MONEY THOUGHT FOR 2024

No better time than the end of the year to assess your money situation. If you are ambitious your money situation is not satisfying at all.

Myron Golden, one of those money motivational speakers, said something in the last few days that struck a code.

“If you desire to fix your money problem, don’t try to fix the money problem, fix your money mindset …. Or your money problems will never go away,” he said.

Do you want to know if you have a money problem?

Add up all the income you made in the year and then determine the value of all the assets you own, things like cash, shares, bonds, businesses, real estate please don’t include your car, cloths and phones.

If you are in a good place your assets should be equal to or more than your age multiplied by your annual income, all divided by ten.  So, if your annual income is sh10m and you are 30 years old you should have at least sh30m in assets. If you have more than your number you are doing well, if not you need to pause and think about your life.

The formula was proposed by Thomas Stanley author of “The Millionaire next door”. It is based on a US reality so may not be directly applicable to us, but it is a good place to start.

There are more brutal formulas, like the income from your assets, passive income, should be equal to or more than your annual expenses to be able to begin to rest on your laurels.

So, if you are doing badly by the above formulae Myron Golden says the money is not the problem but your mindset.

For many of us when thinking about getting money we are like, just show me what to do and I get the money. We will be shocked to learn that it does not work like that.

To explain. There are two ways of spending money. Only two. Either you eat it or you invest it...

If you look at your finances, the balance of these spending decisions would tell an on looker immediately whether you have money problems or not.

So, if I said I will give you a sh100,000 right now, what would be your first thought on how to spend it?  For most of us we will think of food, cloths, drinks or some transient experience. There is a small minority – less than two percent of most populations, who would think first of how to invest the money.

The word invest needs to be demystified. For many of us, we equate investors with those men who are always waiting outside State House looking to get incentives and tax holidays to put up multi-million-dollar operations.

So, when asked how would we spend sh100,000, we think it is too little to invest.

This is the direct opposite of my friend Jack, when money crosses his path his first thought is how to deploy it. However, small little it is. As a result, after more than a decade of this discipline, he has built himself an asset base that is more than a billion shillings and which pays him about sh500,000 daily or sh180m a year or sh15m a month and he is not yet 50 years old yet.

Ok so he might have come upon a windfall in the last year or so, but because of his mindset, which is now wired away from eating his money, he invested it rather than blew it on fast food, fast cars, even faster women and high living.

"Mindset is key. Thoughts lead to actions, actions lead to behaviour, behaviour leads to character and character leads to destiny. But it starts with a thought.

Kampala businessman Sudhir Ruparelia in answering the Financial Times, way back in the 1990s, how he became wealthy replied, “It is an old Indian trick, earn ten shillings, eat one shilling reinvest nine shillings. Repeat until rich.”

Our knee jerk reaction is to rubbish such stories. Us we know the man has done some funny things along the way and that is why he is rich.

That may very well be, but for us it absolves us of the responsibility to try and get rich, we are convinced the rich are crooks and since we are bible slapping, church going Chiristians, we have left the wealth building for the crooks. Don’t get me going why it is convenient for some people that the gullible flock persist in this fallacy.

Crooks will be separated from the rest with the passing of time, don’t worry about that. The point is when money cross our paths the truly wealthy look at it differently from the rest of us mere mortals and that makes the difference in our fortunes or lack of thereof.

And the opportunities are all around us.

Last week investment bankers Crested Capital held a “2023 Market Round up” webinar to see what our capital markets have been doing throughout the year.

While the overall performance of our Uganda Securities Exchange (USE) was dismal, it is down 26 percent this year, the devil is in the detail.

If in January you had bought Stanbic bank shares, at the time going for sh21 each, you would make sh11.50 a share by year end. The share closed last week at sh32.50. But in addition to that Stanbic paid sh6 in dividends per share during the year.

If you had bought 1,000 shares of Stanbic at the beginning of the year for sh21,000, your interest in the bank world now be up to sh32,500. In addition, you would have earned an additional sh6,000.

You just have to extrapolate the figures to see that if you had bought 10,000 or 100,000 or a million shares you would have bagged sh60,000 or sh600,000 or sh6m respectively in dividends alone.

Looking at your annual income surely you could have committed a few shillings to buy the Stanbic share and make some money, during the year. What stopped you from doing that? Ignorance could be an allowable defence, but I am willing to bet you ate the money.

 

THE CURIOUS CASE OF GREENLAND BANK, LUGOGO AND FAKE ARTIST IMPRESSIONS

It will 25 years next year on 1^st April since Greenland Bank was shut down.

The news announced in the last few weeks of Turkish contractor Suuma taking over Lugogo sports complex to redevelop it, more like under develop it, brought back memories of Greenland Bank.

Greenland Bank opened its doors for business in 1990. By 1994  they had a swanky new headquarters building on Kampala road, opposite the central bank.

But its biggest contribution to the industry was its abandoning of the strict banking hours other high street banks kept.

In those days banks would open for business at 9 am and were done by 2 pm. And did not open on weekends. There were no ATMs so if you had not got your money by Friday lunch time, you were in for a long weekend.

Greenland bank not only remained open until 7 pm, it also opened on weekends. And they did not have the onerous opening and minimum account balances that other banks demanded.

"It did a better job of being the people’s bank than the government owned Uganda Commercial Bank (UCB) or its cousin The Cooperative Bank....

The quicker adoption of computers must have helped. It helped too that one of the main promoters of the bank was former Bank of Uganda governor Dr Suleiman Kigundu.

During much of the 1990s UCB was being readied for privatisation, and had suffered several failed attempts, among other things, government’s insistence that who ever was to take UCB off its hands should commit to maintaining the full branch network, which by that had been scaled back to 85 from a historic high of just under 200 branches.

International banks including South African bank Nedbank.

Eventually little known Westmont Bank from Malaysia, stepped up, agreed to all government conditions, took control of the bank but suddenly struggled to raise the money.

It was then revealed that Greenland Bank had tried to buy UCB through the back door, the central bank took control of UCB and soon after sold it to Standard Bank of South Africa and it then became Stanbic Bank.

Meanwhile, Greenland’s over ambitious expansion regionally,  into hotels and grain trading soon caught up with it. Its bad loan portfolio ballooned putting depositor’s money at risk and the Bank of Uganda moved in to shut it down.

Greenland Bank’s promoters have always complained their shut down was politically motivated and that they were still a viable bank by the time of shut down.

In 2019 parliament instituted a probe into the closure of several banks between 1993 and 2016, among which was Greenland Bank.

They say if the rat lives long enough it may eat the skin of the cat.

During their testimony before the Committee on Statutory Authorities & State Enterprises (CASASE) the former Greenland Bank directors listed as one of their assets the Westmont Land (Bhd) Asia of Malaysia.

