THE ECONOMICS OF THE OLYMPIC GAMES

The 1984 Olympics in Los Angeles, US were the first games I watched.

That edition was famous for the US Carl Lewis winning four gold medals. It was also the year Kenyan Julius Korir won the steeplechase, starting a string of nine straight golds in the event by our Kenyan neighbours, that lasted until the Tokyo Olympics in 2021.

So last week very much older, I settled in and gleefully arranged my remotes close at hand to enjoy two weeks of the Olympic smorgasbord.

I was not disappointed in week one.

US gymnast Simone Biles cemented her place as the greatest gymnast of all time, leading the US to gold in the team event and winning the women’s all-around event for herself. And at the time of writing she was in the finals of three other events and looking like a sure deal to bag gold in all.

The South Sudan men’s basketball team gave a good account of themselves against the US team, going down 103-86. This match was much anticipated, as only days ago it took a Lebron James three pointer in the final second of the game to squeeze past our northern neighbours 101-100.

We shall not say much about the women’s volleyball event.

But I have since developed an interest in the economics of sport and it was interesting understanding what it took to put these Olympics together.

For starters it is estimated that about €9billion (sh36.3trillion) was spent to make the Games happen, most of which was from private funding.  France did the new and upgraded the infrastructure which accounted for less than a half of the total budget...

The projections are that the economic benefits to the Paris region over the duration of the games and beyond will between €7 and €11billion (upto sh44trillion) due to a boost in tourism, job creation and infrastructure improvements.

There will be 329 gold medals on offer and the 48 Athletics winners will each walk away with $50,000.

For me the beauty of these games is that the private sector is picking up most of the tab. That means that except for a few vanity projects, these monies will be efficiently spent and show a return, with less impact to the public purse than if the government bankrolled the whole event.

The funding of sports in any society is out of the surpluses that economy can generate. The bigger the economy the more they can fund sports.

Governments used to see sports as a way for the  youth to expend energy and not pay attention to politics, but in the last few decades or so the rise of professional sports has shown that sport can be bona fide economic activity, which while making the youth busy can afford them real livelihoods. In a few instances beyond their wildest dreams or if they had taken the traditional white collar career path. Potential gold medalist Carlos Alcaraz has already made about $8million in prize money this year alone.

  And he is only 21.

But these suplurses especially from the private sector, are far from being charitable handouts. The private sector wants to see a return, often in terms of marketing benefits.

In Uganda where our sports administrations are volunteer based, it’s hard for the private sector to pour money into sports, because they cannot see a return on their investment.

Apart from regulatory oversight, sports does not need government to thrive. The US the world’s greatest sporting nation has no sports ministry. And yet they have sent just over 500 athletes to the Olympics.

The US sports associations have become adept at creating sports events, marketing them and selling them to corporate America. Basketball, American football and baseball are now multibillion dollar enterprises. At the Olympics the US is dominant in gymnastics, swimming, track and field.

And after conquering America they are spreading their wings abroad.

Our sports officials – assuming they want the best for their sports, would be wise to take a leaf from the US model of financing sport and its applicability in a country where there are more pressing needs than sports to fund.

So while I ooh and aah at the athletes performance, never mind marveling what it took to get into that demigodesque (see the women volleyballers) shape, a look under the hood at the economics of sport is just as entertaining if not more so, for me.

 

THE OLYMPICS NOT JUST FUN AND GAMES

This week Peruth Chemutai gifted us with a happy moment in these bleak times.

The special police constable floated -- that is what it seemed like to mere mortals,  to gold in 3000 m steeplechase. She became the first Ugandan female medalist ever at the Olympics.

We have three ranked athletes in the men’s 5000m final later today as well as Winnie Nanyondo in the 1500m finals, so there may be more joy for Uganda yet.

With Chemutai’s win Uganda jumped into 46th position in the medal standings vaulting over more established sporting nations like Egypt, Israel and India.

"A look at the  medal tables serves as useful proxy for development or lack of thereof, in countries...

The top ten nations at this writing were China, US, Japan, Australia, Great Britain, Russia, Germany, New Zealand, Italy and France. While at the bottom of the log were Syria, Malaysia. Kuwait and Ghana. Of course other nations like neighbours Burundi, Rwanda, Tanzania and South Sudan don’t even win mention in the medal table.

