WHEN THE GOVT DOESN’T LOVE YOU BACK

Off the Jinja-Tororo road, about 11 km from Tororo town is the 89 MW Electromaxx thermal power plant.

Recently the deep throbbing chug of the plant’s turbines have been restricted to a few hours a week, to keep the engines in good order, as the country has little use for the plant’s power, thanks to an oversupply of hydroelectric power from our dams on the River Nile.

The plant is reported to have cost $60m (sh200b) to set up.

About a kilometer up the road from the plant is the proposed site for a 10,000 barrels per day refinery. The thinking is that Electromaxx can import crude oil, refine it to get the Heavy Fuel Oil (HFO) to run their thermal power plant – and one other in Arua, and the rest – petrol, diesel, kerosene and bitumen, they can sell on the open market.  It makes economic sense, as it costs almost the same to land a barrel of HFO as one of crude oil in Tororo, the difference is the additional fuel products they can distil from the crude oil and sell on the market.

"It works on paper, but Electromaxx did not factor in Uganda’s officialdom...

The project has gone silent for the last three or so years, because somebody has decided that this plant will be competition for the much larger one in western Uganda and has decided to hold on to the license. A license they were supposed to get long before the 20,000 bpd refinery in western Uganda. The western Uganda refinery will be fed out of Uganda’s own crude deposits.

Electromaxx has already committed to $40 million in clearing the site, initial civil works, some of the plant already at the scene and signed commitments to import the crude oil from Nigeria. Four years of trooping from government office to government office has proven futile.

In the meantime, a six-year facility to finance the deal is being serviced on a monthly basis, straining Electromaxx and its parent company, Simba Group’s cashflows to breaking point. Simba Group’s founder and chairman is Ugandan businessman Patrick Bitature.

Electromaxx have been here before.

At the beginning of the century they were frustrated from getting a license to develop the aforementioned thermal power generation plant, in one instance told to their faces that such investments can only be managed by “foreign investors”. After failing to win the Namanve thermal generation plant, Simba Group sued government for their right to develop the plant. The Tororo plant was a compromise site they were awarded to drop the suit.

Since then they have not only increased the installed capacity of the Tororo plant from the initial 20MW to 89 MW but have also continued to set up an 8MW thermal power plant in Arua that has gone some way to ease the power situation in the region.

"Aggravating the Group’s cashflow situation is the government holding on to millions of dollars in payments due to the Tororo and Arua plant...

According to people intimately involved with the project, supplying government has been a nightmare that has held back the growth of the group, which up to that point was growing at prodigious pace on the back of its telecom and real estate portfolios.

This single event has led to a bruising battle with South African-based financiers Vantage Capital over the last few weeks, who have resorted to a public battle to recover a $10m debt to Simba Group they made out in 2014. Vantage Capital’s attempt to take over Simba Group’s shares, they had held as collateral for the loan, was frustrated by the Uganda Registration Bureau Service (URBS), who denied their request on account of them not being legal entity in Uganda. The court upheld URBS position and sent the two antagonists to arbitration.

It’s widely known that Bitature and his Simba Group, saw their fortunes take off with the entrance of MTN into this market. Previously a night club operator, forex bureau owner and tour and travel agent, his partnership with MTN, where he was the initial sole dealer of their airtime allowed the Group to spread its wings in to the region – providing the same services for Safaricom in Kenya, Vodacom in Tanzania and brief ill-fated foray into Nigeria. In addition, he got into the hotel business before the Commonwealth Heads of Government meeting (CHOGM) in 2007.

He is a local investor clearly on the rise.

  "His misadventures with the government lend credence to the perception that government is willing to bend over backwards for foreign investors but for local investors not only do they leave them sink or swim but even go further to actively frustrate them....

According to the budget government owes suppliers almost sh5trillion, some of these debts going back years.

The Simba Group situation is particularly galling because his refinery in Tororo fits in very well with the current flavour of the month – value addition. Is it possible that if Simba Group had had their refinery up and running by now we may not have been suffering the current pump prices that are now dangerously close to sh6,000 a liter?

OF MIDDLE INCOME AND MAKING IT COUNT

During his state of the nation address President Yoweri Museveni reported that Uganda had finally crossed into middle income nationstatus.

