SOUTH KOREA'S LESSONS FOR UGANDA

You know what they say, if you are going to climb a mountain study all the possible routes up and then ask someone who has already been there.

Looking at the numbers alone South Korea was little different than Uganda about 50 years ago. At independence in 1962 Uganda's GDP per capita was about $62 while that of South Korea was about $87, around the same.

However South Korea was just coming out of a devastating civil war that had literally razed it to the ground, while Uganda was being touted as the cant-miss country with its bounty of natural endowments.

If you had gone to sleep then, after visiting both countries, and woken up today you would have doubted what you knew then.

During the period the size of the South Korean economy has grown to $1,197 billion from $2.3 billion, grown to five hundred times its size or essentially averaged 13 percent annual growth for the last 52 years. And it has done this while spreading the benefits better than its neighbours. It's ranked 15th on the Human Development Index, a ranking which measures how well the country is doing on social indicators like literacy,availability of health services and other indicators which measure the population's quality of life.

The Ugandan economy of course has only grown forty fold in size from its 1962 levels.

Last week members of the press sat down with officials from South Korea's embassy and technical assistance agencies to understand how the East Asian nation achieved what it did and what lesson's we can glean from their experience.

Given the apparent equality at the beginning, South Korea maybe one of the best case studies that show that for development the key factor that predicts success, or not, is the quality of the people -- leadership and general population, rather than the wealth in natural resources of the country.

Despite a period of colonization by Japan, South Korea had been existence since before Jesus Christ was born, which meant it had had a centralized administration that was directing development. The levels of education among the population were quite high with primary enrollment at 60 percent in the 1960s compared to 12 percent here.

This means two things, that the country's bureaucrats were drawing on long established practice and experience, while at the same time there was a critical mass of qualified people to formulate and execute policy.

But they did not stop there. When they decided they were going into heavy industry they decided their skilled manpower was inadequate to support their ambitions and they embarked on a programme to skill their people.

They ramped the numbers of their graduates from science universities and specialized technical schools from 5,000 in the the 1960s to 50,000 by the end of the 1970s. I will be impressed if we have 5,000 technology and science graduates annually in Uganda today.

"But in the classic case of God giving meat to those who have no teeth, our embarrassing bounty in arable land and conducive climate has clearly worked against us. The Koreans have less than a fifth of their land good for agriculture but have mastered the art and science of high yields to the point that Dr Hyeong-Jin Jee, the head of their agriculture assistance arm asserted "It's not the size of the farm, but how much you can reap that matters"....

While South Korea imports 70 percent of its food its self sufficient in rice and vegetables.

He pointed that the share of our budget is woefully low and suggested that were the budget to be increased from the current under ten percent, it should be focused on developing agriculture technology, especially seed development. In addition extension services should be boosted.

He said that in the 1960s Korea used to develop up to 40 new seeds varieties annually now they are up to a thousand annually.

However it might be a case of its still early days for us -- if we write off the 1970s.

The graph of the growth in per capita income shows that here was slow, almost imperceptible growth between the end of the Korean War in 1953 before they reached $500 GDP per capita in the mid 1970s. Around that time, probably when the human resource had matured and the shift towards heavy industry, fuels an exponential jump that has continued despite the subsequent political and economic upheavals.

Also interesting is that the leadership recognized very early that this growth needs to be shared rather than concentrated in a few hands, long before poverty eradication became a fad in development economics.

South Korea was never uganda, but interesting lessons can be learned from their development process and then who knows in 40 years we will look back and wonder at what we have achieved.

SHOULD WE GIVE HEALTH INSURANCE THE BENEFIT OF DOUBT?

The acronym SMH is widely used on social media. It stands for Shaking My Head.

Last week I SMH when I read that government is pushing ahead with the National Health Insurance
Scheme.

Under the scheme the government is undertaking to organise health insurance that will increase the accessibility to health coverage countrywide. Workers will be required to pay 4 percent of their gross salary into a pool with their employers forking out an additional 4 percent.

