THE DIFFERING FORTUNES OF THE UK, UGANDA LEAGUES

Last week it was reported that Manchester United was the most valuable soccer club in the world. 

Audit firm KPMG using an algorithm that took into account a club’s profitability, popularity, sporting potential, broadcasting rights and stadium ownership, put the club’s value at €3.095b (sh12.7trillion)

The team from the North West of England, beat Spanish club Real Madrid into second place, followed by Barcelona, Bayern Munich and Manchester city.

For Manchester United this is a far cry from the team, which started out as a department team for a railway company, went into receivership at the beginning of the last century, was relegated several times before the second world war and had to endure 41 barren years before it won its third league title in 1952 (so Arsenal should not lose the faith).

Closer to home it was reported that most teams in the just concluded soccer league season are staggering under the weight of massive debt, many have not paid their players in months.

If the richest sport in the country is suffering like this, one shudders to think about the lesser sports.

"A cursory look around our league throws up some disturbing facts. If we were to judge our teams against the aforementioned KPMG parameters none are profitable, a few are popular or own a stadium, most sporting potential is non-existent and the sh50m fees from broadcasting rights barely covers payroll....

It’s not difficult to see why this is so. Beyond a dearth of business management talent (I am not talking about having an MBA) most team structures are hobby associations than sustainable enterprises.

They generate little revenue from the traditional sources -- gate collections, membership, endorsement contracts or player transfer fees.

But even the little they get they lose to a combination of the officials’ sticky fingers and a general financial ineptitude.

Assuming our soccer officials are well meaning individuals who are totally out of their depth in trying to make a success of their teams, rather than rapacious sharks whose sole intention is to smash and grab, I recommend for the off season reading Robert Kiyosaki’s “Rich Dad’s Guide to Investing”.

Kiyosaki has a simple model which he overlays on businesses to determine whether they are a worthy investment or not.

Called the B-I pyramid at its base it has cashflow, communication, systems, legal status and then at the peak the product. And this pyramid is further supported by the enterprise’s mission, leadership and team.

Notice that between the product – the entertainment, and cashflow the club’s legal status – the relationship between shareholders and members for instance, the systems the club employs to sustain the business and communication, in this respect our clubs continue to operate like the old Indian dukas where it was enough to throw the shop’s doors open and customers will come.

That could work those days when you were the only shop owner on Kampala road.

The interesting thing is that marketing ones product or self is so much cheaper than it was before. A face book page, a twitter handle, a SMS blast on match day can do wonders for a team. For much less than the price of a sugar cane

For all this to happen leadership comes first. What kind of leadership will lift our teams out of this quagmire? One with a vision for the club that will not only aim for success on the pitch but even more important one with a goal of long term sustainability. Not one with eyes bulging at the crumbs now available in the game.

Like a business a club can only grow as big as its promoter’s vision. The bigger the better.

And by the way this is not calling for a takeover of teams by egotistical money men, although leverage greed and vanity to build teams has worked before.

Barcelona FC which last year pulled in more revenue £570m than Manchester United, £515 is owned by the supporters, like many of our teams.

In Barcelona’s case leadership is more crucial than in Manchester United’s case in the latter’s case it is a “public” property and you know what they say – beware of the stupidity of people in large numbers.

"The point is that we have to realise that our sporting entities, not only soccer, are floundering not because of the economy or lack of government support or lack of talent, but for lack of leadership and more specifically business management. That’s the place to start. Once you have that in place everything else will fall in line...

But then again there is the real possibility that this is not news to the people who matter. I hope not because then you would have to wonder about their motives for not effecting it, for maintaining the status quo.

But in the event that this is all news, thank me later. Or better still pay me!

WHAT WILL THEY SAY AT YOUR FUNERAL

This was a week when death was in the air and on the air. On Sunday renowned educationist Lawrence Mukiibi died in a Kampala hospital following a fall in the bathroom at his home. Mukiibi, the proprietor of a chain of schools, has been a prominent figure in the country’s education sector for the last two decades, a trailblazer whose legacy will not be easily forgotten.