The president said that by the end of this month Uganda’s GDP per capita would be $1,048, more than ten dollars above the accepted level of $1,036 required for a nation to cross into middle income status. To be officially recognized he said we would have to keep the economy growing for at least another three years, he said.

As expected the chattering masses went into overdrive, complaining that the economy is doing badly and that they are not feeling their country’s new status in their pockets.

Their cynicism aside this is nevertheless an important landmark for our economy.

"We are on a development journey and the attainment of the middle income status is an important milestone. It’s like going to school, the attainment of the middle income status is like completing P7, it’s an important event, but in and of itself not very useful for a person, in terms of becoming a self-sufficient economic player. Friends and family will acknowledge the accomplishment but the celebration will be mooted and maybe restricted to your immediate family. Attaining middle income status, like passing PLE, is not an end in itself but nevertheless an important rite of passage.

In 1986 Uganda had a GDP per capita of $250 or about a quarter of what is reported now. The progress becomes even more impressive when you consider that during the same period the population has about tripled, in other words if we still had the population of 1986 our GDP per capita would be more than $3000 and we would be eying upper middle income status already.

In the aid community they are always clicking their tongues at our high population growth – 3.3 percent at last count, which means our population doubles every 25 years. They complain that our high population growth rate is putting the brakes on our development.

In more developed countries bringing population growth rates under control it has been shown, came after, reductions in maternal mortality, fertility rates, infant mortality, in that order and only then did we see population growth rates slow and even reverse.

These developments speak to improvements in the health care systems, which comes with huge sustained investment in the sector. 

For a country to do that, it needs to be generating revenues from taxing ever growing economic activity.

High population growth rates are only a symptom, a symptom of poverty. Solve the poverty question and population growth will be history.

Which is why I don’t pay much attention to GDP per capita. It is a useful indicator of progress or lack of thereof, but to my mind the better indicator is the UN’s Human Development Index (HDI). The HDI measures living standards of a population by looking at among other things life expectancy, education and purchasing power parity.

The HDI recognizes, to paraphrase the great teacher, man was not made for the economy but the economy was made for man. The benefits of the economy should accrue to all the citizens and not to a small well positioned few.

 In 2019 the last available figures, Uganda’s HDI was 0.544. The better a country, the nearer its HDI is towards one and further away from zero. Uganda was ranked 159 out 189 countries, which shows how much more work we have to do and partially why explains the middle income status is not more widely felt.

But we are not alone. Tanzania with a GDP of about $55b ranks below Uganda at 163, Ethiopia with an economy thrice the size of Uganda’s was ranked 173. On the flip side Mauritius with a GDP of under $20b is ranked 66^th with a HDI of 0.804.

Norway is at the top of the pile with a HDI of 0.957.

"A growing economy is a prerequisite for development as measured by the HDI. In Uganda we have hacked the economic growth equation, according to World Bank figures, the last time the Ugandan economy contracted instead of grew was in 1985, the challenge of course is to ensure that this growth is more equitably distributed...

It shouldn’t come as a surprise. Most of Uganda’s growth has come from services – retail trade, financial services, construction but also manufacturing, which are mainly found in urban areas. With an urban population of 22 percent it’s not surprising that the benefits have been concentrated among a relative few.

As a country we have to keep the economy growing, so that we can collect more revenues, which we can use to improve services and infrastructure, spreading opportunity more equitably. Middle income status is not to be snorted at, but we need to look to improving the living standards of everybody not just an urban few.

THE CURIOUS CASE OF PATRICK BITATURE VS VANTAGE CAPITAL

The first inkling that we mere mortals had that local businessman Patrick Bitature maybe in trouble, was with the publication of an advertisement on 18^th May announcing the auctioning of his prime properties – two hotels and a block of apartments, for money he owed.

On the same day Bitature responded to the advert, dismissing it as having no legal basis and we thought that was that.

But before we had caught our breath, on 23^rd May, Vantage Capital on whose behalf the above mentioned advert was published, took out a full page ad to explain the genesis of the saga and how, while the high court had ruled they were not a legal entity in Uganda and therefore could not move on Simba Group’s assets, they were determined to collect their pound of flesh.