My knee jerk reaction was shock at the shamelessness of these government officials trying to fleece us yet again. I couldn’t comprehend how you can ask me to pay insurance for services which do not exist.

Health insurance schemes in Kenya, Tanzania and even further afield in South Africa and Ghana have
managed some measure of success, actually improved the quality of health services in those countries for their people. But this is Uganda!

Dr Francis Runumi, the health ministry’s commissioner for planning, was gracious enough to absorb my scepticism (to put it mildly) and shed more light on the concept.

That health services are undercapitalised and staff unmotivated while health is a human right underpins a move towards the introduction of a health insurance scheme.

The law, a draft of which is already working its way through the system, proposes the creation of an independent agency to oversee the scheme and will contract public as well as private health providers.

"The designers of the scheme expect that a properly run national scheme will lower the cost of health care, improve government services and will help not only set but enforce benchmarks for health service providers, as the penalty for falling short of set criteria will be black listing...

In reaction to it being too expensive for Ugandans Runumi said this is not borne out by the facts. In 2009 he said the ministry’s budget was Sh472b but in that year Ugandans spent sh3 trillion on health care. Essentially government had fallen short of national requirements by at least four-fifths.

Health officials suggested that up to $100m (sh260b) in premiums will be collected from the formal sector and another $10m from the informal sector, but Runumi said projections are that within five years they expect to be collecting at least $400m (one trillion shillings).

Opposition to the scheme has come from business owners, who anticipate a rise in their operating costs and existing service providers, who can expect to lose some business initially.

But that is not unusual. When Tanzania launched its own scheme in 2001 the opposition was intense and protracted. But as the scheme begun to operate some of its most voracious critics have become is greatest champions.

And finally he scheme will not be run by the health ministry but by an autonomous body like the NSSF with its own management and reporting structures.

The principle of national health insurance is a good one on many levels.

At the most basic level that it has the potential to improve access to health services for more Ugandans. Secondly in order to comply as providers to what will be the biggest pool of funds in the health sector, providers will have to improve their offerings ensuring more widely spread improved
services.

Which still leaves the niggling question of whether we can trust a government agency with our money? If government has failed to provide decent health care with all the money we pay in taxes how can they be expected to do any better? Why don’t they improve health services before they can come to us asking for or hard earned cash?

Runumi is adamant that the health sector cannot be improved with government funding alone.

Secondly, he argues that you cant wait for circumstances to improve while people are suffering.

“If we are going to do the chicken-and-egg debate  we will never get off the ground. You pay then complain later – if there is something to complain about,” he said.

UGANDA AT THE HELM OF ANTI-EBOLA FIGHT

Uganda has more than thirty health workers helping out in West Africa against the Ebola outbreak in that region.

At the end of November 12 health workers arrived in the Liberian capital, Monrovia, while another 20 were already dispatched in August.

It’s not by mistake that the World health Organisation (WHO) is calling on our capacity in this battle.

Since 2000 we have suffered three Ebola outbreaks. In all there were 598 who contacted the deadly virus, 278 of who died. But the interesting thing about the attacks is that with every subsequent one the country’s health system was quicker to identify the problem, restrict infection and minimise deaths. Eighty percent of all the deaths due to Ebola were registered in the first attack, when we were caught flat footed and still trying to understand and respond to the disease.

Of the countries in the region that have experience with haemorrhagic fever South Sudan and 

Democratic Republic of Congo, being the others, we probably have the more organised system. 

Which is not saying very much, but it is something.

Of course the experience in Liberia is not going to be the same for our selfless health workers. The support systems -- government commitment, media involvement and popular vigilance that our own anti-ebola effort enjoyed may be lacking.

Maybe the one good thing that came out of Uganda’s three decade experience with HIV/AIDS, is that the public are easily mobilised to fend off threats like these.

"In hindsight one of the challenges that led to the spread of the disease in West Africa, which at the peak manifests as bleeding from all orifices of the body, was the inability by local populations, media and NGOs to raise the alarm when the first victims showed up in December last year...