In the same week South African based Ivan Semwanga, was buried I his home district Kayunga in a funeral that was more memorable for the money and booze that joined him in the grave than for any moving eulogy during the event. Semwanga is famous for lighting Kampala’s night life up as the leader of the “Rich gang” in recent years, with lavish parties and ludicrous displays of conspicuous wealth. It is also reported that he owned a few schools in South Africa.

Two Ugandans with differing legacies brought together only by the fact that they died within days of each other. It is unlikely the two men shared the same company.

"The self-improvement industry has numerous suggestions for how to live to one’s full potential. One that is particularly fitting this week is the suggestion that one should imagine his funeral and imagine what you would want said about yourself by your relatives and friends on the day, and then live towards that ideal...

A kind of reverse engineering.

Of course the nature of the tributes you envisage will be a function of your current state of consciousness, your perspectives on life. So if you are currently an achiever with huge ambitions what you imagine may be grander than the village drunk who looking forward to the epitaph, “He live his life to the full, never saw a beer he never liked or finished”.

Jokes aside such an exercise may spur one to greater things when they were just currently coasting through life or force a u-turn on a life that would inevitably lead to self-destruction or allow one to redefine success or even hold steady on a course which while not showing success currently will eventually lead one there.

Thinking ahead gives many people headaches because it imposes on one the burden of living up to an ideal self. But they say that if you don’t know your destination any road will lead you there.

The question is that what is the purpose of your life?

But first off why should we even have a purpose to our lives beyond getting by everyday, paying the bills and generally just existing?

You are either growing or you are dying. Growth suggests improvement. Purpose is at the end of that growth or improvement. To reach for higher purpose is what helps you get up from defeats you will encounter along the way, soldier through the challenges and just as importantly know when you have arrived at your destination.

As suggested above to attain ones purpose you have to grow to the size of that purpose. How big you grow will depend on the size of your purpose.

"The highest achievers down history had purposes that stretched far beyond their selfish or parochial interests. If they rose to fame or accumulated great wealth this was often a by product of a life of service to people beyond themselves...

Bill Gates’ initial goal was to have PC on every desk in America. His perspective on life changed and he has now committed himself to ending world suffering. Henry Ford behind him wanted to build a car that would be driven by the masses. In recent times Mark Zukerberg set out to connect everybody at his university Harvard before stretching his purpose to the whole world.

Interestingly the greater the achievement the more humble these giants of our time are. How can you be proud and arrogant when people are still dying of Malaria – in Gates’ case or how can you be arrogant when there are still at least five billion more people on earth to make active users – in Zukerberg’s case.

When you are truly committed to huge goals pride and arrogance do not occur because you are too busy trying to make your huge dream come true. Its only the little people who can afford the luxury of pride and arrogance.

So, what will they say about you at your funeral?

SACCOS TAX WAIVER: THANK YOU BUT ….

Last week parliament waived taxes all income taxes on Savings & Credit Cooperative Societies (SACCOS)for the next ten years starting with the next financial years as a way to encourage savings .

As it is now SACCOS pay 15 percent withholding tax on interest earned from savings and on dividends.

Raising savings rate is important for our national development ambitions.

According to the World Bank our bank deposits to GDP stand at about 17 percent of GDP in 2014 (the most recent figure they have on their website) Kenya stands at 44 percent, South Africa at 58 percent and Mauritius at 92 percent.

"The more money we have flowing through the formal financial sector the better for the economy. With increased savings we can have lower lending rates and more and more money can find its way to the more productive sectors of the economy...

It has been pointed out that its not true that we don’t save, its just that we save in different ways by buying land, livestock and other non-financial assets. The challenge with this kind of saving is that it locks resources down making them unavailable to the owner or anybody else and to that extent slowing down the development process.

The formula financial sector serves as the middleman between the savers and the borrowers. SO while you have no use for your savings if they are placed in a bank rather than under your mattress, those funds can support others with ongoing projects.

The other argument is that our incomes are low and the cost of living is rising every year leaving us nothing leftover to save.