At issue is a $10m (sh37bn) loan lent to Simba Group in 2014 which Vantage says has gone bad and they want to collect on.

In their ad they claimed that the loan agreed to with Bitature was supposed to be serviced on a quarterly basis, but that Bitature had not paid a cent. This claim was refuted by Bitature a week later in a full page ad, claiming on his part that the terms of the loan were such that repayment was due in 2017 and after negotiation for an extension, again in 2019.

These were not your normal commercial bankers, hence the mezzanine financing. Mezzanine financing is by definition more flexible than the usual commercial bank loans and cheaper than paying using equity.

It was curious of course that having required payment every quarter, Vantage waited till 2017 to move on Bitature and his Simba Group, wouldn’t we all love lenders like that?

It was also curious that despite the beginning of a court ordered arbitration process, Vantage moved to transfer Simba Group’s shares it had held as security to the loan, a process Uganda Registration Services Bureau (URSB) refused to do because there was an ongoing arbitration process and also because Vantage was not registered in Uganda.

Vantage had chosen London as the arbitration venue and were in the process with Simba Group of agreeing on the composition of the panel.

For URSB to transfer the shares to Vantage, at the bare minimum, the recipient had to be a legal entity, able to sue and be sued, in Uganda.

Vantage as was their right challenged URSB’s action in court. But the court’s hands were tied.  On 9^th May while agreeing with URSB that Vantage was not registered in Uganda, the court said, in effect, that had that not been the case, it may have looked favourably on Vantage’s appeal to move on Simba Group to recover what was due to them.

They promptly moved to appeal the ruling. But curiously again, barely two days after lodging their notice to appeal they published the above mentioned ad to auction Simba’s properties.

Interestingly, a major regional bank already has mortgages on those properties and has first charge, a first right on action on them, a fact that Vantage knew before it did the deal in 2014. This happens with mezzanine financing all the time – lending to entities whose assets are already mortgaged. Their comfort when they do these deals comes from holding the borrower’s shares as security.

"By taking control of Simba Group, Vantage would be able to restructure the debt with the bank or sell off the group, debt and all, to others interested in owning the group, valued according to some estimates at more than $150m. Vantage’s core competence is not running other businesses, but rather restructuring their balance sheets, selling them off to show a return to their investors and moving on to the next deal....

So it is curious what Vantage’s agents in the country were trying to achieve by advertising Simba’s properties, embarrassing Bitature and bringing into the open a matter, that is purely a business dispute.

The way it seems to me, both parties are jostling for leverage and time.

Vantage have chosen to move now. It is hard to justify a non-performing loan on your books for eight years, someone’s bonuses or even job maybe on the line because of this debacle. Because of this and other motivations, it is clear Vantage is looking to force the issue, bring it to a conclusion sooner rather than later. With the courts not playing ball, they have clearly chosen to appeal to the court of public opinion and embarrass Bitature into “good” behavior.

Bitature on his part, riding on the ruling that Vantage has no legal standing in this country, may have bought himself some precious time. Time to organize himself.

Covid was a blow to his hospitality businesses, with occupancies only just beginning to creep up from the grave, but even before Covid, he is owed millions of dollars by the Uganda government, emanating from his power generation plants in Tororo and Arua, debts going back to before Covid.

Everyone who owes money – and Bitature has not denied that he owes Vantage money, should repay what he or she owes.

Bitature cannot afford not to come to an amicable settlement with Vantage, because in the rarefied atmosphere of high finance that he operates in, trust counts more than any asset. It is in his best interest to pay off Vantage, if only because to default now would easily see him blacklisted by financiers far and wide.

Vantage on its part has brought the bare knuckles world of international finance to our door. The warning is clear, that if you want to play with the big boys you better be ready to flex.

BANKING INDUSTRY NOT OUT OF THE COVID WOODS

While banks in 2021 saw improvements – double digit growth in income and profits there was still some hesitancy to jump right back into business, as we saw the tail end of the Covid pandemic, according to an analysis of their annual results.

Total operating income was up 14 percent to about sh4.5trillion from sh3.9trillion in 2020 and industry profits were up 43.5 percent to sh1trillion from sh706billion during the same period. The bigger percent of these gains, about seven in every ten shillings of these, attributable to the top five banks by assets.