And suddenly, at least for me, it all begun to come together. Greenland bank had created a front company in Malaysia to come and bid for UCB. When the fraud was unearthed, not least of all because Greenland bank was infiltrated, than the Government pulled the rag from under Greenland bank’s feet....

In hindsight Greenland’s problems must have been a result of trying to chew more than they could swallow, causing a liquidity crunch and leading to it falling foul of banking regulations. Never mind too, that they committed the ultimate folly of banking, committing short term liabilities – people’s deposits, to invest in long term projects --- real estate development.

Because of the underhand method that had been used to control UCB, Greenland could therefore not openly get back what it had poured into UCB bank and that was that.  Not to mention they never got around to raising the balance of the price they had pledged to pay for the bank.

So when Lugogo sports complex was handed over to the a foreign contractor to develop, I couldn’t help remembering the UCB saga.

According to artistic images supposedly issued by the new developers, the cricket oval and the tennis courts are not part of the development plan. Instead of these there will be a huge indoor arena and a small hotel .

"More recently the Naguru Estate was taken over by some Irish-led developers, OpecPrime properties, whose artistic impression of a satellite city on the site has remained a pipe dream...

Meanwhile hundreds of residents were evicted and promised they would have first call on the residences that would emerge from the plan. They are still waiting, if they are alive. The land is now overgrown and some local people have been stealthily apportioning themselves plots from it.

I am hanging on to the copy of the Lugogo complex’s artist impression to compare it with the final product.

 

KENYA PRIVATISATION, BETTER LATE THAN NEVER

Last week Kenya’s President William Ruto announced his government would be privatising 35 state owned companies.

To that end, a new law  been enacted that brings into force an agency to carry out the exercise without bureaucratic interference.

The naysayers of course are up in arms, seeing this as an International Monetary Fund (IMF) plot to take Kenyan assets on the cheap.

Even if that is true no one is asking how Kenya came into a situation that the IMF would dictate to it.

"The IMF is like the lender of last resort. When no one else will touch you with  a 100-foot poll the IMF is the one you go to. But they are not a charitable organisation, their money has a cost.

Normally others will not lend to you, because the probability is high you will not be able to repay them.

So the IMF may insist on more efficiency in the economy and the easiest thing is to flog all the deadweight companies that are sucking more out of the government than they are paying back in taxes and dividends.

Greater efficiency in the economy will make the IMF redundant, as the country will be able to go to the open market to borrow funds.

Privatisation can take many forms, selling the company as a going concern or liquidating it all together – selling the assets and paying off the liabilities.

In the last incidence the company maybe beyond salvage – up to its eyeballs in debt, in need of major recapitalisation and in a dying industry, in which case it may not make business sense to try and keep it going.

But if the company is to be sold as a going concern one can expect that the labour force will be cut (tribalism and nepotism are never an efficient recruiting mechanism), minimum efficiencies achieved, while replacing obsolete machinery before they may think about beefing up staff numbers again.

The Uganda experience shows that the labour force eventually surpasses the original numbers before privatisation. The only thing is that it is not all those who are retrenched that regain their old jobs.

"The main aim is not to raise money but to create greater efficiency in the economy...

Kenya has a fairly robust stock exchange on which some of these companies can be offloaded – if they have sound management and strong balance sheets, but chances are they will be sold to investors directly.

The critics will say that since many of these companies will be snapped up by foreign investors it amounts to colonialism via the back door.

It would be ideal that local businessmen buy the companies. But often what happens is that it is cronies of the political elite who “buy” these companies, who often can not raise capital to revamp them and end up selling them anyway, to foreign investors at multiples of the price they bought it at.

The ordinary citizen  is often conned into thinking it is better to sell to our own, not knowing they are facilitating crony capitalism with they being the eventual loser. They lose because efficiencies are not created that would see a wide supply of goods or services.

Kenyan indigenous capital would have a better chance of participating in the up coming privatisation, because not only are they wealthier but also because they know how to mobilise resources in groups. They have longer experience in SACCOS and investment groups than we do or did in the 1990s, when our privatisation process was taking off.

In the final analysis the man on the street wants better goods and services at a fair price, they really don’t care who owns the company.

In theb 1990s Russia, still hung up on their socialist dogma, privatised many of their companies by giving shares to the workers. The workers ended yup selling their shares to a few connected Russians who are today’s oligarchs, fabulously wealthy people (all men) and the workers’ plight is worse off than it was under communism, especially since expected efficiencies did not turn up in the economy. And also because they took the money from these companies to buy assets abroad, like Chelsea FC.

But if ownership is such a big deal, the Kenya government should make listing on the Nairobi Stock Exchange (NSE) within a certain time frame as a condition of sale. No gentleman’s agreement as happened here, with the eventual owners not acting as gentlemen eventually.

"The powerful interest groups in Kenya that have resisted the privatisation of companies have finally run out of runway. These companies should have been privatised 20 years or so ago. But the economic realities have dictated that  they have to go now.

Dictated because the short term suffering from privatisation can be politically costly. Ruto did not come to this decision with out the economic reality staring in the face. He needs to offload as much excess baggage on the national purse strings, if he is to have ha lf a chance of getting the Kenya economy back on track.

Again we bring such hard decisions on ourselves. If these companies were well run and making contributions to the treasury the case for their sale would be hard to sustain.

But no, people are not asking the major question, who put us in this position?

 

THE IMPORTANCE OF THE VISION THING

During the recent “Uganda Entrepreneurship Congress 2023” at Makerere University in an interaction with the students the question came up, “How do we ensure the durability of our businesses?”

The statistics have been parroted over and over again, that 90 percent of businesses do not get to their fifth birthdays. I suggested to the students that this is not as bad as it sounds, because the business people who run those failed businesses, did not lie down and die, but went out and started new businesses. And the lessons of their failure helped make their next business better, hopefully.

But yes the question, “How do we prevent from failure?” Business lady Sharon Tumusime, co-founder of carpentry shop Palit, advised first off the that budding business people should not fear failure because failure is part of success.

Easier said than done and I could have sworn I saw a few kids rolling their eyes. You cannot blame them. In school we are taught the lesson and then we seat for the exam, in the business world, you seat for the exam first and then you learn the lesson. A mental adjustment is important, for all of us who want to go into business.

“Rich Dad, Poor Dad’ author Robert Kiyosaki advises that you need to fail faster, so you can learn quicker. That failure will happen is a given.

In my mind I was thinking that one way to ensure these failures are not final is to cover your downside, factor in the risks. I learnt this the hard way in my forex trading days. However sure the trading set up is it minimized your losses by determining before hand how much you are willing to lose if the “sure deal” did not go as planned.