Going by the table its clear that sporting success comes from the respective society’s economic surpluses. That the more successful countries have enough money left over after looking after their citizens’ basic needs to funnel into sports.

The top medal winning countries made a killing in sports such as gymnastics, swimming, rowing, weight lifting and equestrian sports among others. The common denominator in all these is the huge outlays required in building the facilities and supporting the athletes to train for these events.

Forbes magazine reported a few years ago that it costs no less than $20,000 (Sh75m) annually to train an archer or table tennis player for at least eight years to make it to the Olympics and not necessarily win gold. It cost about $100,000 annually for at least eight years to train a potential tennis professional.

Beyond the financial cost it takes at least 10,000 hours of systematic practice to attain world class standards in anything, in this case sport. Broken down that amounts to three hours a day, five days a week for ten years. Our sportsmen don’t match up to world standards because they have not done their 10,000 hours, but if you think about it how much would it cost to sustain that effort?

In most of these countries most of these costs are subsidised by their respective governments as well as corporate sponsorships. The national subsidies come from taxes.

On the above evidence our athletes are winning in spite of ourselves. Going by GDP, we are a poor country and hence how much our government spends on sports is miniscule and our corporates entities even less so. 

Kenya are beginning to fall behind, as diminishing returns set in on their natural model of raising athletes. For the first time since 1980 Kenya failed to win Olympic gold in the men’s steeplechase event.

Uganda, like Kenya are relying on our naturally endowed athletes from the east to rack in the medals, but this will only last so long. 

So what is Uganda to do to keep up the momentum? 

The more successful sporting nations have strong grass root structures, which were not primarily intended to build gold medalists, but to engage youth in beneficial activities and keep them away from crime.

This infrastructure has helped identify thousands of athletes who are then funneled into more specialised training.

So for starters we need to revive the schools'national competitions. Our schools are the most extensive network already in existence that we can leverage.

At the bare minimum this will identify talent, but strategies need to be formulated, financed and implemented to take these budding talents to the next level.

But most importantly our sports organisations have to get professional management. This mode of volunteer managers who are there because they were voted into office and not necessarily on merit, is an archaic model that will take us nowhere soon.

Otherwise congratulations again to our medalists at the Olympics – Chemutai, Joshua Cheptegei and Jacob Kilimo. We wish the latter two and Nanyondo good luck in their races later today.

OF THE OLYMPICS AND NATIONAL BRANDING

The Olympic Games started last week in Tokyo, a year behind schedule, to a muted opening ceremony to mark the times.

In empty stadiums, athletes in swimming, gymnastics, soccer, handball, tennis and hockey among others competed hard never the less.

During the Cold War the Olympics also  had a subtheme, the competition between capitalism and socialism. The Olympics was used as a big propaganda exercise, winning the most medals was meant to show to the world which was the more successful system.

That rivalry between the west and east is much toned down now and thankfully so, as we can now focus on the athletes performance without being distracted by weighty issues of geopolitics.

But the branding value of the Olympics for competing nations has not gone away. Starting with hosts Japan. This is the second time the Japanese capital hosts the sporting bonanza, the last time being in 1964, when the games were beamed live around the world for the first time. In better times the Olympics would be a show of organisational and technological advancement for the host nation. This time it may be a show of how Japan is able to host the Olympics in the midst of a pandemic.

The US is the biggest team as usual, flying in over 600 athletes. Russian athletes are not competing under their flag following a two year ban imposed on the country for drug doping infringements. However athletes not involved in the doping scandal are competing as The Russian Olympic Committee (ROC).

Countries and corporate entities put a lot of weight on the performance of their athletes, as they should.

"A brand, personal, corporate or national is built on four pillars – awareness, association, experience and loyalty. They basically follow in that order....

There is no brand if no one knows about it. So winning athletes raise the awareness of nations. One of the best stories of the games so far was of freestyle swimmer Ahmed Hafnaoui who upset the form book to win gold in the 400 meters freestyle, suddenly online searches for Tunisia went through the roof and Ahmed’s following on social media exploded. You will be shocked how many people out there can not point out Uganda on a map of the world, leave alone Africa.

Some may brush this aside as unimportant, but if you think about it why do you buy the groceries you do or shop from the shops you do or hire one mechanic and not the other? It starts with knowing them. As a country, company or person, being known is where the branding process begins.