The five biggest banks by assets are Stanbic, Centenary, ABSA, Stanchart and DFCU in that order.

Interestingly the smaller banks while they saw their holdings in the risk free government securities jump eight percent, growth in their loan portfolios surpassed this rising 12 percent.

"The bigger banks the above suggests were more hesitant to get back into the game at the first sign of improvements in the economy, which came with the partial lifting of the lock down in June 2021. The figures showed that these banks easing out of government securities was only just matched by increases in their lending portfolios as a group....

This suggests that with full reopening of the economy earlier this year banks will be straining at the bit to lend to the more lucrative but riskier private sector.

Be that as it may the major challenge for the industry is he high cost of doing business. Most of the industry’s income, 73 percent was eaten up by costs, but again this average masked the huge disparities between the best and the rest, with the best on giving up 37 percent of their income and the worst spending 147 percent of what they earned, meaning they were loss making and had to dip into their shareholders’ pockets to cover the hole.

Interestingly embedded in this is the cost of funds for banks. While the industry average is three percent, measured by how much interest they pay on deposits, one bank’s source of funds is below one percent. The instituion with the priciest funds is 18.1 percent.

This is one figure and the disparities suggested therein, has major implications for bringing lending rates down.

A few weeks ago the Uganda Bankers Association (UBA) had a meeting to hear a report on how to lower their cost of doing business as a way to eventually lower lending rates to the public.

"While government increased borrowing has major implications for lending rates – why lend to risking businesses when government is borrowing at double digit rates? The bankers recognize their own high costs of doing business is not helping the situation....

While in the last two or so years the introduction of agency banking, mobile banking and ebanking have helped lower costs but these savings again have been hogged by the bigger banks. That being said more can be done by the bigger banks and the industry as a whole if there was more collaboration in infrastructure sharing – data centers, ATMs and the movement of cash around.

With the mobile money snapping at their heels – MTN and Airtel’s mobile money companies reported between themselves deposits of sh1.5trillion, which would have made them the seventh largest bank by deposits, there is a sense that collaboration rather than the current everyone-for-himself-and-the-devil- take-the-hindmost will account for the smallest bank but also weaken the industry’s ability to fend off the mobile money companies.

As mentioned earlier government borrowing continues to hold up lending rates but also are some regulatory requirements, like the insistence that every bank have its own infrastructure, means there is only so much the banks can do to bring down lending rates.

"It goes without saying that the health of the banking sector is critical to the smooth running of the economy. Its increasing profitability suggests there is plenty enough to go around....

The mobile money sector has stepped in to do what banks couldn’t do with their huge cost bases, which is to increase financial inclusion by reaching us where we are whenever we want.

The future of banking may very well be that they cede the personal banking space to the mobile money companies and the fintechs and provide the upstarts with the wholesale banking services that they need.

The Bank of Uganda has already signaled that it makes little sense to persist with the dated brick and mortar model of opening branches to reach customers. But with the pervasiveness of the mobile phones now, there is more than 60 percent mobile phone coverage, even when accounting for people with multiple accounts, the agency bankers are just place holders for an eventual total digitization of the financial sector.

Arguably Covid hastened this progression.

It is possible therefore that by the time the banking industry is ready to get back fully on their feet they will come up to the realization that the industry has moved along and some very hard questions will need answering.

TO SAVE THE ENVIRONMENT EACOP MUST GO ON

I had a déjà vu moment last week seeing some breathless young lady accost French President Emmanuel Macron entreating him to stop the development of the East African Crude Oil Pipeline (EACOP).

The EACOP is the 1400 km pipeline that will evacuate Ugandan oil from western Uganda to the Tanzanian port city of Tanga.

The earnest young lady explained that the pipeline (As if Macron does not know) that the pipeline would encourage the use of fossil fuels which are major driver behind climate change, whose effects are manifest in droughts, floods and even the increased frequency of sand storms the middle east is suffering currently.

It took me back nearly 20 years when all sorts of activists jumped out of the woodwork to protest the development of the 250 MW Bujagali dam. Led by the local agents of an NGO called the International Rivers Network.

