Last week it was reported in the Business Vision that Roofings ltd is advanced stages of processing steel from iron ore mined in Kabale.
According to the report Roofings has earmarked a billion
dollars (sh3.8trillion) to develop the mine and another $20m to build the
processing plant that would produce 25 tons of iron sheets for local and
regional markets.
These were just numbers until you realise that the market
value of Uganda’s biggest company, telecom company, MTN is just about a billion
dollars currently.
All Ugandan business men should interest themselves in this
project, if only because they need to learn what it takes to raise such sums of
money.
For starters you can not raise a billion dollars in Uganda...
A few weeks ago, I interviewed Aga Sekalala Jr about his
businesses but more specifically about keeping his companies in a state of financial
readiness.
The way he explained it or how I understood it is that they,
he was speaking about Ugachick have structured themselves in such a way that a
moment’s notice they can borrow money from the banks or attract investors.
This goes beyond having clean books of accounts to having
certifiable process and adopting best-in-class systems across the company. This
takes time, is arduous and the immediate benefits to staff and management when
you are doing it are not apparent but it pays off in the long term.
In the interview Sekalala said this is necessary because you
never know when the need for more funds arises. Banks promising you the funds
in 48 hours is just a sales pitch, it rarely if ever happens like that and it
takes longer if you are not ready.
My favourite American Warren Buffett has gained some notoriety for investing millions of dollars buying companies he has never visited, but just on the strength of their financial records. Buffett who turned 92 last week has been looking over financial statements since he was 11 so probably can see things the rest of us mere mortals can not, just by looking at a balance sheet...
Back to Roofings ltd. For them to be able to raise a billion
dollars and from foreign funders, speaks to their financial readiness. In the
bigger picture of international finance raising a billion dollars is the atom
in the drop in the ocean. But to be good for that kind of funding must have
taken years of building trust and demonstrating integrity.
I remember in 2002 looking to buy iron sheets from roofing
and then, 20 years ago, they had a waiting list a mile long, not for lack of
materials but because the demand was overwhelming and not only locally. I remember
seeing a man, they told me was Burundian pacing up and down the premise as his
two trucks were being loaded, with an order he had made a few weeks previously.
You do not come it to such money without being organised, organised
to the point that a financier looking in on the business can determine whether
he will get his investment back, with an acceptable return.
The fact that our business struggle to survive to their
tenth year, leave alone transition from generation to generation is more a
function of how they are structured, or not, than that they lack funding. In fact,
the better organized business never lacks for funding, be it from internal or
external sources. Even in these harsh economic times.
To my mind what Roofings Ltd and Ugachick show us is that
one, business can grow and thrive in this country and secondly that raising
funds starts with the business. Or businessmen may get rejected because they
fail tick a few boxes, but those are the rules the financiers have set, you
either play by the rules or go elsewhere.
It has been said many times in this column that our poverty is down to our inability or willingness to aggregate our resources. And as such someone else comes along, looks beyond our moaning and groaning, and turns this pig’s ear of an economy into gold....
But it goes beyond failure to aggregate resources. What does
it take to aggregate our resources? Leadership. Our failure to do so points to
a lack of leadership. The knee jerk reaction for us, is to look at politics but
even at our own individual levels we are unable to aggregate our land, capital
or human resource capacities.
What that means is that people who have hacked that challenge
come here and literally drive us out of “our” town.