Following on from being known is what the brand is associated with. Believe it or not Uganda continues to be associated with Idi Amin, it does not help that now Netflix has a docuseries with Amin squarely in the middle of it. The US, which has arguably the highest level of violent and organised crime and history of systemic racism is known more for other things – democracy and business. Their winners in the Olympics enhance the brighter side of the US. So having a dark past does not necessarily doom your brand.

Events like the Olympics create awareness and promote positive associations about countries. To experience or feel loyalty for those countries you would have to go there, the Olympics does little to help with that.

So for the US, which will be competing to top the medal table, the Olympics will cement the perception of world dominance. For China, ROC and the EU countries will look to place strongly too as a way to improve their perception as serious players on the world stage. Countries like South Africa, Tunisia, Kenya and even Uganda by winning will improve the perception that they are doing good things in their countries and deserve a second look.

The hardnosed bean counters will be rolling their eyes at the idea that national brands have even a passing effect on GDP, but they will be shocked.

It is not true that if you build it they will come.

"You can have the most green environment, the greatest number of animal species and still only manage a million tourists a year like Uganda, while the city  of Miami – a concrete jungle and the most violent city in the US attracts at last count, six million tourists a year....

As an example the most visited places are better branded – more people are aware of them and have positive associations attached to them.

For the individual athletes the Olympics is a test of their prowess and offers a hope of an improvement in their lives if they do well – that means they will be more widely known. For nations it will increase their profile and the positive associations surrounding them.

But that is half the work. The real work in brand building is that when you have made the brand known and created some positive associations it matters that you work hard at making sure the experience of the country matches or exceeds the associations  created...

I am a tourist, I have seen Stephen Kiprotich, Julius Cheptegei, Winnie Nanyondo and Halimah Nakaayi win on the world stage, so when I come to Uganda I am expecting the basics -- safety, comfort and convenience otherwise my experience will be soured and brand Uganda suffers. It is all connected.

So

"going to the Olympics should be more than cobbling together a bunch of athletes and sending them off with a hope and prayer, it should be seen in the context of a national branding strategy....

One interesting thing about the Olympics, or more specifically the US Olympic team – the US has no sports ministry.

OF THE OLYMPICS AND WHITE ELEPHANTS

By the time you read this we will have been enthralled by a beautifully choreographed opening ceremony of the 2016 Rio Olympics. For the next three weeks we shall marvel at the feats of speed, strength and stamina of the young men and women who have endured blood, sweat and tears to perform on the world stage.

Unfortunately the Olympics – except for the 1984 Los Angeles Olympics, have proven to be a black hole for state resources and when the final finishing tape has been broken it has been difficult to discern the benefits to the hosting economy’s  of the quadrennial event.

"This is sad but not surprising. These extravaganza’s characterised by dodgy procurements and cost overruns have been proven to be what the resident technocrats need to finish their palatial homes or pay tuition for their pampered offspring. The promise of an economic boost or elevated global status often don’t materialise for the former and for the latter amount to 15 minutes of fame and not much else...

In fact hosting the Olympics in 2004 was at the heart of Greece financial woes a decade or so later. 

Borrowing heavily to spruce up infrastructure for the centennial games, after the games the Greeks were stuck with massive stadia that had little economic value once the show rolled on. But the debt had to paid. Like other developing nations the Greeks favourite past time is tax evasion so they were soon in a bind and almost found themselves out of the European Union when they were almost submerged by their debt obligations a few years ago.

The Olympics are great entertainment and I like most, will be watching with bated breath as the athletes tear down the track or the gymnasts tumble up and down the mat or the swimmers cut through the water. But I will be suspending disbelief because I know after the party will come the hangover.

To be fair all these lovefests should be hosted only by nations that can afford the subsequent losses.

Brazil is already staggering under hard economic times. The Olympics and the soccer World Cup of two years ago do nothing to raise incomes, improve services or improve the general wellbeing.

While it is the seventh largest economy in the world, just behind the UK, it has third world income inequalities. A Brazil has a gini coefficient – a measure of income inequality, of 0.505 with a figure towards zero being ideal and one towards one being disastrous.

"The estimated $12b or $60 per Brazilian, that has been used to host the event would have been better spent improving social services and more economically beneficial infrastructure...