In the real world of business this may take the form of starting small. We now enjoy the hospitality of Café Javas multiple restaurants, but who remembers that it started out as a small, cramped operation on Bombo Road in 2005? That was probably the business owner testing his concept, checking whether it works or not and once he was convinced, he rolled out seven other outlets and four others in Nairobi.

Also you can minimize the cost of failure by spreading the risk, bringing in partners to shoulder the burden. That is the basis of the limited liability company. No matter how sure the deal is, it can fail and to prevent it from wiping you out entirely, making it difficult for you to heroically pick yourself up, dust yourself up and start all over again, spread the risk so if it fails you only hurt a little.

"We, who went to school, have the mistaken idea that money will solve all problems. So when we get a windfall and go into business big are wiped out and start complaining about the economy...

Though over the years reporting business and dabbling in this or that, I have become convinced that the founder’s vision is a critical ingredient to whether a business succeeds or not over the long haul. I saw a few more eyerolls in the room when I suggested this.

It is part of the human condition that we think you just tell us what to do, we do it and voila! Success will follow. I think it also comes from our classroom upbringing.

We don’t pay attention to the intangibles. To our detriment. Because before anything happens there is first a thought. If you want to make a chair, build a house or plant a tree, first a thought.

While its romantic to go out and start your business, a pause to think about your vision for whatever it is you want to build may make the difference between collapsing after year one or enduring for years.

The trick with the Vision is to own it. You should be able to see it with your mind’s eye and feel the emotion that will come with achieving it. This last part emotionalizing it, is important because it will provide the grit needed to hang in there through the debilitating lows and temporary highs that come with doing business....

Just as important is that with a vision you will be forced to be strategic, where strategy is the series of actions you will need to take to achieve the vision.

Many of us are not strategic, we are hardworkers, ready to roll up our sleeves, jump in and start making money. Inevitably when we are hit, we crumble like a pack of cards because our actions are not driven by a vision and guided by strategy.

"Strategy is important more for what it prevents you from doing than what it dictates you do...

Many years ago, when we founded the New Vision Staff SACCO, we closed the first year with sh33m in the bank. we were jumping around with glee, success had come quickly. The question then became how to utilize the surplus and also sorts of ideas saw the light of day – car washes, tent and chair hire.

But our vision was to be a financial institution that creates financial freedom for our members. Rather than divert from this and go into all sorts of general trade, we stayed true to the Vision and invested the money in treasury bills and bonds. The net effect of this was that 16 years later at the height of the Covid pandemic in 2020, we closed the year with sh900m in the bank. That figure would have never happened had we run around like headless chicken, spreading our energies all over the place.

Things like having a vision and mission statement that drive strategy sounds like text book stuff, “too much English” but when you appreciate that whatever is manifested in physical form is only as good as where it came from the intangibles, you will not be quick to dismiss the Vision thing.

And finally, your business or even you, as a human being can only grow as big as your vision. Small vision small company. Big vision, big company. There are no miracles.

In the 1980s Bill Gates dreamt of putting a PC on every table and became the richest man in the world in pursuit of this vision. But someone had a bigger dream, to put a computer in every hand and today Apple is a bigger company than Gates’ Microsoft.

 

IN BUSINESS DON’T LOOK FOR A CUSTOMER …

Last week during the “Uganda Entrepreneurship congress 2023” at Makerere University business coach Robert Semkula counselled the young, eager students that when they go into business, “Don’t look for a customer look for a friend”.

That was interesting because we all know nothing happens until you sell, sell to a customer.

It was a clever way of saying you need to focus on building relationships with your customers, because again we all know if they like you, you are half way to selling.

We have argued severally in this column that businessmen before they claim the economy is doing badly, should first do an audit of their customer care processes...

As customers we are tired of the bored sales executive whose body language suggests she would rather be elsewhere than be selling to you or the gum chewing, rolling of the eyes, front desk officer who would rather you did not come in their door or the technician who returns your TV or car in such a state that you will be calling him no sooner has he turned the corner.

Our businessmen, we call them that because they are selling something but, in all honesty, have as much luck at success as the sighting of nsenene this season; our businessmen, seem intent on chasing us away from their shops so they can watch Tiktok.

So, imagine if we have some sort of universal epiphany – as I did listening to Semakula, that why when the customer walks in our door, don’t we try to make him our friend by looking beyond the current sale to building a long term relationship? After all the business theorists tell us it is cheaper to sell more to an existing customer than cultivate a new one.

We may suffer a culture shock, but what would this brave new world look like?

It would be that when my car breaks down and I call the mechanic to come check it out, he would be focused on getting to me or one of his people, identifying the problem and taking it off my hands. Once that happens he would give me regular updates – in writing, on what was needed and the progress on the job. To stretch the fantasy, they may have even have loaned me a car to use as they work. The beauty of the loaned car is that they would have skin in the game, they would not forget to work on my car and at the bare minimum would look to get the job done quickly so they can get their car back – before I damage it.

This could work for appliances out of order, the plumbing that needs repairing (in this case they would stay onsite until it was fixed) or even a bad hair job.

Our businessmen see this tender loving care as an added expense they can not afford or worse, that it would be keeping them from serving other customers. But if you think about it, I will remember the service especially if it is replicated routinely and would not hesitate to recommend him to my friends and family. They say people never forget how you made them feel...

As it is now many times we are scared to recommend our handymen because we know their ways of not quite finishing the job and overcharging for it (if you don’t finish the job, whatever you charge will be overcharging). It maybe the difference between when we are asked who is our mechanic, our response not being a sigh and waive of the hand but an eager sharing of his contact over WhatsApp.

Unfortunately, there are enough of us who are bad mannered and ingrates, dissuading our businessmen from being nice and hence the vicious cycle and hence the complaints about the economy being bad.

Talking about a bad economy, it amazes me every day to realise how many people are doing well are quiet about it. The noisy ones are the complainers, while the guys getting paid everyday are seated quietly in the corner smiling inwardly to themselves.

How would you serve your friend if they came to your shop, may be the way to start thinking to reengineer your business.

I remember many years ago when I was looking for a size 14 dress on Johnstone Street. The shop I went into only had size 12. I made as if to leave the shop and go to the next shop, but the shop attendant beat me to the door, urged me to take a seat he would bring the same dress. After a few minutes, which seemed like forever – we didn’t have smart phones, he came back with not one but two dresses a size 14 and a size 16, just in case.

I was getting ready to fork out a little bit more for his effort but he insisted the price was as quoted before. He became my go to guy for clothing and referred him far and wide.

Now his more tech savvy son is the one I meet, since I no longer can be bothered to go to town anymore. They now have several “shop windows” online and the son and his friends seemingly drop whatever they are doing to deliver.