Officially it is reported that 5,000 people have died since February but one has to wonder how many died in the three months prior to that.

This should be an eye opener to us. That we can deal with our own challenges quite adequately using our own people and resources.

But Uganda should go further. Given our centrality on the continent we should be building capacity not only to cure our deadliest diseases but also be on the cutting edge of research into these diseases. And beyond that we should be leaders in formulating and dispensing tailor made treatments for these ailments.

It makes sense.

Billions of dollars are poured into research related to cancer, cardiovascular and heart diseases and aging in the west, while the amounts committed to malaria, TB, diarrhoeal and water borne diseases, which are predominantly third world problems, is only a fraction of the former.

Let us recognise that no one will sort out these problems or at least treat them with as much urgency as ourselves who suffer the brunt of their effects.

It is not unheard of for a lesser developed country to be leading the way in one field of endeavour or another.

Brazil, a major coffee exporting nation, is on the cutting edge of every facet of coffee production, processing and marketing, with whole universities dedicated to the aromatic bean.

We don’t lack for manpower or even resources, seeing how many billions are pilfered in dodgy contracts and questionable payments every year. What we are lacking is the leadership with sufficient sense of urgency to drive this agenda.

MAIDS OF THE WORLD, UNITE!

The footage of the maid brutalizing a toddler that burnt up social media last week, brought the statistics about child abuse alive in a way that no amount of words could.

"In effect, every body who watched the footage was as if a real witness to the fact. Not evidence of bruising or the sanitized narration of NGO speak, but the real time battering of a defenseless toddler entered our space with such force as to shift attention from Cranes latest failed bid for glory, nude celeb pics or the political uncertainty surrounding the ruling NRM party. And even that is to understate it....

Clearly the maid was deranged. No amount of insistence for objectivity by the lone voices on social media could justify the maid's action. Explain? Maybe. But justify? Impossible!

That being said it raised interesting questions -- if one managed to step away from the raw emotion (the maid by the way, is safer behind bars! Such was the vehemence of the common reaction to the incident), one has to wonder who we are living in charge of our children while we go off to make them a better future, a future that is not guaranteed it turns out.

How is the average house help recruited?

The recruitment of the househelp is usually the business of the lady of the house. Convenient because it is assumed that she manages the home and therefore knows who she wants and what she wants done on her behalf. The maid is often recommended by a relative, ferried in from a far flung village -- the logic being she doesn't know Kampala and so she won't get up to any hanky panky. Major qualifications seems to be that she be clean and obedient to the point of obsequesness, basically an ass kisser -- but not of the man of the house, of course. And if there are kids to be tended, she has to be "good" with kids.

And it has worked quite well for at least two generations of urban-dwelling-two-income households.

There is the odd house girl horror story, but not enough to cause a rethink of our maid hiring practices.

Last week's events meant we took a second look, a not too endearing glance, at the people we have charged with the rearing of our children.

The househelp industry is totally without regulation. What are the qualifications of a nanny beyond the intuitive judgement of her boss? What happens when a maid oversteps her bounds, before we resort to criminal prosecution? Who is going to regularise the industry?

With the exception of the terror meted out by "that maid" the employers have been the major beneficiary of this vagueness, paying these people as low as they can get away with, for a 24/7job and in many instances forcing them into "services" that are beyond the call of duty.

That being as it may, it is unlikely that these employers -- some of whom are human rights activists in their day jobs, are going to right this situation.

So it is left to the house-helps to do it themselves.

As unlikely as it sounds, the house maids of the world have to unite. To organize even if they do not agonize, or rather, even if they don't show us they are agonizing.

They need to not only lobby for and protect their rights, but also to protect their profession. One errant member like "that maid" could bring the whole profession into disrepute and mess it up for all of them.

Somebody posted on social media a tongue in cheek comment that he will not wait for video evidence, but will slap his maid on his arrival at home! Funny to the rest of us maid-employers but an attitude the sisterhood of the maids would be loath to encourage.

An organisation would lobby for suitable legislation, that would lead to better pay, better working conditions and even guarantee the quality of its members, taking away the arbitrary criteria by which maids are recruited, treated and paid.

