NSSF AND OUR PERSONAL FINANCES

Last week a bill to amend the current NSSF Act came to parliament on its way to becoming law.

One of the 13 proposals that caught people’s attention was one that would change the way savers benefits would be taxed. As it is now our contributions are taxed before being passed on to NSSF. In the new law the taxing of our contributions would be deferred to the time we collect our benefits at 55.

"The uproar was understandable as most people are not aware that their contributions are taxed before we pay out, so they were feeling hard done by the fact that their eventual payouts would be taxed...

But in the new law one has the option to not collect their benefits at 55 and wait until they are 60 to get their full amounts without being taxed. Many lurched onto this provision complaining that government wants to force us to save with them till they are 60.

There were many things to learn from people’s reactions, mostly the loud ones who are in the minority, about our attitudes to money.

The world over governments realizing they cannot always take care of their citizens, especially in old age, force their citizens to save through one kind of social security scheme or another. Left to our own devises we will not put money aside, even if on an intellectual level we understand the wisdom of this.

It is a human condition, hardwired into us down the years along our evolutionary path.

"This is why the wealthy people are the minority in society. Not because resources are not enough to go around, but because the attributes of planning long term and delaying gratification do not come naturally to any of us. Even the wealthy have had to train themselves – apart from those who inherited or stole their riches, to behave unnaturally not for a day or a week or even a month but for years even generations.

You can bet there was an uproar as well when the government in 1985 enacted the current NSSF act, with people wondering why government wants us to save, that we can do it for ourselves. Thankfully there was no social media then.

NSSF has been bandying around the statistic that of its members who get their age benefits at 55, up to 80 percent of them have blown it within two years. This statistic was one that could have been used to amend the law to move away from paying out a lump sum to paying a pension. That is not among the amendments proposed.

But interestingly there is a small minority of the Fund’s two million members, about 40,000, who choose to leave their savings with NSSF after retirement. It is an unnatural thing to do – everybody else just can’t wait to get at their monies, never mind that they don’t know what to do with the windfall; but it is a wise thing to do. NSSF last year paid an interest of 15% on savings there are no banks that can pay you that amount in this town, so why not let the funds continue to accumulate?

Unfortunately, under the current law these people can only do this until their 60 after which NSSF hands over their money. It is being suggested that this provision be scrapped and members if they wish, can keep their money with the Fund until they die.

And assuming NSSF can maintain the track record of paying out double digit interest rates, in the five years between 55 and 60 these members savings will have doubled!..

That is the magic of compounding. Another unnatural phenomenon we are not conditioned to appreciate.

NSSF reported that if a person earns a million shillings a month and NSSF maintained a 10% interest for the duration of their 30 year working life under the new law they would receive sh345m compared to sh301m. The chattering masses jumped up and said this was a lie, given that of the worker’s income they only save sh50,000 a month or sh600,000 a year or sh18m over the 30-year period, so how does that become sh301m or better still sh345m?

They forgot the employer’s sh100,000 monthly contribution, the statutory 10% and were clearly ignorant of the power of compound interest, which Albert Einstein once said was the eighth wonder of the world.

NSSF also showed that while government tax from our contributions would amount to about sh67m under the current law in the new law government tax would more than double to sh143m. That set the critics off again. Why should government take more from us in tax? Tax, they say is the cost of civilization. Without civilization not only might you not get your money but if you do you might not enjoy it in peace.

But the clincher was that there is a proposal that workers can save up to 30 % of their income tax free. That if you earn a million a month, before the tax man wields his or her axe, you can commit up to sh300,000 to your retirement savings and leave only sh700,000 for NSSF tax. If you do the bare minimum savings of five percent or sh50,000 URA would tax sh950,000.

I am not holding my breath for Ugandans to max out on this benefit. Because the benefit will be enjoyed in the future. They would rather shoot themselves in the foot by saving less now and complain later when they tax their final benefits.

The argument to make would be that government should only tax the accrued interest on our savings, which are actually more than the contributions (thanks to compound interest), therefore not deferring taxing of our contributions but making them truly tax free.

THE NEW NSSF LAW, BETTER LATE THAN NEVER

This week The National Social Security Fund (Amendment) Bill, 2019 finally came to parliament for debate on its way to becoming law.

The report on the vent kicked up a storm among the chattering masses over one provision in the law which will have savers benefits taxed when they receive their retirement benefits and not when they contribute.