And whenever I ask how business is going the son is quick with a thumbs up, “Mzuri.” Surprise! Surprise!

 

 

LETTING AGOA SLIP OUT OF OUR HANDS

Liechtenstein is a small country in the middle of Europe. It covers an area of 160 square km or smaller than the size of greater Kampala; has population of about 40,000 a tenth of Kampala’s population.

Nothing to write home about, that is until you discover it has the highest per capita GDP in the world of $180,000 by some accounts. The World Bank places it behind only Monaco at $234,317.

For the purposes of this article, we will use Liechtenstein. The net sum of the Liechtenstein economy is to service the bigger EU $17trillion market. They are a tax haven, offering low tax rates for individuals and companies and are a tourism destination. Their central location means people can live in Liechtenstein and commute to work all over the EU. Or better still register their companies in Liechtenstein and operate all over the EU.

The moral issues of providing tax haven services aside, Liechtenstein’s people would not be as affluent as they were if they were situated where the Central African Republic (CAR) is.

The point is you need to attach yourself to big markets like Liechtenstein or Mexico or Hong Kong if you want progress.

A few weeks ago the US announced it was suspending Uganda from the Africa Growth Opportunities Act (AGOA), which allowed free access of our goods to the largest economy in the world duty free. They said they were kicking us out along with Central Africa republic, Gabon and Niger over human rights issues. In our case the passing of the Anti-Homosexuality bill earlier in the year.

The irony of it is that the law was passed through a democratic process, which they are always encouraging us to do, and therefore by their action they want us to subvert the will of the people.

We are damned if we do, and we are damned if we don’t.

The bigger story though is that while we do not neighbour the US, this access to the biggest economy in the world, has been open to us since 2000 and in that time period we have grossed exports of about $200m or about $9m, with the biggest export receipts coming in last year.

Kenya on the other hand grew exports under AGOA to $525m in 2020 from $29m in 2001. If they suspended Kenya there would be a greater impact on their economy than us.

"The bigger story is then is how we failed to take advantage of this giant market when we could and probably explains why we struggle to take advantage of other markets in the region and beyond...

A friend of mine thought he could supply coffee to South Africa. When he got in touch with a major supermarket chain after looking over his business, they offered him space on the shelves of the 14 stores in Cape Town. They wanted him to supply 45 tons of his coffee every two weeks, but in addition have 45 tons constantly on hand in their stores, to maintain continuity of supply.

The logistical and financial demands were such that he had to go tail between legs back to them and give up the offer. To just meet those basic requirements would require he scale up his operations at least fourfold, something he did not have the capacity to do on his own. You can argue that with a bit more sophistication he would have got partners to come in with him on the deal and who knows.

To exploit AGOA we needed to do much more than we saw happening around us. But maybe we are not to blame for criminally squandering the AGOA opportunity when we had it?

Let us not deceive ourselves that we will develop, that is manage a reasonable standard of living for all Ugandans on our own steam. We will have to trade. The formula has worked for the east Asians, Europeans and even the US, so who are we to think we can be any different.

Our technocrats and politicians need to be burning the midnight oil, plotting and scheming on how to break into rich markets. We have to look up and down the value chain to see how we can produce multiples of whatever we are producing now; investments in research will be critical, how we can improve our communications and transport infrastructure –the development of rail and water transport must be treated with greater urgency and all the supporting services in trade negotiations, finance, marketing we will need.

We have worked very hard to get our East African Community up and running. There is still a lot to do, but it can give us a taste of the work we have to do.

The Kenyans, Tanzanians and Rwandans refusing us to prosper by putting non-tariff barriers in our way is standard for any markets and require a certain kind of skill in government we seem to be missing.

So beyond just producing stuff we need to be able to process, distribute, grow and protect those markets...

If we can only take a break from trying to steal public resources we might be able to get this done.

 

A WELCOME ANALYSIS OF UGANDA’S CHANGING ECONOMIC FORTUNES

BOOK REVIEW: TRANSFORMATIVE ECONOMICS; UNDERSTANDING THE PATHWAY TO ECONOMIC TRANSFORMATION

AUTHOR: PROF AUGUSTUS NUWAGABA

PP: 356 pages

 

The challenge for Uganda is to lift the economy from a pre-industrial to a modern one. To lift the majority of citizens out of poverty, though increasing their productivity and therefore earning power.  A modern state would be characterized by higher productivity in every sector, better living standards for all, trade in processed/manufactured goods, industrialization towards a more ICT driven economy among others.

To do this one has to understand where you are in the continuum of development and how you got there before you can fashion a route to development.

Professor August Nuwagaba does this simply enough for anyone to understand.

He identifies that land tenure system as designed in the Buganda Land agreement as a major impediment to our economic advancement, shows that the expulsion of the Asians in 1972 was a disaster and that by liberalizing markets, privatization of state enterprises and introduction of tax reforms the current government did the right things to resuscitate the economy.

The neo-liberal policies that have got us to this point, with its emphasis on fixing the macroeconomic environment and hope for a trickle down of the benefits, has taken us as far as it can, with a small elite benefitting disproportionately to the larger public.

So in his book—as the title suggests, he tries to chart a way for lifting the Uganda economy from its current state to an industrial and post-industrial economy.

Nuwagaba has strong opinions on how the drivers of the economic recovery of the last four decades can be retooled to drive transformation. Economic policy, monetary policy, debt management and aid among other things but he is clear that it first begins with the individual. 

"Each individual has a responsibility to raise their income, save and invest more and remain healthy and it is on this that all other drivers can be built....

We will not be reinventing the wheel and Nuwagaba has some interest case studies from the Asian tigers and Europe that light the path for us. The retooling of education away from producing learned graduates to churning out individuals with the relevant skills for the various stages of their development path is key and plays on the notion that all progress starts with the individual.

It is clear through the book that while we deserve a pat on the back for resuscitating the economy over the last 40 or so, this has only served to create a foundation for the real heavy lifting that is to come. Another mind shift is required and disciplined execution of a well thought out strategy is imperative.

A major omission that is hard to ignore however, is the role of corruption in slowing or subverting progress. While no country is corruption free, for a developing country like ours corruption concentrates resources in a few hands, denies the majority the services required for them to lift themselves out of poverty, distorts markets and threatens social and national security.

While it is a whole subject on its own, ignoring it misses a major piece of our context and why the best laid plans can still go awry.

"Development is not a natural progression. It can be subverted by human beings ignorance, ideological disorientation and putting their wants above those of the greater public. Our history is littered with how damaging a lack of strategic focus can lead to misguided actions however popular that can derail progress for generations.

