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.