It caused an uproar because current savers are mostly unaware that they are taxed as they contribute now, so the proposed move to tax the benefits when they receive them was an unpalatable proposition.

They ignored or were more likely unaware, that in the proposed law they will not be taxed when they contribute.

Interestingly under the new law savers will collect more money than they would under existing circumstances but government too will collect more tax...

Assuming a million shilling salary for 30 years at a 10% annual interest under the current regime saver will collect sh301m, while government will have collected sh67m along the way. Under the new the same saver will pocket sh345m but government too will see its collections more than double to sh143m.

However, there is an interesting catch. If the saver pulls out all his savings at 55, the statutory retirement age, he will be liable to pay the whole tax due to government. But if the saver can hold on till 60 he will get all his contributions plus interest and not be liable to tax.

On a macro level this amendment could not have come too soon. In fact it’s probably a decade late.

The current NSSF law was enacted in 1985 and was probably a visionary document for its time. Proof of this is that our NSSF is the largest social security fund in the region despite many more years of stability in our neighbours Kenya and Tanzania.

However, it has been long overdue for an overhaul seeing as national savings have stuck stubbornly to just about 10% of GDP for at least 15 years now.

At an NSSF news conference this week the Fund’s CEO Richard Byarugaba reported on the lopsided nature of our savings which are skewed unsustainably towards short term money. Money held in our financial system for less than five years accounts for just over 60% of the total. Long term money which is the real driver of development accounts for about 37%.

In more serious economies those figures are the other way around.

This inversion of our saving habits is a major reason why lending rates are high in this country. If the banks had more long term funds they would scrambling to shovel that money out of the door and according to the laws of supply and demand lending rates would fall.

This bias has a historical background. Our over reliance on donors for development financing meant there was none to little incentive to try and develop long term savings. But as we have disagreed on our development priorities and the donors have turned off the taps it has become critical that we mobilise our own resources.

If you were central planner like the Ethiopians, you would wake up one morning and order every working Ugandan surrender a greater portion of their income to beef up national savings. Which may at first have other people cheering at the foresightedness of the leadership it would be unsustainable and susceptible to abuse and evasion.

With a bit more intelligence you can convince, even seduce, your people to part with a few more shillings.

The new bill speaks to the latter rather than former approach.

NSSF believes that if implemented appropriately we can see our national savings rate shoot up to as much as 40 % in 30 years. Then and only then do we take control of our development agenda.

We have said it many times before, as a country we are poor because we have failed to aggregate our resources, be it land, human resource or money. We fail because we are not putting in place the mechanisms to enable this.

Imagine if government had left it to our own devices to save for our retirement, how many of us would put aside five percent of our gross income, leave alone 15% and not touch it for the duration of our careers? It is likely there are no hands up in the room.

Despite the hoolah balooh I would pay good money in the not so distant future, to be around the hecklers when their NSSF check lands in the account – taxed or not.

THE STORY OF YOUR BUSINESS IS MORE IMPORTANT THAN MONEY

BOOK REVIEW: STORY DRIVEN

AUTHOR: BERNADETTE JIWA

AVAILABLE: Amazon

There are tons of books published annually. In the US alone it is estimated that up to a million new titles are published in a year. So the chance of finding the book that speaks to you right here, right now, is made that more difficult. 

Literally a one in a million chance.

“Story Driven” has been that book for me in recent days. Its catchy tag line—“You don’t need to compete when you know who you are,” made me want to not only look again but snap up a copy and see what this all meant.

Truth be told I didn’t get around to reading the book immediately. It took me a few weeks to get around to it, because I was attending to other books that had moved me. I only do books that move me, otherwise what is the point.

The book is based on the simple premise that companies that flounder are often those who lose their story, the reason they were set up, which often was not to make money but because the founders thought they could solve a problem they had identified. But as time goes on companies forget this and start competing for market share, increased profitability and enhanced brand awareness.

The author makes the distinction between the competition driven company, which is reactive to competitors and focused on winning, as opposed to story-driven companies, which are responsive to customers and pushed by a need to matter, are purpose driven, keen to live a mark on the constituencies that they serve.

“Great companies,” she says. “Have something in common, they don’t try to matter by winning. They win by mattering.”

We forget – or maybe we don’t know, that business success measured by profitability or growth or any other traditional metric is a byproduct of providing a good or service that is in demand and in a cost effective way.

In fact, Jiwa, who is a world renown authority on business philosophy, explains that what distinguishes two companies, even in the same industry, is their respective business philosophies. And this is irrespective of whether it is articulated or not.