Experience has shown that is not true. When the New Vision SACCOS was started in 2005 the minimum monthly saving required of members was sh40,000, even the highest paid members grumbled initially about the figure. Today a decade or so later members who did not have two coins to rub together can of millions of shillings in savings.

"This goes to show that the reason our savings rate are low as a nation is for lack of adequate avenues to save. This has been proven time and time again...

The bank accounts in existence currently are more than five million but there are at least 21 million mobile money accounts across all platforms today. It has taken the industry less than a decade to catch up and overtake the banking industry because of their convenience.

As an intermediary between the people and the formal financial sector SACCOS are arguably the next best thing. A well run SACCOs industry can be key in mopping up the billions that the banks are unable or unwilling to go after especially in the rural areas.

Whereas the tax relief is most welcome it is not the solution to the reported collapse of SACCOS. In fact I believe a tax waiver will make SACCOS more vulnerable to collapse than before.

This is why. First of all I would be surprised if even a tenth of all the 3000-plus SACCOS in Uganda pay any tax. For those that have been paying tax the waiver may serve as a windfall and how the SACCOS managements decide to deploy these windfalls may very well lead to their down fall.

In the absence of good strategic processes this windfall may go towards introducing perks for management, raising expenses, accumulating new liabilities and investing in assets that do not support the group’s core purpose.

Remember it’s a ten year tax holiday, if unnecessary expenses are accumulated when the taxation resumes cash flows will be severely affected and trouble will begin.

SACCOS will do best to remember that there are only two ways to spend money to invest or to consume. During this moratorium they should be best advised to beef up their balance sheets rather than increase their expenditures.

The New Vision SACCOS last year paid more than Sh100m in corporate tax, a figure that has been growing by about 14 percent over the last several years every year. And you are not counting PAYE and withholding tax on interest and dividends.

"While we are grateful for the relief a more sensible thing would have been to lower the tax rates for SACCOS, say to 15 percent even five percent during the next ten years. The idea being that the discipline of paying taxes would be maintained....

I can imagine that there will be a struggle to jump start tax compliance come 2017.

But while we are still on the subject of raising why not also raise the amount of mandatory savings workers make to NSSF? Say they match employers contribution of 10 percent of income?

THE CHAOS THEORY AND HOW WE GOT TO WHERE WE ARE

I happened upon “Chaos Theory” not in a classroom –Thank God! But in the pages of Michael Crichton’s “Jurassic Park”. It is basically that small changes can lead to large unintended consequences. That a butterfly flapping its wings in Japan can cause a storm across the world in New York.

This was the week to examine the chaos theory as it applies to Uganda’s economy specifically.

Former Democratic Party Chairman Boniface Byanyima passed on last week and at a vigil for the pioneering politician, President Yoweri Museveni revealed that Byanyima worried that Museveni was tending towards communism and tried to dissuade him.

It was fashionable for any young political firebrand of the time to flirt with communism, the theory that all property should be publicly owned and everyone paid according to their ability and needs.

"It is doubtful whether Museveni, if he  had hang on to his communist credentials would still be in power today or whether the economy would have been resuscitated after 1986....

On the other hand his knowledge of dialectical materialism, which is the Marxist theory that provides that changes in political and historical events come as result of a struggle between social forces based on material needs may have helped his analysis of the situation and ditched any past romance with communism.

In 1986 the country’s coffers were empty after almost two decades of misrule. However there was an urgent need to get the economy ticking again if only to sustain the regime in power. The critics of capitalism or the free market economy are numerous, but there has been no other system in human history able to create economic growth at the rate at which it has happened since the Second World War.

By adopting a series of IMF and World Bank prescriptions – privatisation of state enterprises, liberalisation of markets and emphasis on a stable macro-economic environment two things were achieved. First, that the aid taps started flowing helping rehabilitate the infrastructure and give confidence to private investors to follow suit. Secondly by breaking up the state monopolies and opening up the economic space, private initiative long suppressed by inefficient government entities, was unleashed.

But also communism was crumbling at the time, whereas the collapse of the Berlin Wall was still three years away the signs were already evident in the USSR and behind the iron curtain in Eastern Europe. The USSR could scarcely bankroll the communist experiment when bread lines were forming at home.