But one can immediately see why this idea is dead on arrival. There is the question of the capacity of maids to organize themselves. Secondly, it is unlikely the the beneficiaries of this inexpensive and uncoordinated pool of labour would allow them.

It's like they say, everyone wants to go to heaven but no one wants to die.

If you think about it our children are with these ladies twice as long as their parents or even worse.

"The trend of the working mother is irreversible, unless of course bad house maids are banned and quality help is too expensive, like it is for our relatives abroad. So it would make sense that the issue of regularising the maid industry is looked into more seriously, never mind the discomfort it may cause us in the short term...

But what the hell! Let us just lynch the maid and the next one and the next.... It's much easier that to ask the tough questions.

KAWERI COFFEE PLANTATION: UGANDA’S BEST KEPT SECRET

Tucked away in the hills just outside Mubende town is Kaweri Coffee Plantation, a 2,512 hectare (6,207 acres) operation that is arguably Uganda’s best kept secret.

In the late 1990s the German company Neumann Kaffe Gruppe (NKG) was looking to start a robusta plantation. After assessing several options in South America, Asia and Africa they settled on Uganda.

“Uganda was chosen partly because it is part of the Greater Congo Basin, which is where the robusta coffee has its origins,” said Kaweri Coffee Plantation managing director Etienne Steyn.

NKG, which accounts for one in every ten kilogrammes of world coffee demand, got land in Mubende and set about setting up a plantation to rival similar operations in Brazil and Mexico.

Planting of 1800 hectares of coffee was completed between 2001 and 2004.

“All coffee nurseries within the district, and as far as Mbarara, were exhausted to meet the required number of seedlings needed for planting”. We now have our own nurseries,” Steyn said on a recent tour of the plantation.

There are currently about 1.8m trees on the plantation on 1650 hectares, now under coffee. Another 685 hectares (27% of the farm) is occupied by natural highland rain forest and is fast becoming a sanctuary for all sorts of wildlife – serval and civet cats, bush babies, vervet and colobus monkeys, various antelopes such as Reedbuck, duiker and bush buck, many rare species of butterflies and many species of birds.

Steyn said that the plantation, which harvested its first crop in 2005, is set to produce 2,500 tons of coffee this season. This means Kaweri will account for two in every hundred bags of coffee produced in Uganda, the largest single producer of coffee in the country.

According to the Uganda Coffee Development Authority (UCDA) there are about half a million coffee farmers in Uganda.

But Kaweri is not only the single highest coffee producer in Uganda but may also have the highest productivity per unit area than any other operation in the country.

"According to Steyn the farm’s productivity is about 2.2 tons per hectare compared to the national average for the robusta of half a ton per hectare.Better farming methods and the judicious use of research are at the heart of these high productivity numbers at Kaweri....

“Every month we take leaf samples and send them to UK for analysis, in addition annually we take soil samples for analysis in Brazil. From these we are able to determine accurately what fertilisers and other inputs we have to apply in different parts of the farm,” Steyn said.

The farm does not however employ irrigation as there are no streams or surface water on the farm and in 2013, Geophysical surveys showed no underground water was available for irrigation purposes.

Kaweri markets a washed robusta and has the largest wet processing plant on the continent with a capacity to process 350 tons of coffee cherry daily.

Internationally Kaweri has distinguished itself as having produced a robusta coffee that is traded by name: Colobus (Screen 18), Turaco (Screen 15) and Reed Buck (Screen 12) coffees, which allows the farm to command a premium over and above the normal prices.

Kaweri does not employ the use of outgrowers although it employs at least 600 people throughout the year and up to 3000 during the peak harvest period of six months.

“During harvesting we often exhaust all the available labour around the farm and have to go further afield to hire workers to harvest the crop,” Steyn said.

The nature of the robusta tree is such that it is unlikely that mechanised harvesting will replace manual labour, so for the duration of the 99-year lease NKG has on Kaweri we can expect that it will continue to serve as a source of employment throughout the year.