As mentioned earlier, the book does not require any high appreciation of economics to follow the logical thread Nuwagaba has woven through space and time, where we came from and what we need to do to deliver a better future for our country. The book would do with a lot more contemporary case studies especially of how policies like liberalization and privatization have got us to where we are.

This book is a useful reference for anyone wanting to understand why we are where we are as an economy and what needs to be done for us to get to the next level. This book should be required reading for Ugandan economists and planners. It is a useful addition to the study of the economic history of this country.

 

THE FOREIGN INVESTOR BOGEY MAN

If you look down a list of the top tax payers in this country, nine out of ten of them are foreign owned companies.

The Asian community may take exception to their classification as foreigners, but for purposes of this commentary, why that is so will become apparent.

There are people who are not happy with this state of affairs, if they had their wish, most tax payers would be local businessmen. Which is not a bad aspiration in itself. These people however get it a bit twisted when it comes to explaining how we can go about overturning the current state of affairs.

The prescriptions go from the knee jerk recommendation that government nationalize all the companies. People who think like this, believe that if government takes over the companies local Ugandans will somehow be better for it. They dream of lower prices, more jobs and more uptake of local supplies.

Then there are those who think foreign companies should sell shares to government and then along the same lines of the above, we locals will be better off.

And finally, there is the group that thinks government should slant policy towards local investors – lower taxes, cheap credit and a waiver on governance restrictions as a way to allow our local businessmen to catch up with their foreign rivals....

I never know whether to laugh or cry. With age and wisdom, I now resort to silence.

Let us start from the beginning. Why is foreign capital here? It is here because there is opportunity, opportunity not least of all because our local businessmen can not take that opportunity up. Foreign capital can take advantage of the opportunity for number of reasons among which are quality management, advanced technology and access to capital. And also, because they come from more developed economies, they can see some opportunities we cannot.

I will never forget in the 1990s when a water bottling company set up shop in Uganda and I was guilty of thinking “Under what circumstances would I buy water?” But the investor knew people would need water that was certifiably good to drink, packaged conveniently and widely available. He had seen it elsewhere and knew it would work here.

A few years ago, I was in France. In my room there was no sign of the complimentary water. The next morning, I mentioned this to the receptionist and without blinking an eye he told me to drink the tap water. My initial reaction was shock. But when he kept a straight face and I thought about it, I nodded and walked off. Bottled water is successful in France where you can drink out of the tap, what would happen in Uganda, where a former boss at National Water & Sewerage Corporation (NWSC) could not vouch for the quality of the water from his taps.

And if you think about it that opportunity had been lying there begging to be taken advantage of, for at least 20 years prior to our first bottled water.

Everywhere I look, people complain that our businessmen don’t have access to capital. But the mobile telephone companies have shown us that, that too is a fallacy. Last year more than sh190trillion flowed though all mobile money apps in Uganda. That is the GDP of the country. Meanwhile transactions on mobile money are growing at more than 20 percent a year. That means that in four years double the money or about sh400trillion will be coursing through the mobile money networks.

Where has all that money come from? Most of it came from our pockets, under our mattresses, in our socks and bras. The money can now not only be useful to those who need it, but also to the owners of the money who now earn an interest, which they were not before.

The point is, all the capital we need is among us, we just need to build mechanisms that will liberate it from its current dark, dank abode...

One can argue that we would eventually come around to it by our own devices, but that is to ignore the time wasted reinventing the wheel when we can just cut and paste or better still get those with the relevant experience to bring it here.

But then again ask why we have to wait for someone else to show us the way.

In 1972 president Idi Amin had a brain wave, that if he expelled the Asian community, the back bone of commercial class, Ugandans would take over the businesses and the economy would be truly in local hands. His thinking process did not go further than distributing shops on Kampala Road to his cronies. We are still paying for that moment of madness.

Across the border from us Kenya with a bigger Asian community did not follow suit.  The result is there for all to see.  While the Asian community continue to be major players in Kenya’s economy, the indigenous Kenyans are much better businessmen from the mentorship that has come with this interaction, unlike our own who were given businesses on a silver platter and have nothing to show for it 50 years later.

"If we really want to dislodge foreign capital, in a sustainable way, we need to mobilise our resources – capital, labour and land, manipulate and manage them in a way that will ensure continued value creation and voila! We will “take” back our economy. Has anyone tried to do this in any meaningful way? Yes.

A drive through the Kampala’s city center a few weeks ago, for the first time in months, and I was surprised to see how many high rise buildings have gone up where there were once smaller buildings.

While you can question the business sense of building high rise commercial space, when higher floors are gathering dust, going unoccupied, it is a demonstration that we can mobilise resources locally.

We are still in the rudimentary stages of capital mobilization, we either pay for our developments in cash (believe it or not) or we borrow from the bank. But it is a start.

"Our attitude towards foreign capital should be what can we learn from them so we can go off and do the same or even better. However seductive Amin’s method was, going by the results, it should be furthest from our mind.

 

CHICKEN COMING HOME TO ROOST ON CORRUPTION

My jaw hit the floor last week when it was revealed that the Uganda National Oil Company (UNOC) was “sold” to a Chinese businessman.

While the “buyer” had documents to prove he had paid for UNOC, he did not or declined to reveal, who he dealt with and how much he had paid. He was blissfully unaware the company was a government entity, or so he said.

This came hot on the heals of another con perpetuated in the energy ministry where some Serbian ”Investors” were relieved of more than a billion shillings and the con artists had set them up for another $50m payout.

"If this is your only country; if this is where you intend to while away your years; if this is the country you hope to raise your children and your children’s children in, you should not laugh off these incidents in between sips of your beer...

Both scams show a level of preparation and sophistication that can not be learnt from a text book, but have come from practice and long experience. The scammers have been honing their skills on us, getting away with fleecing Ugandans because they have cover from higher officials, who can command the justice and law system to look the other way.

How did we get to this point?

There is a backhanded complement in there somewhere. In years gone by the big scams were of reams of paper going missing or bicycle procured, which never landed or other instances of pilferage.

But as the economy has grown and the budget with it --- in 2013 the national budget was sh12trillion compared to this years sh52trillion budget, the corrupt and their schemes have grown as well.

"As a result Uganda’s reputation now rivals a certain west African nation, which is the buzz word for everything corrupt....

Attracted by our growing reputation for corruption, unsavory types (the kind who carry $20m in bags around Kampala) have flocked to our shores.

While it is understandable that the Fortune 500 are not falling over themselves to come to Uganda – our market is too small, we are clearly not getting the next best thing, as the cost of doing business, with corruption added on is too prohibitive for them.

It cannot be emphasized enough that corruption is a terrible thing. The theories about allowing our elite to crudely accumulate wealth as a way to build an indigenous capital base is a fallacy and does not hold up to the most cursory study....