She says being a story driven company is important because that is where culture starts, its philosophy and is emphatic that everything that happens to a company good or bad are a direct result of the business’ philosophy.

It makes sense. If you think about it, if one of the drivers of business success is differentiation how better to distinguish yourself from the competition if not by being your authentic self. And is that not a competitive advantage in itself, providing goods and services in a way that only you or your company can?

This inability to hold your story close to your chest is most probably the reason why many of our businesses cannot transcend a leadership generation. The inheritors of the family silver do not know the story and not emotionally attached to the culture and philosophy as set out by the founder.

If they have not served at the founder’s feet and were just jettisoned into the company at the top they really can’t appreciate the company’s story and therefore its raison d’etre.

A company’s story is what allows the founders to weather the usual upheavals of being in business – poor sales, shifting markets and even the incessant knocking of the tax man.

This fits in very well with past writings in this column.

That for instance there are only four reasons to go into business – to feed oneself, to pass on something to descendants, to sell the company and for philosophical reasons. And to a tee companies are more likely, to not only survive but thrive, the more they tend towards being set up for philosophical reasons on one side of the pendulum than to sustain the found on the other hand.

We are more likely to make progress once we believe in the significance of what we are doing, she writes.

It also speak to the lesson of professor John Kay in his book, Obliquity in which he makes the case that business success – profitability and growth is often arrived at without aiming at it directly, but by round about means, obliquely, in improving customer service and experience.

And the market is not stupid. It recognizes when a company stands for something and rewards it with attention, loyalty and of course an ever ringing till.

It is simply written. And just in case you think your business is small and not susceptible to such strategies, she has brief synopsises of dozens of companies both big and small (but all companies were once small companies) doing everything from counselling to manufacturing electric cars to show that this principles are universal and not only suited to manufacturing or services alone.

If you extrapolate this philosophy it can serve well in other enterprises – sports teams, schools and even governments.

The book is a must read for anyone trying to build anything of significance.

THE UPDF RETIREMENTS AND THE STATE OF THE NATION

In his seminal book “Guns, Germs & Steel” author Jared Diamond makes an attempt to explain why the north – economic north is rich and the south is poor.

"At the bottom of it is the agrarian revolution where farmers by adopting more modern methods of agriculture – crop spacing, irrigation and animal husbandry, were able to generate a surplus. This surplus was traded with neighbours or stored away to finance two classes of people that have been critical to the domination of western culture – the thinkers and the professional army...

That is how great scientists like Isaac Newton or Michael Faraday or Galileo Galilei were able to tinker around for hours in their labs and lay the foundations of modern science or allowed Aristotle and Socrates while away their days thinking about the organization of society.

The professional army barracked away from society and the study of military science in the same vein meant that the armies of western Europe were able to sweep around the globe form conquest to conquest, with the booty from this far flung empire – another surplus, helping to improve the living standards of their people.

The development of the modern army is in response to the need to project these country’s influence abroad and to defend themselves against other rivals imperial ambitions.

In lesser developed nations armies were smaller, used rudimentary weapons and little to no science in their operations.

When the war drums were beaten able bodied men reached for the nearest implement and rushed onto the battlefield to protect their lands and women. Or not. Driven more by passion than strategy.

No wonder a handful of soldiers were able to subdue all the tribes on the African continent.

Fast forward to the present. This week 341 officers of the Uganda People’s Defence Forces (UPDF) were retired in a lively ceremony at Bombo barracks.

Some had been in service since the 1970s having been passed down from the Uganda Army to the Uganda National Liberation Front (UNLF) the National Resistance Army (NRA) and eventually the UPDF.

Before being demobilized they were oriented into civilian life, advised about how best to utilize their severance pay and how to access their pensions.

This was a great occasion not just for the UPDF but for the country as a whole. For one the fact that the UPDF can allow people leave is a sign of the peace prevailing in the nation. While they are still on call as reservists, the urgency to maintain all officers and men in situ is not there anymore and is not conceived for the near future.

It also means the Forces are being renewed with young people joining and coming through the ranks.

As a peace time force they need to be looking to improve the quality of the force rather than increasing the size of the force. Recently reported plans to convert Kabamba Military Academy into a university of military science points in this direction. We shall return to this.

Secondly, these can add to efforts to boost the economy. Soldiers by training and practice are disciplined and understand its usefulness. There is nothing worthwhile that can be achieved without discipline. In western economies demobilized soldiers become businessmen and consultants, their value recognized by business and their contribution valued.