"The Olympics are a white elephant for poor countries. A white elephant like roads to nowhere or overinflated power dams or unsustainable state owned airlines. And like all white elephants they are often dimmed necessary to increase the surface area for corruption and serve as an ego trip for powerful people. Unfortunately they are paid for by hard earned taxes....

I love the Olympics but one cannot help feeling that such events, are a racket by global elite to divert resources into theirs and their cronies’ pockets to the detriment of the rest.

Things would be very different if the bills for these events were footed by the companies, who now are the major beneficiaries of these events. You would have leaner, less extravagant effects which would still provide the entertainment value we have become accustomed to with little negative effect on the general public.

If wishes were horses.

They say that when businessmen lock themselves in a room together you know they are conspiring against the consumer.

So while I cheer on these young athletes achievements I will have at the back of my mind that we are being had – especially the Brazilian tax payer, and there seems nothing we can do about it.

Pass me the popcorn

MUST LEARN LESSONS FROM STEPHEN KIPROTICH

It is old news. Stephen Kiprotich last week won gold in the World Athletic Championships in Moscow. Like in London a year ago he took on the favourites – this time the Ethiopians, run them into the ground before strolling to a much deserved victory. 

For fear of stating the obvious Kiprotich is a national hero. But more importantly we can glean important lessons to apply to our daily lives.

So here goes my top four list of lessons to learn from the double gold medalist

#4. Aspire to substance over style

Life they say is a marathon not a sprint. You can’t blast out of the blocks and have nothing left over for the next 42 km.  You have to pace yourself. Though he comes from a humble background it means forgoing the home comforts of home with his family for weeks on end. It means logging hundreds of miles in the freezing cold of the Kenyan highland, running on nothing more than siturungi (black tea) and a half a loaf. It means battling through nagging injuries, flagging morale and frequent setbacks. It means pushing yourself beyond what you thought was humanly possible. To last the distance you have to have a higher goal than just attaining the simple luxuries of life, looking good around your friends or even winning gold. “I want to be a legend,” he told us before the London Olympics. One gold, or even two, do not a legend make.

#3. Ignore the illusion that you have arrived

If Kiprotich was a mere mortal like many of his Ugandan countrymen after bagging gold in London last year he would have hung his life size portrait on his seating room wall, put up his feet and begun to live “the” life. Thankfully he did not. He weathered the distractions of the post Olympics celebration to explore his potential further. Since the Olympics he has won a half marathon in Amsterdam, came in sixth in the London Marathon and now won the World Championships.

And if the young man is to be believed he is not done yet, “I know it’s not easy. But I want to become the first Ugandan to win these competitions twice,” he said referring to the Olympics and World Championships.

#2. No one is going to do the work for you

There is a lot of lack in Uganda. We lack good roads. We lack good leadership. We lack money. We lack shoes. The easy thing to do is blame our inadequacies on our lack and roll over and die. But Kiprotich has shown that lack is not an excuse. He had a dream and has gone about creating it. When his full story is eventually told -- the struggle, the despair, the pain, everything he has gone through the rest of us whiners, will shut up. US rapper 50 cent in reflecting on what Barak Obama has done for African Americans said, “Obama has taken away the excuses.”

#1 Repeat over and over again

There is method to his success and since he has done it himself and has shown he can reproduce the formula there is no reason we shouldn’t expect more of the same. That is how enduring success is created you search and search for a method that works for you, and when you do find it, you repeat it over and over again. But if we are always looking to short circuit the process, to find short cuts or are in pursuit of that “one” deal that will solve our lives problems for good, we will miss the benefit of the process and even if we enjoy some success when it fades away we will not know how to reproduce it.

In the 34 million Ugandans I am sure there are many more heros. Kiprotich is lucky – where luck is opportunity meeting preparation, to have his success celebrated by the whole world.

But yes, as a model of keeping nose to the grinding stone, ignoring friend, foe and even family’s initial skepticism about his dreams and remained steadfast in the wake of initial success, there are very few around we can show up to our children and say “Yes! Be like him. That is what a good man is made of.”

WIMBLEDON & INVESTING IN SPORTS

Last weekend the Wimbledon tennis fortnight came to a tumultuous close with victory for Britain’s Andy Murray , the first British male to win there since 1936.