If this held true, in the three decades since 1986 we would see some of these crude accumulators, legitimize their business and turn up as some of the biggest tax payers or employers or would have developed a national presence. It has not happened and it will not happen.

 They have squandered hundreds of billions of shillings on questionable initiatives, hairbrained projects, white elephants – all private, and have nothing meaningful to show for their access to the state coffers. So let us bury that idea once and for all.

Beyond concentrating public resources in a few hands, it also denies us quality public goods in education, health, infrastructure and even security, the ingredients needed to climb the social ladder for  the least of our brothers.

As a result of their dubious ways, thousands if not millions of citizens are not getting a fair chance at improving their standard of living.

Corruption is a terrible monster that feeds off itself, growing, squeezing out honest endeavour, leading to frustration and despondency of the general population.

Our corrupt do not stay in their cocoon for long, especially if they are not caught. They soon link up with regional and international networks to extract more and more.  They are not very discriminating about the networks they fraternize with and very soon we will have organized criminals not only roaming our streets but getting photo opportunities with and bending the ear of the high and mighty.

The problem with these criminals is that when you give them an inch, they will want a mile.

They will not stop at just emptying state coffers but will want to protect their enterprise by compromising politicians and security. So very soon, if it is not already happening, they will be smuggling drugs, guns, wild life trophies and vulnerable people right in front of our eyes, with full cover of the law....

They will turn the country in to a hub of illicit trade, benefitting a few elites while impoverishing the rest of us. These actions will see us ostracized from the international community.

It has happened before.

In Montenegro, a country in eastern Europe, in attempt to circumvent sanctions imposed on the former Yugoslavia, the leased their ports and airports to cigarette smugglers. With afoot in the door these gangs stayed on long after sanctions had been lifted on Yugoslavia and Montenegro had broken away.

The gangs so entwined themselves in the country’s running that the Italy once had w arrant out on the head of former Prime Minister Milo Djukanovic for his role in smuggling cigarettes.

Essentially the corrupt and their cronies can hold the state hostage, to a point where it becomes impossible to move on them—except for few sacrificial lambs. Inevitably this leads to major dysfunction....

Believe it or not we are not the most corrupt country in the world or even in our region, but that is a competition we should not be aiming to win.

 

MORE MONEY TRANSACTED ON MOBILE MONEY THAN UGANDA GDP IN 2022

A few weeks ago Bank of Uganda reported that the value of mobile money transactions in 2022/23 jumped 22.6 percent to sh191trillion from sh156tillion in the previous year.

This was driven by more people signing on to mobile money, up 11.4 percent to 42.9 million from 38.5 million in 2021/22.

The value of transactions at sh191triliion or $51.5b is the first year that transactions on mobile platforms overtook the national GDP and is expected to remain above, as more people take up mobile money and the transaction values overtake that of money transfers. This trend was already registered itself in neighbouring Kenya with Safaricom’s Mpesa years ago.

At the current rate of growth of mobile money transaction values, these will be doubling every four years. Its just amazing to think about it.

In my mind this is an exciting trend when viewed against the fact that more than 90 percent of transactions are “low value” transactions of less than sh50,000.

The way to think about this, is that if mobile money platforms were not there these are monies that would have been in our pockets, not being helpful to us or to the general economy.

But also, that there are millions of people who were not in the formal financial sector who are now in and set to reap the benefits that come with this that have been denied them for generations.

Since this money is in the formal financial sector, we are earning interest from it and its being lent out to those in need.

On the surface of it, it is not difficult to deduce that this has an effect on the wider economy.

Earlier this month GSMA, an international organization unifying the mobile ecosystem, released the results of their research on the effect of mobile money on economies.

The researched showed that in Sub Saharan Africa total  contribution of  mobile money to GDP  was almost $150b, accounting for 3.7 percent growth. In eastern Africa a comparable figure is $60b, 5.9 percent increase in the region’s GDP.

The research had four major findings.

One, it showed what was widely known that mobile money is biggest in Sub-Saharan Africa, But they went further to show that a 10 percentage point increase in mobile money adoption can translate in up to one percent in a year.

Their research went further and showed that increased adoption was leading to increased usage with average annual transaction values rising to $800 in 2022 from $500 in 2013.

Thirdly that increased ecosystem transactions -- buying goods and services, rather than cash-ins and cash-outs had a greater impact on GDP growth.

And finally, that effect of mobile money adoption on GDP increases with more users.

It makes sense. By getting more and more money in circulation into the formal financial it activates the value of that money – money in your pocket is no good to you or anyone else. Probably more important is the inclusivity of all those people who have been unable to engage with the formal financial system as it was previously constructed.

Prior to mobile money about 80 percent of money in circulation was outside the formal financial system one would think this position has improved dramatically in the last decade.

So, improvements in the GDP would follow as a result of more money in the formal sector but also the improved efficiencies in the flow of money around the economy...

We take these efficiencies for granted. But there was a time, while western economies had long adopted “plastic” – credit cards, we were still doing everything with cash.

Most people kept their money with themselves, doing nothing for themselves or the general economy. The few who held bank accounts had to transact at the banks’ convenience. Opening hours were from 9am to 1 pm and only on weekdays.

ON a weekend and in need of cashflow as in the bank you were in trouble. Hence people keeping on themselves more money than was necessary.

When the now defunct Greenland Bank, leveraging on technology started opening later into the evening and on weekends, it was no surprise that people flocked there. The high street banks responded by unleashing ATMs, but even their best efforts meant just fraction of the population was involved.

And it is scary to think with increased uptake of mobile money and innovations in the industry, what the financial landscape will look like in 10 years. Our biggest financial institutions will have been born of mobile companies, everybody with a mobile account, services extending beyond money transfer, commercial transactions, to making physical cash irrelevant.

The dream of a cashless society I used to report about in the 1990s is coming to life in the least expected ways, with a speed that is positively breath taking.

 

PERSONAL FINANCE FROM FIRST PRINCIPLES

I got around to thinking the other day how would I give a talk on personal finance and do a good job of it if my talk was restricted to 20 minutes.

After much huffing and puffing I came up with a talk that would pass.

Ladies and Gentlemen your personal financial situation is determined by how you spend your money. There are only two ways to spend money, either you consume it or you invest it. Which of the two you did more of in the past explains why your finances are the way they are today.

"If your spending was biased towards consumption and away from investment, you are barely making ends meet, regardless of your salary. If on the other hand your spending was biased towards investment and away from spending, you probably are better off than the average person around you....

My talk should really end here but let me expound.

