pay for trying to rebalance the supply-demand equation when it goes awry.

Calls to dictate fuel prices or any prices for that matter, are a knee jerk reaction that may be good for the headlines but are bad economics that will invariably lead to a worsened political situation – ask Zimbabwe and should not be entertained by reasonable thinking members of society.

 

 

TRIBUTE: EMMANUEL TUMUSIIME MUTEBILE, PILLAR OF UGANDA’S ECONOMIC RECOVERY

It may be hard for one to wrap ones mind around the full extent of Emmanuel Tumusiime Mutebile’s contribution to the resuscitation of the Uganda economy. We may not even know the half of it.

In 1986 when the National Resistance Movement (NRM) took over power, the economy was on its knees, it had regressed into subsistence, it was half the size it was in 1970 in real terms and the national coffers were empty.

"The NRM’s celebration were short lived when the reality hit them of the enormity of the task ahead of them...

Convinced they could do it alone without help from the usual suspects – The World Bank and the International Monetary Fund (IMF) in typical guerilla fashion, they decided to make do with what they had. They centralized the distribution of essential commodities like fuel, soap, paraffin and sugar, they made a go of jump starting some industries and battering coffee and grain for critical imports.

However, the laws of economics cannot be denied, as shortages persisted and inflation shot through the roof, peaking at 240 percent, before NRM realised their revolution was in danger of dying a still birth.

It took a night time meeting at Entebbe state house in which Mutebile, the chief economist in the economic planning ministry and then Bank of Uganda governor Leo Kibirango made the case for tighter government spending to curb inflation and a liberlised economy to jump start production, for the government to do an about face.

Following the meeting the ministries of finance and planning were merged and Mutebile assumed the position of Permanent Secretary and Secretary to the Treasury.

"Mutebile and his allies came out on top of an ideological battle, which on one side, argued that unlocking the individual capacities of business and Ugandans would reinvigorate the economy better than government alone could, the pragmatists, while on the other hand the idealists maintained that government should control the economy to ensure the economic independence of the country....

The idealists of course did not have Mutebile’s inside appreciation of the state of the economy and can be forgiven for their naiveté.

As the chief technocrat in the ministry, Mutebile over saw the liberalization of the foreign exchange market, the privatization of parastatals, the curbing of inflation from three to single digits and helped lay the foundation for the longest period of economic growth in the history of Uganda.

While also at the ministry he was instrumental in seeing millions of dollars of debt written off under the High Indebted Poor Countries (HIPC) initiative, at the end of the last century.

While these reforms were all conditionalities for the aid taps to flow, they made good economic sense and Mutebile’s conviction and steady hand often made the difference between policy reversals and staying the path of economic reform.

"His detractors were legion, but the gruff speaking economist took them all on, winning them over with the strength of his argument or leaving them in his wake to gnash their teeth in exasperation as the economy powered on from strength to strength....

In 2001 he was appointed governor of the Bank of Uganda, already a pillar of the economic reforms but which was further galvanized to better oversee the country’s monetary policy, by the entrance of Mutebile.

The central bank has been recognized regionally and internationally for its stewardship of the country’s monetary policy and banking sector and has managed to ride out several crisis of confidence. He is the longest serving governor of the Bank of Uganda.

If there was a blindspot in his stewardship of the economy it was the shortfall in strategic planning, that would have allowed the government to direct the private sector to ensure more equitable growth. The private sector is the best mechanism for creating wealth but simultaneously the worst distributor of that same wealth. Left to its own devices the rich get richer and the poor get poorer, widening the divide between them to unsustainable levels.

Mutebile and his allies have argued severally that you need to first have economic growth – wealth creation, before you can distribute it.

Be that as it may, his contribution to the economic growth of the last three or so decades is undeniable. It is inconceivable that without a turnaround of the economy, we would now be debating the nuances of development theory...

By his example and influence Mutebile mentored several economists inside and outside government and one can expect his legacy is in safe hands.

Mutebile was born in 1949 in the then Kigezi district. He joined Makerere University to study politics and economics, which he failed to complete because he dared to question the rationale of Idi Amin’s economic war.

He completed his degree at Oxford University and added to it a Masters before returning to Uganda in the early 1980s.

Mutebile passed on in a Nairobi hospital on Sunday morning, his health had been failing for some time.

 

 

TROUBLE IN PARADISE! SURPRISE!