Beyond creating jobs for people in the area, Kaweri supports the surrounding communities and the farm has drilled  eight boreholes, built a new primary school in nearby Kitemba village and has helped in transferring know-how to local coffee farmers.

“Support activities include the establishment of extension services, development of professional farmer organisations, capacity building on value addition processes and market access as a result they are today marketing in bulk directly to exporters – cutting out the middleman and getting paid more,” Steyn said.

Steyn, himself a former coffee farmer in Zimbabwe said, it would an uphill task for local farmers trying to replicate the scale of the $20m (sh52b) Kaweri plantation.

Speaking from his experience in Zimbabwe he said commercial farmers have little support in Uganda.

“We had farmer associations in every district which provided extension services, lobbied for our interests, facilitated in warehousing. In addition there were agricultural banks whose services were structured taking into account the industry and its nuances,” Steyn said.

Despite a compensation case that is still winding its way through the courts and hangs over the project like a dark cloud, the farm’s target is to achieve production of 3,500 tons a season.

Industry players are genuinely impressed by what is happening in Kaweri.

“It’s a massive, well run operation and is a good story of what can be done in this country. Its just sad we don’t have a local testimony like that,” said Andrew Rugasira, founder and Chairman coffee processor Good African Coffee.

ends

UGANDA: STILL A LONG MARCH AHEAD

Uganda’s latest census indicates our population growth is slowing down, but also shows that we remain predominantly rural people, which suggests that despite our outstanding growth figures we still have a very long way to go before the benefits are evenly distributed.

The results issued by the Uganda Bureau of Statistics (UBOS) showed that annual population growth rate had slowed to 3.03% down from 3.3% recorded during the last head count a decade ago.

Uganda’s population growth rate, bested by only seven other countries in the world, has been a major cause for concern. If a country’s population grows too fast it will put strain on resources and the nation’s ability to ensure a good living for its people. Thankfully Uganda’s economy has grown faster than the population in all but four years in the last 28 years.

In theory, the economy chugging along at a faster rate than the increase in people is a good thing.

The challenge remains distribution of these economic benefits more equitably across the population.

Which brings us to our slow urbanisation rates.

According to the census about two in every ten Ugandans lives in the urban areas. An improvement from the last census when it was 1.5 for every ten people.

Observers of development notice that urbanisation is strongly related to rates of development. Urban areas concentrate people in small areas allowing for ease of provision of basic services. In addition they are an attractive market for industries and businesses, which in turn create jobs which in turn attract more people.

Invariably, in addition to higher economic growth, development statistics like access to health, clean water and opportunity are higher in urban areas.

In Uganda not only is more than half the economic activity generated in Kampala but important statistics such as, access to social services, clean water and electricity are way above anything anywhere in the country.

It is not by mistake that the most developed countries have at least eight in every ten of their populations living in the urban areas.

As it is Uganda is only more urbanised than Burundi in the region.

One can hazard that the structure of the Ugandan economy, which was planned by the colonialists as a small-holder farming economy, means there is little incentive to move away from our villages. This proved useful during the chaotic 1970s and 80s, because without this small holder farmer to keep us food sufficient, life would have been a lot more unbearable.

Across the border from us Kenya was developed to support a settler economy, so Africans were disposed of large swaths of land to accommodate huge agricultural concerns, a situation which remained little changed after independence.

"The nasty environment that are our towns aside, the benefits to the economy of concentrating people cannot be ignored, the question is how do we fast track the process? As it is our 4.4% annual rate of urbanisation does not cut it.

Rwanda is leading the way in this, facilitating population growth around economic activities, mostly agriculture, making it easier to provide roads, social services, electricity and markets for their produce. The project is still in early days but our southern neighbour has decided that is how they are going to fight poverty and keep the economy ticking along.

Clearly creating jobs by fostering an enabling environment for businesses is key to attracting populations. And it’s not the multi-billion projects that account for most job creation in any economy but the small to medium sized enterprises.