The economy only recovered to its 1970 levels just before 2000.

Prior to that butterflies flapping wings had brought forth the Euro in January 1999; in Afghanistan had led to attack on the Twin Towers in New York on 9^th September 2001; which accelerated the dotcom bubble burst and which led to the global financial crisis in 2008.

These event far from our shores have led to a build-up of the military industrial complex and a more inward looking population in the donor nations, leading to a turning off, or at least, reduced aid.

Increased revenue collections – thanks to our commitment to macroeconomic stability, meant that as the aid taps run dry we could at least tread water as we re-calibrate how development will be achieved in the brave new world.

Also the rise of China, which in the late 1970s begun to look for other ways to catch the mouse beyond a dogmatic adherence to communism, meant that there more alternatives for aid and foreign direct investment.

And the last week the IMF said they had downgrade their growth forecasts for Uganda this year to 3.5 percent from five percent on account of the poor harvests and less than planned roll out of key infrastructure investments. They added though that they see growth returning to the six percent level within the next two years.

We are at cross roads. Our emphasis on infrastructure development while long overdue are now happening and the benefits will begin to show themselves shortly.

Urgently we need to improve the environment for businesses to thrive and create the much needed jobs for the hundreds of thousands of new entrants to the job market annually.

"I sense a tendency to think the government will create the jobs, which goes against hundreds of years of economic history and good development sense...

Governments do not create jobs and by extension wealth, the civil service should not be the biggest employer in an economy. But rather governments should create the environment that allows businesses to create the jobs.

Let us not look to exceptions to the rule to justify our planned economic adventurism, stick to the time tested road  -- maintain macroeconomic stability and remove the barriers to business,  and it is almost a mathematical certainty that we will pull out of our current economic malaise.

That and the hope that the right butterflies have already flapped their wings.

UGANDA SHOULD NOT SWEEP TORTURE UNDER THE CARPET

Almost 20 years ago a Kampala magazine published the picture of a young female model on their cover.

That would not have been a big deal as models can be found around every corner in our capital. What made this one so memorable was that the picture showed a hint of her underwear peeking through.

Ugandans went ballistic. The uproar was such that the promoters of the offending magazine had to make a public apology for fear of their license suspension.

Far from bringing a close to any such repeat publication this actually served as the opening of the door to even bolder pictures taken from every imaginable angle, to the point now that it seems like the ethics minister is the lone crusader against such salaciousness.

We are now desensitised to such images. Who would have thought it in 1999.

Last weekend we were assaulted by images of the Mayor Kamwenge, Godfrey Byamukama, lying comatose in his bed at Nakasero hospital, the flesh of his knees and ankles exposed, apparently 

evidence of torture he had suffered at the hands of our security agents.

The police say Byamukama is a suspect in the March murder of Assistant Inspector General of Police, Felix Kaweesi.

The revulsion was palpable everywhere you looked in social media or the traditional press. It was bad enough that President Yoweri Museveni came out to criticise torture as a tool of investigation and ordered the security agencies to stop it, if it was found to be going on.

But the public reaction was interesting for very disturbing reasons.

A few days prior other suspects in the same case were brought to court bearing wounds and injuries from their time in police custody and the public reaction was not as dramatic.

Maybe we need to define the public. The social media public.

"It can be argued that Byamukama’s wounds were more graphic than those of his fellow suspects. But most probably the reaction was more dramatic because the chattering masses of social media came to their senses that if Byamukama, educated, urbane and middle class could find himself in such circumstances….? Suddenly this was too close to home and we had to rise up in righteous indignation...

That is disturbing for the same reason that we are now desensitised to the sight of naked people being paraded in publications on sale on the streets and in broad daylight.

Blame it on our disturbed history. During the 1970s and 1980s it was not out of the very ordinary to be hop-stepping over dead victims of extra-judicial killings. But the vast majority of Ugandans cannot relate to that time as they were not yet born.

But maybe it is a throwback to that time when it was everyone for themselves, God for us all and let the devil take the hindmost.