"For his effort Murray took home £1.6m or about sh8.4b, and it is expected that with his win he can expect his earning power to jump up to $70m annually in endorsement payments...

But the real winner has to be the tournament itself.

 Last year Wimbledon managed a record £37m profit, a figure one can expect will rise this year. Since Wimbledon is run by the sport’s governing body in the UK the surplus is ploughed back into developing the sport in the country albeit with little success.

Wimbledon would make more money if they allowed more corporate sponsorship of the event – an additional $100m it is estimated, but the powers that be have chosen to forgo this to maintain the event’s unique character.

It’s that kind of farsighted thinking that has made the 236 year old event a unique branding opportunity that corporate sponsors are willing to pay top dollar for, even if they will not get as much exposure as they would have liked.

"The Wimbledon Championships  have been carefully groomed into a commercially valuable product, which over the two weeks it is in play, makes more money than most companies in the region make in a year...

Back to earth.  In Uganda we see little effort – or is it too soon to say, being put into developing these kinds of sporting products.

Soccer is a case in point. The most popular sport in the nation fails week in, week out to marshall credible crowds for league games.

"Rugby and basketball are showing that with a bit of marketing and aggressive youth development programs they can punch above their weight and garner growing corporate interest. They now command healthy crowds to their events – although one wonders whether even half the crowd know what’s going on the pitch or court. But it’s that kind of crowd that sponsors are gleefully looking to wave their logos in front of. These crowds appear by design rather than by accident...

They say you are not in business until you have made your first sale. The key to sustainable business is simple – to sell more and more and secondly, to make sure the incoming revenues are greater than the cost of doing business. Easier said than done of course.

As it is now apart from a few sports administrators, most are not trying to attract numbers to their sport and forget about showing a surplus.

Often the leaders of our sports associations are glad to pilfer the little monies from gate collections and expend more energy making the case for government support of sport instead of increasing their own associations capacity to generate revenues.

Government need not be involved in sport. The US, the greatest sporting nation of our time, does not have a sports ministry.

Our previous success in the Olympics in boxing,  athletics and the fact that we have one of the youngest populations in the world is proof enough that we have enough talent in the country.

"What we clearly lack is the entrepreneurial capacity to harness this potential, not only for the benefit of the individual sportsmen but for the benefit of the country, to not only bring in revenue but to raise the country’s profile, bring attention to it beyond the usual poverty, disease, corruption and bombs that is our current stereotype...

Another two week event , tennis’ US Open in New York it was once estimated creates upwards of $400m of economic activity in the city during the duration of the event. The same can be said for such events as the Olympics or soccer World Cup.  The positive aura success in individual sports cannot be discounted. While Uganda continues to be known for Idi Amin, across the border in Kenya everybody knows them for their distant runners, never mind that just barely five years ago a few hundreds were killed in an orgy of blood letting that was covered by international press.

I know it’s a bit much to ask, but our sports administrators should take a long term view of their individual sports, work at building them into viable businesses or at least create bankable products – even  if it is only to increase the surface area for them to  steal from!

WHO WILL BELL THE CAT, REIN IN UGANDA'S SPENDING

The budget is being prepared.

In recent weeks we have seen various ministries and agencies trooping to parliament to defend their proposals.

"The police want their budget doubled. The army have a trillion but they want a few billions more. And statehouse is still in the habit of sprinting through its allocation before the house passes the budget...

Its business as usual. But it shouldn’t be. The donors recently pulled the plug on budget support. While aid as a portion of the total budget has fallen steadily to about 30% it still constitutes a significant portion of the monies used for building infrastructure, schools and hospitals.

So one would think good sense would counsel belt tightening but clearly not.

It’s not rocket science.

Governments spend what they earn through revenues and fees. But if their spending outstrips their revenues they borrow, as we have been doing for the last two decades and before. You can borrow from the donors or from your own population. Governments which have lost credibility with other governments and their own populations go down the slippery slope of printing money.

Money not backed by production ends up chasing few goods leading to inflation. As our recent history has shown when inflation takes hold it is hard and painful to rein it in.

And why we should be concerned with government going as if it is business as usual, the main driver of inflation is often times government spending.