Recently in the World Bank’s annual Doing Business survey Uganda’s environment is not business friendly and a lot of the problem is to do with bureaucracy, its take Ugandan businesses ages to comply with the law on registration, filling taxes, getting justice through the courts and obtaining finance.

In addition and related, we need to improve education and health services, especially in our government health centers. Government services act as the standard, the better government services are, it then follows that private players will offer better services.

Of course the rate of urbanisation can outpace the local government’s capacity to provide services for its inhabitants, which can result in urban poor who are worse off than their rural cousins. That is an issue of the authorities need to keep in mind.

Uganda has averaged economic growth of about six percent for the last decade or so, but the trickle-down effect is not showing itself much in general improvements in the people’s wellbeing. If anything the income and wealth inequalities are widening threatening the progress made of the last three decades.

I believe if we get the economy correct population growth will sort itself out, through increased use of birth control and raising the age at which women give birth to their first children among other things. 

Focussing on making the urban areas more attractive for people through facilitating job creation,  improved infrastructure and social services will not only accelerate the economy’s growth but will ensure the benefits are enjoyed more widely.

pbusharizi@newvision.co.ug

Twitter @pbusharizi

RULE #1 NEVER LOSE MONEY ….

Last week my favourite investor Warren Buffett’s bought battery maker Duracell only days after he took a multi-million dollar loss in selling his company’s interest in embattled UK retailer Tesco.

Buffett’s company Berkshire Hathaway will pay $4.7b to Proctor & Gamble (P&G) using shares it owns in the consumer products company, a transaction which already has activists labeling it a tax dodge. Because the capital gains in his P&G holding will be rolled into the Duracell purchase he will not suffer the maximum capital gains tax applicable.

You don’t get to be the third richest man in the world by accident.

Every time Buffett pulls one of these deals out of the hat a rehash of his illustrious career is dusted up and paraded online, and it never fails to make for interesting reading.

Business insider had an online article “17 facts about Warren Buffett and his wealth that will blow your mind”, which among other things pointed out that 99% of his $63.3b was made after his 50^th birthday. Never mind that up to that point he had been investing in shares for 39 years or ever since he was 11!

Buffett is a real live example of the power of compounding. Fondly referred to as “The sage of Omaha”, Buffett turned 84 at the end of August.

There other jaw dropping facts like that last here he made $37m a day or about $1.5m an hour or about $25,000 a second last year.

Never mind too that in his life time he has donated more than $20b or the entire GDP of Uganda.

The facts about his wealth are always interesting reads but what serves as an eye opener is the thinking that generated this huge cash pile – by the way his company holds $50b in cash.

"The article “Warren Buffett’s most brilliant insights about investing” should be considered essential reading for business students, businessmen and anyone who wants to put his money on the line in entrepreneurial endeavour...

There is no space to list them here so one is best advised to Google the said articles, but several are enduring gems.

·        

 Rule number one, Never lose money; Rule number two, see rule number one – Buffet has lost money, every investor does. But by following a time tested model, where he buys companies that undervalued compared to their intrinsic value means the odds are in his favour in most of his investments. If he employs this method and he loses money he knows there is nothing he could do about it. Stick with the percentages so as not to lose money.

·         To be a successful investor you only need to know two things, how to value a company and how to think about market prices – with age has come wisdom from Buffett. And wisdom has a way of simplifying things in his experience that is all you need to know to be a successful investor. And he should know.

·         If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes – he says his best holding period is for ever. He has worked out that a good company, with good economics will appreciate in value beyond your wildest imagination over the long term. Some of his holdings like in American Express, Coca Cola and GEICO date back to the 1970s.

·         I am a better investor because I am a businessman, and a better businessman because I am an investor. – Whereas he has huge stock holdings his company also owns numerous businesses dealing in as varied products as ceramic tiles, paint, insurance, chocolate makers, jewelry, private jet leasing and precision tools. He applies the same criteria in judging his companies as he does his stock and vice versa.

Buffett’s methods are an open book and given his long experience – he bought his first share in 1941, he should be a reference for all business people of ambition.