Despite our deeply Christian roots it seems the lesson whatever happens to the least of our brothers happens to us, has gone begging.

It would be good for us to remember the poem “First they came….” Written at the height of the holocaust in Nazi Germany by Lutheran pastor Martin Niemollor.

“First they came for the Socialists, and I did not speak out— Because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out— Because I was not a Trade Unionist.

Then they came for the Jews, and I did not speak out— Because I was not a Jew.

Then they came for me—and there was no one left to speak for me.”...

Granted. There are very bad men – and women, who walk among us and the security agencies are trying their best to apprehend them or keep them from doing their worst. Us the chattering masses have little to no clue about what this involves. But surely there has to be a line where as a society we do not cross (And please don’t compare us to the US and their Guantanamo Bay).

It has taken the plight of Byamukama to awaken our moral sensibilities, but the thought has to arise that if they had the audacity to mete such horrors on a “VIP”, how man lesser mortals have been brutalised to get to this point?

And by logical extension you have to ask yourself how far up the “VIP” ladder are you before they get to you?

NO CAR, NO PROBLEM

This last week I have been without my car, so Uber, described as transportation network company, became my friend.

Uber, the largest taxi company in the world but does not own any cabs, runs a network of private car owners who allow their cars to be hired out as taxis. By use of an app on their smart phone, users can summon a car to wherever they are to ferry them to wherever they wish. Fares are often time as little as a third of what the old special hire drivers (where are they these days?) were charging for comparable routes.

Uber earns 25 percent of the driver’s fare, leaving fuelling and servicing to the drivers. The drivers complain the Uber fees are too steep but for those who were previously special hire drivers acknowledge that they have so much more work to do than they used to previously.

For the car owners the trick is obviously to use the most fuel efficient car possible – the Platz, Bitz, Spacio and Raum are the best they say. For the drivers too it’s a game of strategy – what time to operate and where to be, to maximise work and benefit from company incentives. I learnt that after doing 40 rides a week they are entitled to incentive fees over and above what they earn from their passengers.

"How is the company able to keep fares so low? Obviously it helps that it does not have to manage a huge fleet – easily dozens of uber cars are criss crossing the city at any time of the day or night, drivers are paid according to how much they work so there are no wasted labour costs and their office an unassuming space in industrial area means those fixed costs are minimised. I imagine the major expense would be the software that bring sit all together...

Interestingly drivers are rated by their passengers and this could mean the difference between staying on as an Uber driver or not. On a scale of one-to-five if the driver falls below 4.4 average he can find himself locked out of the system, his service terminated.

The drivers too rate their passengers. The better your rating the more likely you will have little trouble drivers responding to your requests for a ride.

"On the one hand Uber allows drivers to link into a huge network of clients they would never have been able to build as independent operators. Foreign visitors to Uganda can use their Uber app to hail cabs here, so to speak...

The service has been in Kampala for about a year and it maybe early days to tell whether it is a viable model for this market. But it has worked in about 400 cities all over the world there should not be a reason why it cannot work here.

It is a harbinger of things to come not only for the transport industry but for business generally in Uganda, linked to the proliferation of ICT and more crucially the growing significance of data.

The Economist last week made the point that, “Data are to this century what oil was to the last one: a driver of growth and change. Flows of data have created new infrastructure, new businesses, new monopolies, new politics and—crucially—new economics. Digital information is unlike any previous resource; it is extracted, refined, valued, bought and sold in different ways.”

The World Economic Forum (WEF) in projecting into the future of shopping, reported that  your regular supermarket will know your common purchases and have them delivered to your door step on a regular basis, its shelves will be stacked automatically, you will need not pay at the counter but an automatic debit to your account will be effected as you leave the store and for some items £D printers will generate them as soon as you order.

This is without factoring in that in the next decade or so more than half our shopping will be done online.

"If you are a businessman looking to the future these and many other trends surrounding data mean that one, your major expense will no longer be payroll but ICT; secondly that the sooner you adopt these new technologies either through your own resources but most likely by partnering with the generators of the technology is the longer you will remain relevant rather than be shunted to the side as the competition passes you by...