This week it has been reported that inside the National Unity Platform (NUP) there are serious differences of opinion about how they should operate in view of their pledge to remove the government of President Yoweri Museveni.

The radical wing of the party think their MPs are being too diplomatic in pushing the main agenda of regime change, the MPs on their part have deflected the charges by asking for accountability for the funds they contribute from their salaries to headquarters.

NUP are understandably unamused that their dirty linen is being washed in public.

But it shouldn’t be a surprise. The party which is not even five years old was cobbled together quickly to contest last year’s elections. In the process it accepted defectors from other parties, many of whom had read the tea leaves and knew the new party led by Robert Kyagulanyi, would shake up the electoral map, especially in central Uganda....

Immediately you can see how people of different ambitions opportunistically took advantage of NUP to get into the house. Now the dust from the elections has settled down, elections have been won or lost and the glue – if any, that was supposed to hold NUP together is beginning to be questioned, coming unstuck.

 NUP uprooted the Forum for Democratic Change (FDC) as the leading opposition party in parliament. Immediately almost 60 of their members find themselves in the parliament. Improved incomes aside, they have quickly found out there is a country to run, they are discussing issues of national importance, regardless of their opposition to the NRM.

Several members of NUP are presently in detention and it can be argued that the MPs could have made it more of an issue in parliament. But that would be to ignore parliamentary procedure.

This honeymoon is clearly over and the party needs to do some soul searching and find their mission beyond overthrowing the Museveni government, in order to keep everyone on track.

In terms of its long term survival the worst thing that happened to NUP was the quick success they enjoyed in the last polls, where they flushed out the ruling NRM’s candidates from central Uganda.

Long term success in any enterprise – political or economic depends on how strong the vision is and how widely it is embraced by the membership. This is important because it is this intangible that will determine whether an organization will get up again after its first, second, third, nth failures. These failures and recovering from them are important in strengthening the appreciation of the vision. In effect you need these failures to strengthen the party’s resolve.

"So you can see how the quick success is a problem. The party’s mettle has not been tested. They have not had to come together and rally against seemingly insurmountable odds, not for one day or week or even year but for a long time...

It’s like the Jewish nation it is the travails they have suffered over millennia -- wandering in the desert for 40 years with Moses, being expelled from the homeland and more recently the holocaust, that have forged the will of that nation.

NUP’s youthfulness, while a breath of fresh air may very well be their undoing. They are going to suffer these internal feuding and differences of opinion in full public view, which is unfortunate for them, but there are no shortcuts.

Of course you can expect that their rivals – both inside and outside the opposition are glad to perpetuate this dissension in their ranks. Those are the hazards of the trade.

Whether they can hold themselves together will depend on the quality of the leadership. It is this kind of adversity that separates the boys from the men, that will either make or break NUP. And inconceivable as it sounds if they fail to handle the situation they may very not be a factor in 2026, even though their grievances will still be there.

THE MONEY CHALLENGES WE WOULD LIKE TO HAVE

I have some rich young friends who have come to the cross roads of their wealth creation journey.

These young men have been saving and investing for the last 13 and 12 years respectively. They have followed a simple formula, every month they saved fixed amount, the amount hasn’t changed over the period. When they had accumulated more than sh30m they moved their savings out of their simple savings account and into a fixed deposit account. Rates were good then they were getting nine percent on their money. But in the third year the fixed deposit rates were down to six percent and they wondered whether there wasn’t anything better in the market.

Two years ago they got all their savings, about sh100m by now and bought a fifteen-year treasury bond which pays them just under six million shillings every six months.

That may not sound like much, but the beauty of the deal is that their interest payments on this bond have now surpassed their annual contribution to the fund. They are earning more than they save...

They are determined to take advantage of the power of compounding and are ploughing back all the income into the fund.

In the last year they dipped a toe into the equity market, committing sh5m to the MTN IPO. The plan is to start allocating money every year to buying some shares on the Uganda and Nairobi stock markets.

While they have kind of made up their investment plan as they have gone along the broad outlines show that they have been climbing up the asset ladder from cash to near cash and now going into equity. The next logical step down the road may be real estate, where they will hope to secure the wealth.

This is their plan for the next 10 years, after which they plan to pay themselves a monthly allowance from their potential earning by that time.

"My young friends have managed two things that often mess up our money affairs.

One, they have automated the process. The monthly contributions are standing orders from their income, that like a tax they have learnt to live without and secondly, they resisted the seduction of the get rich schemes they have come across and maintained they steady, even boring progress...