In more competitive economies every edge counts and the army is recognized as useful resource for mining leaders.

The battles of the future will not be fought with the AK47 – a handy, sturdy gun, well suited to our low technology environments. The battles of the future will be fought in cyberspace, in the labs and with much more advanced technologies and out of necessity will require a different kind of soldier.

Continuous renewal of the forces can help in better appreciating this new reality.

I think I am young and as a member of the press, I am ahead of most people in our society in keeping abreast of recent developments. But any superiority I feel over my fellow man is often dissipated within minutes of sitting around ten year olds with access to a smart device and a data connection. 

"Not only do they have more access to information than I had at their age, but they are leveraging and manipulating it in ways that can only come from early adoption of these technologies and a fearlessness of the possibilities....

I shudder to think what they will be doing with their computers in a decade or so from now.

The physical demands of military service are a natural filter but given the rapid changes in technology and military science, we may be forced to be more proactive not only returning officers and men into civilian life but in accelerating the training of those still in the force.

ARE FARMERS & BANKERS SPEAKING AT CROSS PURPOSES?

Two events within days of each other, served to highlight the struggle of agriculture to take its rightful price as a key driver of the economy.

To begin with debate on the Coffee Bill begun in parliament’s agriculture committee. The bill that was presented to the house by government earlier in the year has kicked up a storm. One of the offending clauses in the bill was a provision that all coffee farmers be required to register their farms and coffee trees.

The bill stipulates that this will apply to farmers with 50 or more trees to make planning for the sector easier, as well as ease the delivery of services to them.

The bill also prescribes deregistration of coffee farmers who do not look after their farms or nurseries.

The critics have complained that the law is too restrictive and may fail efforts to grow production by disadvantaging small farmers, who would miss out on planned assistance to the sectors.

Related to this the Uganda Bankers Association had their annual conference where they grappled with the puzzle of why more isn’t being lent to agriculture.

"Going by Bank of Uganda statistics in the last 12 months lending to agriculture has accounted for 12% of total loans disbursed. Of that less than half or 36%, goes into production, which is what most people think about when they are talking about agriculture. The other 64 percent goes to processing and marketing of agricultural produce...

The theme of the bankers’ conference, “Derisking financing and investment in agriculture to provide youth employment and inclusive growth” was appropriate. Lending to agricultural production – in the way we do it in this country, is too risky.

Reporting on the meeting the New Vision had a headline “You do not understand us, farmers tell bankers”. I could imagine a banker reading the paper that morning and thinking the headline should actually be “You do not understand us, bankers tell farmers”.

It is an interesting relationship. The bankers are doing just fine without trying to push for business in agriculture. Lending to manufacturing, trade, real estate and personal loans accounts for seven in every ten shillings they lend, so from where I am sitting, the farmers have all the work to do to make the bankers take them more seriously.

At the very basic level the banker lends to those who can pay him back. This means one has to have a proven income that will be consistent into the future.

The challenge for most farmers is to prove that they even have an income. Secondly, given our overreliance on, rain, the natural fertility of the soils and the good nature of neighbours, vermin and pests not to raid our farms, a future income is hard to project.

A farmer in the Netherlands controls the climate and water intake of his plants by growing his crops in a greenhouse or zero grazes his cows and his feeding and milking process are automated. When such a farmer heads to the bank he will not only have his revenues, but a complete set of audited accounts going back a generation or two from which plotting projections will not be like playing the lottery. In addition either Dutch farmer will have invested in security of his property, giving the bank comfort that the future revenues have a good chance of being collected.

These are additional costs that will raise the cost of production, but will very well increase the value of the products.

Which brings us nicely around to the registration and regulation of farmers as proposed in the coffee bill.

The intention is that this will bring us in line with international standards of agricultural production. In western markets the concept of traceability is gaining traction. Buyers want to know where the coffee beans come from, are they grown organically, are child labourers being employed and a host of other qualifications we may shrug off but which could mean the difference between getting $10 cents more or less for your product.

So yes, the small farmer has cause for alarm.

If you have your five trees and are unregistered, coffee buyers would not want to mix your untraceable coffee with their own, for fear of a market backlash.

 A few years ago a tobacco exporter was blacklisted by international buyers because one consignment was contaminated with plastics and other debris. The exporter was able to trace where the problem well and remedy it, because all its farmers are registered. But this was after losing millions of dollars in export contracts.