To compete maybe futile. It’s already happening. We are bypassing older supply chains and ordering our books, clothes, electronics, cars and even food online.

This will invariably increase economic activity because making purchases will be so much more convenient. The missing link in Uganda so far is to bring the credit market to interact with these new possibilities in commerce.

Last year it was reported that all mobile money platforms had a turnover of sh44trillion shillings or about half the GDP of Uganda and more than the national budget. A lot of this money was store away under our mattresses, in our socks or in our bras, now finds its way into the formal financial sector, and will have far reaching effects for the economy.

But if the local businessman is having to face existential questions spare a thought for the worker of future.

"The rule of the thumb seems to be on a scale where manual labour is on one side and knowledge work on the other, the more your work is manual than knowledge based is the extent to which that role will soon be extinct....

A few weeks ago Jack Ma, Founder of Ali Baba, one of the world’s largest online stores, said Artificial Intelligence (AI) – where computers use data to make human like decisions, will be disruptive and cause a lot of pain but the general economy, hopefully our general standard of living will be better for it.

Who knows I may not even need to own my own car in the future and be better off anyway!

TRUMP AND THE EVOLUTION OF DEMOCRACY

US President Donald Trump dominated headlines this week with the sacking of the Federal Bureau of Investigations (FBI) director James Comey.

The sacking raised more than a few eyebrows since traditionally the FBI director normally see his ten year term through -- Comey was appointed in 2013. The move was widely viewed as suspicious, bordering on ridiculous given that the FBI was investigating alleged ties between Trump’s associates and Russia. A tricky investigation since there are suggestions that Russian backed hackers interfered with Hillary Clinton’s campaign and may very well have handed Trump the White House.

This latest move makes it look like Trump has something to hide.

Watching this whole saga and its run up from afar, it was interesting to see how commentators were struggling not to bite their tongues. Were similar events happening in Uganda, they would be quick to call Trump’s electoral victory rigged, the word dictator would be used liberally in describing the 45^th president of the USA, there would be hysterical calls for a national dialogue to heal a deeply divided nation and they would be calling for sanctions, suspension of aid and even regime change...

But It is as if the cat has got their tongues. They have refused to call a spade a spade or at least use the same standards to judge their own as they judge Africa’s leaders. The moral high ground has been lost – at least for now.

But more importantly the events in America show that democracy is an evolutionary process. And that the progress of that process is dependant more on the goodwill of the people and their leaders than the laws and legislation in place.

And secondly and relatedly it, democracy, is in a constant state of ebb and flow depending on the circumstances and players on the scene. As a result it cannot be one size fits all. That the basic tenets that support a democratic society emerge as people and societies interact and because of differences in time and place will develop differently.

So it makes little sense to insist that this country or that live up to a standard evolved in another land or hold up any one country as a paragon of democratic virtue.

Trump has shown that an individual can bully – or attempt to bully, the establishment in total disregard of the law or tradition, but the ability of the judiciary and legislature to hold Trump in check is something to watch.

Indications are that the Trump administration will test the paraphrased wisdom that it takes 200 years to build a democracy and five minutes to destroy.

The Americans and understandably so, will argue that their democracy has withstood much greater pressures and will do so again, and even come out stronger than ever.

But one has got to wonder whether with a process that delivered an outsider to the White House, foreign interests keen to subvert the same process and an electorate determined and willing to hold the Washington establishment to account, one has to believe that Trump heralds a shift in the country’s politics for better or for worse.

"For the rest of us looking on the knee jerk reaction maybe to dig in. To roll back democratic gains and try and put the brakes on the momentum towards further democratisation. That wold be ill advised even stupid...

A global momentum towards devolution and away from centralisation of power is underway. This is aided by improvements and accessibility to better communication technology.

This means the traditional power centres in government, media and other places are coming increasingly under siege and are falling before a determined but diffused attack from all angles.

The smart thing to do is to recognise that the good old days are dead and buried and embrace a new reality where there is a very really possibility for the first time in history of government of the people, by the people and for the people.