One only has to look at Greece to see what happens when governments wear blinkers despite the most dire warnings. The already recklessly extravagant Greek government first doctored its books to get admission into the European Union. Once in they continued their profligate way as if it was business as usual hiding expenditures off the books and not collecting taxes. To bridge the gap they borrowed from the banks, which in turn were borrowing from international markets at lucrative enough rates that their creditors chose to look the other way.

When the day of reckoning came the earlier assumed €7 billion deficit ballooned into €30 billion deficit after they had found all the  off book entries. Banks across Europe were in trouble and Greece has been on the brink of defaulting on its loans and teetering on the edge of ejection from the EU since 2009.

It was so bad that Greece’s woes threatened the union and the credibility of the single currency, the Euro.

Borrowing is not a bad thing its what government do with the loans that causes problem. Greece of course financed the 2004 Olympics, which they could barely afford and a lot of the facilities have found little or no use after the last medal was given out in Athens.

If on the other hand, you use the debt to facilitate business by build transport, energy and social infrastructure.

"In Uganda of course with our massive government one doesn’t have to have divine powers to know that increased spending will go towards  maintaining the fat cats first before any crumbs can  be thrown to do roads, railways, schools and hospitals...

Or maybe government official’s know something we don’t?

Maybe they are banking on oil money, which will not be expected before 2016, to cover our current extravagance. That would be treading on dangerous ground.

Assuming the donors maintain their hands firmly on the purse strings we can expect some hard times ahead and these will call for hard decisions, not least of which is that we have to cut down on spending.

But who is going to bell the cat?

THE OLYMPICS, THE 10,000-HOUR RULE & HIGH ENDEVOUR

They say if you want to be successful look at what the majority of people are doing and then do the opposite.

"In any field of endeavor a minority enjoy disproportionate benefits compared to their numbers because they are willing to do what the majority are unwilling to do, in terms of putting in the planning and effort to achieve their goals...

Every four years the Olympics rolls around and serves as useful demonstration of how effort and dedication can lead to feats of superhuman of achievements.

Last week two athletes stood out for me Chinese teenage swimmer Ye Shiwen and North Korean weight lifter Om Yun Chol.

Shiwen who in breaking the record and winning the gold medal in the 400 meters individual medley race, kicked up a storm with some accusing her of doping. Breaking the record was not the issue, it was that she improved her personal best time by seven seconds, and in addition swam a faster final lap than the male winner in the same event just hours before. And the kagirl is just 16.

Chol on the hand not only broke the record in the clean and jerk for his weight category but Chol who is 56kg, joined an exclusive club of weight lifters who had ever lifted three times their weight.

When we watch them perform and like me, have our jaws drop to the floor in awe we are seeing but a small part of the whole process of achievement.

"Time magazine had a 71 page special on the Olympics and in it they gave a sneak peek into the Chinese training system, which is becoming the gold standard of how podium performances can be engineered...

They of course have taken sports science to a whole new level but there is no getting away from the volume of work, done with hellacious intensity the top Chinese swimmers, divers, gymnasts and weightlifters endure to perform at the highest level.

In his book Outliers, Malcolm Gladwell reported on research which showed that the common denominator among world class performers was the amount of time they put into practicing their craft. The research showed that at least 10,000 hours have to be logged if one is to have a realistic chance of being world class in sports, music or any endevour of significance.

Ten thousand hours is the equivalent of practicing your craft systematically, three hours a day, fifty two weeks a year for ten years.

So for the 16 year old Shewin who started swimming at six, virtually all her swimming life has been dedicated to her current performance, no splashing around in the local pool on hot Saturday afternoons for her, but systematic, lung bursting, limb cramping laps day after day after day.

And those who cannot or will not or dare not log the mileage how do they account for the success of their rivals? Talent!

The beauty of that excuse is that it suggests an intangible, god given gift relieving one of the responsibility of failure to perform at the highest level.

Ok they may be some physical characteristics – Shewin was identified by her kindergarten teacher because of her large hands and feet, but there are hundreds of other girls with big feet and hands, many of whom have been performing at the London Olympics, but only one of them has come through with stunning results.

In watching the Olympians one has to keep in mind we are witnessing the finished product. To go out tomorrow or next week or next year or even in five year’s time and expect to do Shewin’s time at Speke Resort Munyonyo – the only Olympic size pool in Uganda, is an exercise in futility or worse.