I suspect all sugar outgrowers are registered too. For ease of management in that case, as we consume our won sugar.

Understandably opposition to these new proposals has its basis in the history of the crop, which was mostly grown on small holdings in Uganda. We have a choice to adopt the new law to our practices, however painful they maybe, with the promise of greater competitiveness of international markets or reject them and forgo increased revenues we would earn up and down the value chains.

Clearly leadership will be required to get the small coffee farmers on board. Either they expand their holdings – the Marie De Antoinette option or come together through cooperatives to adapt to the new regulations.

Coffee is obviously the pilot on this kind of law, one can expect it will be rolled out to all other crops and agricultural produce --- birth certificates for livestock, necessary, even critical, if our products are to compete internationally.

LESSONS FROM MUKWANO’S LIFE

Two weeks ago Arimali Karmali passed on. I never knew the man personally, but judging by the tributes to him, which continue to flow in, days after his death, he clearly was no mere mortal.

"Estimates of the wealth he controlled suggests he may have been a dollar billionaire. What was more striking was the testimonies of the people he had helped with scholarships or to set up their businesses or out of plain charity.

From my readings of the last few days this was what I was able to glean as business and life lessons from the man fondly known as Mukwano.

1.       Frugal with a purpose

I read somewhere that his wardrobe consisted of a handful of shirts and trousers. For a man so rich this is an interesting story in itself but it speaks to a deeper principle. There are only so many shirts you can wear or shoes you can lace up. Beyond the function of keeping you covered and presentable, clothes should really be logged in the consumption column of our lives.

"There are only two ways to spend money, either you consume it or invest it. What determines your eventual level of wealth or poverty is which way the balance of your expenditure falls. Clearly the old man, after more than a half century in business, was hardwired to invest more than consume and hence his spartan wardrobe.

The rest of us get sabotaged by the devil on our shoulders continually asking “What is the money for if not for eating?”

2.       Invest in networks

But what was more impressive about the man, were testimonies by the people from far and wide narrating how the man touched their lives – from businessmen to lawyers to former ministers, his tenants, his neighbours. It was amazing.

Wealthy men have died before in these parts I stand to be corrected, but I have never got the sense that they touched as many lives. Fair enough, maybe the people they helped didn’t want to speak out, so it is testament to Mukwano that his protégés and the beneficiaries of his largesse stand up to be counted.

Beyond that he clearly cultivated networks of partners that were not restricted to Uganda or even the region. Networks developed on trust -- deliberately, systematically and consistently cultivated, were key to keeping his business alive and thriving.

Our businessmen don’t seem to log trust in their asset columns and are ok with swindling their creditors, partners and clients at the drop a hat. It maybe explains why our businessmen rarely live beyond five years.

3.       Go into uncontested ground

It is clear that all through his business career Mukwano was a trailblazer. He led others followed. He was not corrupted with our copycat syndrome, where we go into businesses where other people are.

During the days of chaos and persistent shortages he was an importer, when things stabilized he shifted into manufacturing and then in his final years he resuscitated the tea sector in the Toro area. In between all that he manufactured plastic goods, bottled mineral water and built malls down town, pioneering a craze that is fast turning down turn Kampala into a concrete jungle from the dusty unpaved hovel that it was.

There are risks to this strategy. Being the first in a sector means you will have to pay for the lessons you would otherwise have learnt by following someone else. On the other hand if you can pull it off the rewards can be beyond your wildest dreams...

4.       Nothing is beneath you

Long before “Bottom of the pyramid” Mukwano was already there, servicing this sector through his soap, cooking oil, plastics and even mall developments. Maybe it was an easy decision to make, since in the 1980s not only were the wealth and income disparities non-existent, but the economy had ground to a halt to the point that most essential commodities were out of the reach of everybody. So going into bar soap and cooking oil manufacture was a no-brainer, and those be the gifts that keep giving.

"Unadulterated by elitist airs Mukwano saw where the need was and moved to fill it and everybody else be damned....

5.       Invest

It’s safe to say that Mukwano cut his teeth in the rough and tumble of the Idi Amin era, when shortages meant huge margins were to be had on the sale of products. He was not the only one enjoying these margins. But is one of a few, of the very many to come out of the era and thrive in subsequent years.

The difference between him and his failed contemporaries, is that he was not seduced by the urge to consume and live large. When everyone was eating their money as fast as they made it --  a symptom of the insecurity of the time, Mukwano saved and invested his surpluses – a lot in land,  to the point that people say he could be the biggest land lord in Kampala today....