I could not help but admire these unassuming young men. Barring any accidents these young men will have a better financial future than the vast majority of us, not because they will have a good nest egg to begin with but because their minds have been oriented towards investment and away from consumption, which is what makes the difference between the wealthy and the rest of us.

They young men unlike most of us have the benefit of time on their side. Their little savings compounded over decades add up to a credible sum. But the principle still stands start where you are, with what you have.

Meanwhile the young men have invested in themselves studying investment. Their foray into equity signals a further shift in their investment journey.

The assured returns from the bonds are comforting, but over the long term the stock exchange provides the best chance of improved returns. Even better returns can be had from going into private equity, buying into companies not listed publically.

They going down the path that many office workers should take who do not have the time or temperament to run their own businesses but still need to aim for financial freedom.

The inadequacy of time we all understand. You expected on your desk from 9 to 5 and while business is a fulltime job. But more importantly is the right temperament – attitude or psychological makeup, to run a business. While we are the most entrepreneurial country the statistics show that we cannot all be business people.

This path though is not as sexy as pointing to your shop or rentals or trucks and saying their mine. My young friends path is one focused on the end – financial freedom in the future. They are focused on being rich and not looking rich. Placed in one sentence it does not look much, but the difference between the two is worlds apart.

The young men are learning this lesson in real time and in the not so distant future they will not only be rich but be able to look the part.

SHIFTING TO THE PARLIAMENTARY SYSTEM A GOOD THING

We have been here before.

It starts with announcements by fringe members of the ruling National Resistance Movement (NRM) urging a constitutional change, the opposition jumps, promising hell and brimstones if the changes are entertained, then the NRM’s higher organs meet and a momentum is created that sweeps all before them – heckling opposition leaders included, with a dismissive wave of the hand.

There is no reason why the latest proposal shouldn’t follow the same pattern.

When a not widely known MP James Kakooza proposed in 2005 a removal of the presidential term limits he was dismissed out of hand, within and outside the NRM. Again when the honourable Raphael Magyezi proposed the lifting of the presidential age limits in 2018 he was laughed out of town.

"The opposition are right to be worried about the latest proposal, even more so than the previous two mentioned amendments to the opposition...

This column has argued incessantly that the opposition should not be seduced by running for the presidency, but work to build up their numbers in parliament. NRM and their independent sympathizers have an overwhelming majority in the house. At last count in the 529 house NRM account for336 MPs, while short by 18 of the 354 needed for the two-thirds majority, it would be a bad bet to think they couldn’t get that number when they needed.

A parliamentary vote is all it requires to effect this constitutional amendment.

But to step back a bit this would be a brilliant plan to entrench the NRM in power for a while to come. President Yoweri Museveni is in the evening of his career and the party would struggle to find a candidate with the national stature of the president to front in the future. The fear is that like other parties that have dominated their countries in the past, like KANU in Kenya, UNIP in Zambia, they can flounder badly after their founders move on. Shifting to parliamentary system would ensure the NRM MPs stay put – no one wants to be on a losing team and as a byproduct force the parties, all parties, to build structures.

And that last point would the biggest win for Uganda going into the future. It takes more organization to run a presidential campaign than to organize several MPs with a view to boosting your numbers in the house. While in the short term the NRM would continue to dominate the political landscape, as the other parties are forced to graduate beyond vehicles of one individual or the others political ambitions, to become real political machines, we can expect the competition will improve. Of course the parties that fail to adapt will be swept aside onto the dustbin of history.

"What we badly need in this country is some real party discipline as a way to further our democratic practice...

Party leaders will now have to earn their keep. They will have to be more strategic, build up their member bases and see that party discipline is instilled and enforced. All this has become difficult with every passing year, they only have themselves to blame.

Almost 20 years ago the question was put to Kizza Besigye, the then presidential contender, that what would happen if he won the election and the house was dominated by the NRM, he could only manage that they would cross that bridge when they got to it. Us the listeners with a wink of the eye understood him to mean he would buy them all off. That, like hope, is not a strategy.

And finally this is not an innovation nor unusual. The parliamentary system has been practiced by many of the western democracies we look up to. Arguments that the people must elect their president don’t stand up to scrutiny. If anything experience shows a directly elected president is more powerful than one that comes through the party, a thing the opposition have been complaining about for the last three decades or so.