Which is why Uganda’s society fixation on the overnight success cannot be discouraged enough. They say when you wake up to find your friend an overnight success be sure he has not been asleep.

Overnight success is good for the romantic novels but does not play well in real life. Our search for the one big deal has warped our sense of morality and destroyed our work ethic (we used to have one)....

That is why many of us, report to office or rather our jackets do, while we hustle for an extra buck on the side, return home at the end of the day to cook the books rather than advance our education and on weekend we dispossess rural folk of their land by force or trickery instead of saving up to buy our own.

As they say its only in the dictionary where success comes before work.

The challenge is of course that as a society we have too many of the wrong role models and that needs to be addressed.

For starters I would suggest you all watch the Olympics – any sport, and then google the effort the athletes put into their sport.

As for Ugandan athletes? I ask, show me your 10,000 hours!

THE OLYMPICS AND UGANDA’S ROADS

Last week it was reported that government is resorting to more creative funding methods to bridge our infrastructure gap.

According to the report in an attempt to have 44 priority roads, which will cost about sh10 trillion, done as soon as possible government has mooted the possibility that contractors will be able to source financing for the projects themselves.

Under the arrangement the contractor will cost the project source the lender who government will approve of and take over the debt.

"As it is now all funding comes from the consolidated fund and it would take forever to have these roads done if we continue to rely on this model of funding. As it is now the government’s total budget is about sh10 trillion a year of which roads accounts for about a tenth of that total.

The major challenge with this is that it will be mostly foreign contractors who will win these contracts given their contacts with banks with cheaper funds abroad. But also it should be a wakeup call for local contractors to build up their capacity to compete.

Resorting to the private sector for funding is a time tested formula, its only poor countries like ours that resort to concessionary lenders.

The private sector’s motives are more transparent – the profit motive, compared to donor agencies’ assistance, which often has political and ideological undertones attached to it.

It is true of course that if the Uganda government fails to develop the capacity to scrutinize these projects we could find ourselves up to our eyeballs in unwisely contracted debt for decades to come.

To avert a recession in their economies western governments have forced borrowing rates to all time lows and that cheap money would always be more attractive to borrowers, but there is no reason we shouldn’t be more determinedly mobilizing our own resources locally to at least contribute to financing our own roads.

The anecdotes are a dime a dozen about how city traders, untrusting of the banking system and the state choose to dig holes in their shop floors or install vaults in their bedroom to store their cash. Billlions and billions of shillings.

One bank manager in the 1990s in trying to pitch his bank services to one trader was shown in to a vault in the back room of the traders shop that had more money than he had in his branch’s vault. True story.

Mandatory savings with NSSF for employees – five percent of gross salary with a employers pitching in with twice that amount, has seen the fund grow into the largest financial institution in the country. It is the biggest single lender to government and business, through the billions they fix in banks which are then on lent to the private sector.

"Beyond this initiative at mandatory savings government has done very little over the years to compel us to save more of our own income. Some will argue in order to boost production we need people’s disposable income to remain unencumbered so as to boost demand. But that is short term thinking...

Mobilising more of our own resources will increase bank liquidity, force lending rates down, allowing for more credit to the productive sectors, which require more long term financing.

The cost of money may still not be lower than the near zero percent lending rates we are hearing about in the west currently but the spinoffs in developing a mechanism for local resource mobilization will be well worth the cost and hold us in good stead in the likely event of future aid cut offs from abroad.

It is an illusion perpetuated by others that we do not have enough resources locally to help ourselves more.

Relatedly and to get into the prevailing mood the London Olympics will cost an estimated ₤11b (sh42 trillion), of this sum the National Lottery will provide ₤2.18b, TV broadcast rights an additional ₤350m, company sponsorships another ₤700m with ticket sales racking in another ₤600m...

The organiser’s of this year’s Olympics – while a national event, were not averse to bringing in private sector sponsorship not only to ease the burden on the national coffers but to also enhance the Games experience.

It makes sense. A lot of the public funding was used in infrastructure development, which will have far reaching benefits to the London economy, outside of this the private sector has shouldered most of the costs.

We need to wean ourselves from the tradition of government as the main benefactor and government too should look to the private sector to finance its projects, with the long term benefit of triggering alternative fund raising mechanisms.