It’s interesting isn’t it, that our richest individuals never accumulated land as a way to get rich. They got rich through trading and stored their wealth in land. We tend to invert the process.

Mukwano walked this earth for at least 80 years. The above do not even scratch the surface of the lessons to be learnt from the man. He was real life proof that hard work and prudent use of money can lead to financial success the kind of which we can’t even wrap our minds around.

In death his only crime was to leave us without an account of his life, but it is hard to begrudge him his peace.

RIP Mukwano.

AIRTEL GAINING ON MTN, UTL FLOUNDERS

Going by recent events, the industry to watch in the next few years will be the telecom industry. Not only for the speed of innovation in the technologies employed, which is interesting in itself but also for the possible reconfiguring of the sector as the competition heats up.

The government’s UTL is all but buried.  The government’s uncoordinated troop movements not helping its cause.

UTL, which was hived off from the original Uganda Posts & Telecommunications Corporation to prepare it for privatization has been a case study of how not to privatize a state enterprise.

Already mismanaged to begin with, about 20 years ago a controlling stake was sold to a shadowy investor with implied ties to Germany’s Deutsch Telekom, who failed to come through. They then flogged off their stake to Libyan investment fund, Lap Green.

The Arab spring, the fall of Muammar Gadaffi and the freezing of all Libyan assets, put paid to Lap Green’s usefulness, forcing government to take it over in 2017 and put it under administration last year.

"The company is sh700b in the hole, with assets of around sh350b. It has failed to meet it obligations to its creditors and for all intents and purposes should be shut down, were it not for vague references to its strategic value to the country...

The public tug-of-war between the company’s administration and government makes it even more unlikely to attract a credible investor. Government is really only postponing the inevitable.

But the real action seems to be playing out between South African based MTN and Indian Airtel.

In a recent publication it was gleefully announced that Airtel, for the first time in 2017 and again in 2018, was more profitable than MTN, although the South African firm was still pulling in more revenues and continues to grow its revenues faster than its closest competition i.e. MTN’s revenue growth stands at 18.5% in the last three years vis-a-vie Airtel’s growth of 17.2%

According to the report, which was not disputed by Airtel, in 2018 they made a profit of sh338b up from sh245b the previous year, while MTN managed sh220b profit last year compared to sh152b the previous year. That trend however is reversed when you look at revenue growth. While the revenue gap between Airtel and MTN was sh282b in 2017, MTN stretched this to sh340b in the year ending 2018.

Taking the report at face value, it’s clear that the competition in the telecom industry is much more cutthroat than was previously thought. Which throws up some interesting possibilities for the clients, industry and the country as a whole.

MTN is only just recovering from a bruising run-in with the government, which inadvertently or not, coincided with negotiations surrounding its license renewal. The company had a 20-year license as Second Network Operator that expired last year and yet has not been finalized.

Government has set a $100m fee to renew their mandate for the next ten years.

So the revelation about Airtel’s recently achieved parity should have the government licking its lips for the day their own license comes up for renewal. As a public service operator it has been paying $100,000 for its license for five year terms.

But the figures also throw up another fact. For a while now, MTN has been blamed for having an adverse effect on the Uganda shilling. That every time they repatriate dividends to the parent company the shilling is hit. But clearly Airtel is repatriating more money than MTN and therefore just as “guilty”.

But for the industry, there may be lessons to learn from Airtel. The brand parented in India, has been able to manage some operational efficiencies, which allow them a profit margin of 28 percent, twice as high as that of their South African rival. And they were able to achieve this while fighting to win market share from their main rival. Could it also be a factor of Airtel’s cost sensitive business model – which maximizes returns by driving aggressive bargains with third party suppliers? While MTN has over the years placed big bets on network coverage and innovations like mobile money?

"These factors notwithstanding, from a consumer’s perspective, Airtel seems to have more pricing wriggle room than MTN and given the price sensitivity in the market, they are better positioned for a price war....

On a more philosophical note these recent events show that the industry is the perfect poster boy for the liberalization of the economy that the government launched more than two decades.

Competition has not only broadened the range of services – from voice calls to financial services, it has driven the cost of services down, without compromising the quality of service and those who cannot keep up the pace are kicked to the side.

That being said the industry can be more attractive if government leveled the playing field so that investors can make an objective assessment from afar of the viability of the industry.

In the mean time we best advised to sit back and enjoy the ride.