If you had sh10,000 on you spending it maybe going and buying two beers or three or one, depending on the bar you patronize, which beers you may very well leave in the bar’s toilet before you leave. Investing the same sh10,000 may look like buying data on your phone – my provider can get you 2.6GB with that, which you proceed to use on improving your knowledge, that may result in higher income in future. I saw a saying the other day, “Income does not far exceed personal development”

If you has sh100,000, spending it may look like you buying data on your phone with sh10,000 wining and dining at a higher end restaurant than you are used to and posting your frolicking on social media for all to see and admire. The sh100,000 could be used to buy a 20-year bond which would give you 15 percent interest a year for 20 years. The difference between the two is that in the first instance everyone in your social media universe will know you had a blast at such and such a restaurant or bar – maybe even envy you and want to be you, while in the second instance no one will know that you are going to earn sh300,000 over and above the sh100,000 you invested – unless you go on social media and announce your bond purchase. You are unlikely to get more likes than there are fingers on your right hand.

If you had sh1,000,000 you could spend it by hiring a four-wheel car for a day, bundling your friends in it and heading out to jinja and have a few drinks by the river Nile – all documented for your social media fans. Or you get those one million shillings and by a bond or a few thousand shares on any number of shares on the Uganda Securities Exchange (USE) and benefit from future dividends and capital gains. Umeme shares for example have doubles in value since last year.

Let’s take it abit further and you have sh10,000,000 you could spend it by getting on a plane, export your frolicking to the beaches of Mombasa or Zanzibar and again document it on social media. Or you could take that same money and buy a 20-year bond and make sh1.5million annually.

It is easy to see why we would rather eat than invest our money.

"Eating our money provides instant gratification and also has the added bonus of making us “look” rich. While investing our money, not only will the benefits come sometime down the road but also chances are people will not know about it and therefore will not know that we are rich....

Eating our money is not unique to Ugandans, it is a human condition, at least for the majority or 99 percent of the population who are struggling financially.

The remaining one percent of the population bias their spending towards investment and when the join the blasters, years or even decades later at the source of the Nile or Zanzibar, the spenders will say they are lucky, which deal did they do to get money to start partying.

Many years ago, in the 1990s an interview with the Financial Times our own Sudir Ruparelia was asked how he has amassed his fortune and he joked that it is an old Indian trick, where you earn 100 shillings invest 90 shillings and 10 shillings. Repeat until rich.

I also saw a quite the other day that goes “Money does not like noise”. I understood this on an intellectual level but came face to face with it during the NSSF release of the mid-term access funds last year. People complained that NSSF was delaying to release their monies but as soon as they were in the bank, it all went silent.

And finally, if there is one other lesson to be learnt from this talk or kept in mind when we decide how to spend our money is that in all we do with our money, the goal should be to get rich not to look rich.

Thank me for your time.

 

IS IT POSSIBLE FOR SMOKE WITHOUT FIRE?

MPs are up in arms at what they see as an unfair bailout of thermal power generator Electromaxx, controlled by businessman Patrick Bitature.

They claim government has paid $13m (sh48b) for the Tororo 90MW thermal power plant, particularly annoying prospect when government is in the throes of a cash squeeze.

Such stories serve to score cheap points against the government to the detriment of economic players, until they are put under a microscope.

While the politicians will not let the facts get in the way of a good story, the truth will set us free.

Electromaxx has a Power Purchase Agreement (PPA) to produce power at the thermal power plant.  The plant uses Heavy Fuel Oil (HFO) to generate power which is fed into the grid via the substation in Tororo.

The PPA stipulates the generators obligations and government’s as well, which among other things outlines how they will pay for power. We will not get bogged down in the details of the PPA but let us just say that government owes Electromaxx millions of dollars in back payments under the agreement.

To back track a bit. To build a plant of that magnitude – it was reported to have cost $60m (sh200b) to set up, no one, fishes in their pocket to pay for the massive civil works, the generators and the installation. You borrow the money from the bank. The loan it is envisaged will be paid serviced using the money you will get from generating power according to the contract.

So, when government does not pay you as planned, inevitably you are going to come under the gun, especially from your creditors – not only the banks but your suppliers as well.

As a way to extricate themselves from this unfortunate situation, it was agreed that government takes the plant off Electromaxx hands.

The politicians argue that why should such a deal be done when we have hydropower surplus. Thermal power plants are often used as back up capacity, if you have them and don’t need them now you keep them available for the time when they are needed.

While we enjoy relatively consistent power now, most of our power comes from hydro power, which can be affected by the vagaries of nature and climate change. A drop in water levels or damage to one plant or the other – all events we have witnessed in the last few years, can cause the grid to trip and throw us into darkness. Also in the recent past vandalism of transmission lines have cut off parts of Uganda off the grid. It was envisaged that the Tororo plant will serve a s a stop gap measure to sustain power in the Tororo industrial area, eastern Uganda and for power exports to Kenya.

There is an Energy Policy, drawn up in 2018 that recognizes this risk. In the policy it is required that the energy generation mix includes 10 percent thermal power, among more than one plant.

 So, it makes sense for government to control the Tororo plant as it does the Namanve plant which it took over after operator Jakobsen Elektromaxx concession came to a close last year.

I would imagine the Electromaxx owners would have been loved to paid a nice bulk figure, but government’s cash situation is that that is not possible.

So, the tow parties have agreed that government will take over the Tororo plant, but maintain Electromaxx as the operators for the next five years, allowing them to get paid over that time.

Essentially, they have changed the agreement from Build Operate & Own (BOO) to a Build Operate & Transfer (BOT) arrangement, which is a fundamental change in the agreement which would change the nature of the PPA.

Meanwhile the millions of dollars government owes to Electromaxx remain outstanding, which negotiations remain ongoing.

Two things stand out for me in this whole sorry saga. It is prudent for a country, which has aspirations for industrialization to have a steady supply of power. Contracts especially export contracts, can not go begging because you had power outages. The penalties for such can bring down whole industries. So inbuilt redundancy in the network is prudent. Ofcourse one can argue that right now we are running surplus generation capacity but when more than 90 percent of your generation capacity is hydropower, even that surplus is at risk.

Secondly, the backstory to this is that it is extremely difficult do business with government. As at the last budget reading government had domestic arrears of sh8trillion, for which they have provided sh200b, isn’t it any surprise that the gains of the last 30 years are not being felt equitably around the population?

DO NOT MESS WITH THE LAWS OF SUPPLY AND DEMAND

It was interesting how the problems surrounding Kenya’s fuel pump prices have gone largely uncovered in the Uganda press.

Ahead of the last election the government of Uhuru Kenyatta, in a populist move to win votes for Raila Odinga, decided to hold the fuel prices at a certain level. Pump prices were rising very fast.

At the time the war in Ukraine and the hangover from the Covid lockdown, which had disrupted global supply chains, was pushing up pump prices all around the world.

Nairobi decided that they would pay the oil companies for any cost incurred above the price they had fixed.

