Last week it was reported that Kampala businessman Charles Mbire bought about 23 million shares in Bank of Baroda.
It was a timely buy
because every one who has shares in the bank by 21 July will be eligible to a
sh10 dividend per share. Do the math.
But for people like Mbire, who has been a major beneficiary
of the growth of telecom company MTN, where he has a four percent stake, dividends
are really the icing on the cake. While they will expect an annual dividend, beyond
that they are looking at whether the underlying business can keep growing in
value year on year. Wealth is what you keep not what you earn.
"For the majority of us mere mortals we get excited by the money we have in our hands, the truly wealthy get more excited by the growth in what they own. It’s a different reality that comes from a different mindset...
Every year the do-gooders tear their hair out at how wealth
disparities are widening around the world.
In January international aid agency, Oxfam reported that the
wealth of the top ten richest people has doubled since the beginning of Covid
while 99 percent of humanity is worse off from the pandemic.
On the surface of it the difference between the top one
percent and the rest is that the top dogs are the owners of capital while the
rest are content to sell their labour. Capital is scalable, while labour is not
– you can only work so many hours in a day, while money is not restricted by
distance, space or time.
But on a deeper level it’s the mindset of the two groups
that is the real difference.
Back to Mbire. On June 24 about three weeks ago he received
his dividend check from MTN, along with more than 20,000 other shareholders. Given
his four percent holding in the company, he would have come into about sh4b.
While the rest of us mere mortals went off and partied away our money, Mbire took
half of his takings and made a bet on Bank of Baroda.
I can hear you now, “But at least him he had a lot to
invest, for me with my sh100,000 what did you want me to do? It’s too lito
(little) to invest.”
My favourite American is Warren Buffett, the richest
investor in the world. The story is told how he walked into the lift on his way
to work one day and saw a coin on the floor, which had been ignored by all the
other well-heeled occupants of the lift, he bent down picked it up, “This is
the beginning of the next billion dollars,” he said as he held it up to the light.
It’s that attitude, more than luck or intelligence, that has
informed the 92-year-old billionaire’s spectacular investment success since he
bought his first share as an 11-year-old.
The truth is, our actions around small monies will be the
same around big monies. Because our actions around small monies are not wealth
creating, we will never reach a place where we are pulling down sh4b in
dividends, leave alone investing half of it to buy other company shares and
adding another few hundreds of millions of shillings to our bank accounts.
There are no miracles.
Also, what Mbire sees that we do not see, is that he is buying a piece of a business. He does not need his name to be on the entrance of Bank of Baroda, he is in it for it s productive power and if no one knows he owns a piece of the company he is ok...
The wealthiest people in the world do not go it alone. My man
Buffett owns 16 percent of the company Berkshire Hathaway, which accounts for
most of his wealth. Last week the company was valued at $606b or about 20 times
the size of the Uganda economy.
For the rest of us we are driven by ego rather than profit,
we would rather point to that building or that company or that farm and say it
belongs to us. We would rather own all of a small thing than a piece of a
larger thing.
And finally, and related to all of the above, delayed
gratification is not just a catch phrase but essential to wealth creation.
Mbire could have found a way to eat the sh2b but instead he has decided to postpone eating it or more precisely, is stretching his eating over many years into the future, essentially having his cake and eating it. For us mere mortals we just eat our cake....
While Oxfam is justified in lamenting the tax dodges
exercised by the wealthy, and lower wages of workers maybe they should be focused
too on bridging the gap in mindsets between the wealth and the poor. Because after
all the orientation of the mindset is a learned skill not genetically passed
down.