Will the proposal go through or not, only time will tell. But on the balance of things given the NRM’s parliamentary superiority and need to perpetuate itself in power after Museveni has left the scene, it seems a likely outcome.

2022: NSSF MONEY IS HERE NOW WHAT?

In recent weeks the amended NSSF Act was sent to President Yoweri Museveni for assent. Once he does assent to it, as he expected to, it will be up to the relevant ministries to come up with a way for the amendments to the bill be actualized.

So while beneficiaries may have missed Christmas it is reasonable to expect you will get your benefits before Easter.

The attention grabbing clause is the mid-term savings access. In the amended bill if a member has turned 45 and has been saving for more than 10 years he will have access to up to 20 percent of his savings.

For most this will be a windfall like they haven’t seen in their lives and the trick will be that when the dust settles, from spending the money, there will be something to show for it,  more than a hangover and hazy memories.

NSSF research shows that eight in ten members after they receive their retirement benefits, have nothing to show for the money after only two years. With life expectancy up to 63 years now, higher than the 45 years when NSSF came into being, this statistic points to many years of financial challenges ahead.

What do we ordinarily do with our money after retirement?

We build the family home, not a bad idea, this may take away the rent expense, but it is also a sunk cost, that will return no income. And in old age the biggest need is a regular income. We also go into business, which was one of the biggest arguments for the midterm access. We tend to think that if we have money the business we start will succeed. There is nothing further from the truth. In fact, when you start a business with a lot of money, it does not give you a bigger advantage than someone who starts on a shoestring budget, maybe that you will start with a bang and probably maintain the illusion that you are in business for a bit longer...

And all this is before the brand new cars we are going to buy and the travelling we are going to do. We probably deserve it after slogging for all these years at dead end jobs.

So what to do that will give us half a chance of making the best of this windfall? Here are three suggestions.

1.       Eat less, invest more

It starts with the mindset. The difference between the rich and the rest of us is that the rich invest more than they spend. Its habit they developed even when they were earning peanuts. There are only two ways to spend money, by consuming it or investing it. The more you are doing of the former than the latter, the less likely you are to become rich.

Almost 20 years ago Sudhir Ruparelia did an interview with the Financial Times. He closed the interview with a flourish, saying something to the effect that getting rich is an old Indian trick, of the ten shillings you earn, you reinvest nine and eat one shilling and repeat until rich.

I shall not torture you with a reexamination of your spending patterns but keep this one thing in mind when thinking about the NSSF windfall. Invest more than you blast away.

2.       Set ego aside

The challenge for many of our investments is that they are more a reflection of our egos than desire to make money. Our investments tend to be things we can show people while pointing to our chest, “It belongs to me”, even if they are investment black holes with no chance of showing a return.

We need to get out of the way of our money, if it is to have a chance of looking after us into our old age. They say, we spend money that is not ours, to buy things we do not need, to impress people who don’t care.

To be true investors we need to be interested in sustainable returns over the long term. The 15-year treasury bond in November promised an annual interest of 15.50 percent. This means that a person who invested say sh100m in that bond would get 15.5m annually for 15 years. If you can get an investment that can guarantee those returns and better over the next 15 years go for it, if not go get yourself a treasury bond.

A treasury bond is not as sexy as a ranch or rentals or a kabusiness -- they no longer even give certificates, so you cannot show it off to friends, family and haters, but it will do its job, which is keep the money flowing while you retain your initial investment.

 

3.       Forget about it

But this investment thing may be too difficult and the reality of living in destitution in your last years is too painful to contemplate. Don’t try to keep up with the Jones, leave your money in NSSF where going by past results, you may get a double digit return until you qualify for retirement benefits.

If you have just touched 45 and leave your money in NSSF for the next ten years and they just manage 7.2 percent return on your money, your current balance will double by the time you pick it up in 2031 and that is not counting the subsequent savings you have made into the fund and interest on that.

Some are already doing it. About 40,000 beneficiaries of the retirement benefits have chosen to leave their money there after they clocked 55 enjoying the record interest rates NSSF has been posting in recent years.

I know this is not even as sexy as pulling out your money and trying to beat the market, but it gets the job done. And in the meantime for the next ten years you can go online and learn to be a true investor for that day when you clock 55.

Happy New Year!

PS 

Since this was published in the New Vision on 27th December 2021 President Yoweri Museveni assented to the bill in the first week of January. Disbursements are expected to start 60 days after the bill is gazetted, by the the finance minister would have come up with regulations taht will govern the way the bill is implemented.