There were snide remarks from our side of the border, with people saying that that is how real governments work to cushion their people from bad things. I was not one of them and in fact predicted in this column that it would end in tears. 

It is a common saying in the market that the market will remain irrational longer than you can be liquid...

It was not long before government was reneging on the deal or rather, they run out of money to pay the oil companies to hold the price stable.  The oil companies responded by turning off the taps, until their bill was met.

Soon there were fuel lines in Nairobi – but not in Kampala, where government had wisely let the pump prices find their level.

A few weeks ago the Kenya government issued the fuel companies a bond in lieu of cash payment. The bond would ensure a regular payment from government and could be used as collateral for alternative financing, that is if the market trust the Kenya government.

And finally last week it was reported that Kenyans have decided to leave their cars at home as in September fuel consumption had fallen to its lowest level in five years.

There is a famous experiment of about boiling a frog. That if you threw a frog in a pan of boiling water it would jump out immediately, unable to stand the heat. On the other hand if you put the frog in a pan of cold water and continued to heat the pan slowly, it will take longer to feel the heat and jump out.

When you try to hold prices artificially, its like boiling the water before throwing the frog in. When you can no longer hold the subsidy (read the frog has to be put in the pan) the price will jump or fall dramatically, making adjustment all the more painful. Kenyans were shocked when the prices jumped to the real level earlier this year and have responded by parking their cars.

Ugandans on the other hand, while they complained about fuel prices crossing the sh5000 liter mark last year, adjusted to the price adjustments the best way they could, and for a brief moment earlier this year prices dipped below sh5000 again. Of course, no one reported that. Now that they are climbing back up above sh5000 the chattering masses have gone into overdrive.

The naysayers will say that even the more developed economies provide subsidies for certain essential goods and services. Two wrongs don’t make a right and no one talks about the cost of these subsidies...

The trillions of shillings the Kenya government owes the oil companies will come the expense of health and education services, infrastructure development and other public goods, denying the majority of Kenyans the chance to climb the social ladder by improving their living standards.

Interestingly at the heart of every subsidy there are a few connected people who make disproportionate profits from them. So the biggest beneficiaries are not the little man as the politicians would like us to believe.

Our politicians are not stupid. They know the way to tackle market imbalances is by addressing the supply-demand equation. If prices are too high, look to increase supply. If prices are too low, look to increase demand.

The problem of course is that these interventions could take time and not convenient for the politicians. Even when subsidies are used to boost production instead of consumption, they distort the market – pushing legitimate businessmen out and developing interest groups which will fight to sustain the subsidy, regardless of the economic case against it. And the day of reckoning will eventually come around.

We get around this by keeping in my that adhering to the law of supply and demand is least painful remedy. And in the event that we choose to flaunt or ignore it that we will pay the price. But what do the politicians care they will have moved onto the next flavour of the month.

 

NSSF HAS COME A LONG WAY

It was around 1996 and I was a younger business reporter.

Then National Social Security Fund (NSSF) boss Abel Katembwe and architect Henry Sentoogo made us climb several flights of stairs to the seventh floor of a two tower shell  in the middle of Kampala.

The reason for this morning exertion was to explain to members of the board the options the NSSF had for the building.

"Believe it or not lifts were not planned in the original design of the 14-floor twin towers building. The options were to finish them as separate properties or have two walk ways at the seventh floor and the top, to join the two towers or make the massive outlay on a bank of lifts, which would fit nicely between the two towers.

It seemed obvious to me that Katembwe and Sentoogo had talked about it and they favoured the last option,  but new the cost would be a sticking point.

The rest as they say is history. So the next time you are in Workers' House and waiting for the lift, know that where the lifts are was open space and also explains the 14 floor atrium in the center of the building.

The Fund, which was barely 11 years old at the time must have had assets of less than a trillion and struggling to get employers to comply with their obligations to their workers.

Nearly three decades later and NSSF has become the biggest financial institution in the country and the biggest statutory social security fund in the region.

In between the Fund has battled perennial scandal that ensured a revolving door of CEOs, before settling down over the last decade or so to post its best performance ever.

Since the entrance of Richard Byarugaba in 2011 the Fund has grown from around sh2trillion to sh18.56trillion in assets under management. This is a 20 percent compounded annual growth over the period or it has been doubling in size every four years.

It helps that more and more people are contributing to the Fund. I could not get figures for 1996 but in 2011 the fund was collecting about Sh400b annually, which is what it now collects in about three months...

It did not happen by accident.  

Increased transparency, aggressive chasing of member contributions, better strategy and most importantly, execution of that strategy have been the key to turning around the institution.

The strategy that has been executed in the last ten years has its beginnings in the short lived tenure of David Jamwa, who run the Fund before Byarugaba.

I remember at the time seeing the new strategic objectives and worried that Jamwa was smoking very potent stuff.

It looks easy, collect money from members, invest the money, mostly in government paper and voila you have a profitable and rapidly growing company.

But there are a lot of moving parts that have to move well for this to happen consistently for a decade, despite some very drastic economic events -- covid lock down to mention but the major one.

It has been clear for a while now, that NSSF is an aberration in our economy, a public institution that works.

Its main strategic objectives until 2035 is that it will grow into a sh50trillion fund and that it will have half the workforce as members...

The growth to Sh50trillion is about 9 percent annual growth over the next 12 years, considerably slower than the last 12 years, but that maybe because we are working from a larger base now.

This means that the Fund's management has to be more disciplined in their execution of strategy and also keep costs to the bare minimum. They are already the most efficient Fund in the region, they must sustain that discipline or get better.

The culture of achievement has to go on. we members have been spoilt rotten, they have given us an inch we now want a mile.

In the mean time as this column has mentioned before, NSSF has become too big for this economy, that some of the people tasked with overseeing it can not wrap their heads around the numbers it deals in.

We saw it during the parliamentary probe. The honourable members -- who do not contribute to the Fund, could not understand how staff could share a bonus of Sh200b.

This is not new, about a decade ago a former chairman of the Fund exasperated by his inquisitors bellowed, "Watch me as I spend the money," in answer to a question about the huge sums NSSF would have to invest to make good on one real estate deal...

The way I see it two things have to happen. Either NSSF as part of its working commits to widely educating the public about how it does what it does or/and a law is past which shields it from the politics of the day.

It will still be supervised by the relevant ministries and audited by the Auditor General, but its day to day affairs will be beyond the prying eyes of parliament.

It happens already with the central bank and arms of government like the Judiciary and dare we say, parliament.

And finally going into the next stage of its development NSSF should not lose sight of the fact that, to those who much is given mush is expected.

Good governance is what has got us to this favourable point, a slip here will inevitably begin to show in the numbers and returns to members.