The anti-Bujagali lobby argued at the time that damming the river would displace hundreds and destroy the scenic beauty of the area.

"So that time they could not hide behind climate change, especially since hydroelectricpower is one of the most ecofriendly energy sources, they argued for scenic beauty...

One local activist was quoted as saying at the time, "The real issue in Uganda is not electricity but poverty. Currently the majority of Ugandans have no money for electricity, for they are below the poverty line. Production of more electricity will not reduce use of fuelwood and charcoal until deliberate programs are evolved to reduce poverty and the cost of power."

Since Bujagali came on line in 2012 – the world has not collapsed around our ears, but in fact, more than a million households have been hooked up to the grid. Those are a thousand families who left to find their own devices without electricity, would have used kerosene lamps or diesel generators for their lighting at night or used more charcoal in their kitchens and would have been less productive.

Access to power is just below 50 percent today but this is a far cry to the just over five percent of the population who had access to power before Bujagali came online.

It would be interesting to see how much more economic activity has resulted from this development and further still how many people were lifted out of poverty or at least saw their incomes increase as a consequence.

I want to bet that the Bujagali activists now live in houses – they probably built with their paychecks from the campaign, powered by the dam fought so vehemently.

"The anti-Bujagali activists were dead wrong then as the anti-EACOP campaigners are today....

In fact, to stop these developments will be to damage further the very environment they claim to be seeking to protect.

Because it is true that in our part of the world the biggest cause of environmental degradation, is not the fat cats who are reclaiming wetlands for construction, but the poor who have decimated 90 percent of our forest cover in search of new farmland and firewood for their survival.

The history of poverty eradication is quite clear. Countries interested in doing so, exploit their natural endowments to create economic activity, which leads to a rise in incomes across the board and therefore reduction in poverty. In some countries they have done it so well they have surplus resources to bankroll a welfare state, where everyone is entitled to an income in or out of a job. This did not happen by wishful thinking.

"Because we do not have the luxury of enslaving people or colonizing other countries to push economic growth, we have to employ what we have, that is our natural resources and our people. Our confusion about how to do this – due partly to the handsome paychecks from foreign environmental lobbyists, means we are not even doing a good job on this front.

That being said the exploitation of these resources can be done in a way that does not cause irreparable damage to our environment. As it stands now voluminous environmental impact assessments have been carried on the project and provisions have been put in place to mitigate against the damage to the environment to the extent possible. This is not the Niger delta.

If we are truly sincere about conserving the environment we should be poring over these reports to ensure every possible measure was taken to conserve the environment.

The increased revenues to government and to the private citizens involved in the industry, have the potential to improve the provision of public goods and social services that will give more and more people a chance to climb out of poverty.

You do not fight poverty by dishing out money at street corners but by empowering people through better education and health to take advantage of and to create new economic activity.

So if to banish poverty takes the exploitation of our natural endowments and some do-gooder, clearly who knows better than us what is best for us, is fighting this time tested progression, you have to wonder what their intentions are.

"To be charitable to them I would say they are ignorant parotters of slogans on an issue they have no clue about (African poverty), he more cynical view would be that, it is in their interest to remain in our state of under development so our living standards do not rise to their level, because they would have to better share the globe’s resources...

The latter is the conspiracy theory I choose to favour.

 

SRI LANKA, A CAUTIONARY TALE FOR UGANDA

A week or two ago I was shocked to find that diesel was selling at a higher price than petrol at the pump. This reversal I have never witnessed in all my years of driving.

That diesel is more expensive than petrol is cause for worry, as all our major transporters run on diesel. The knock on effect on prices is probably just beginning.

I have seen debate around the subject. A suggestion that is coming through is that government reduce or eliminate taxes on fuel all together, as a way to bring prices down. There are many reasons why this logic shouldn’t pass go but the best thing is to look to Sri Lanka to see what happens when governments bow to populism and forget basic economics.

"Following the elections in 2019 the Sri Lankan government set itself up for the current crisis by stopping the use of fertilizer, probably playing to the environmental gallery, instituted major tax cuts, which included the abolishment of Pay As You Earn (PAYE) and when the error of their ways became apparent went on a money printing spree and as a day follows night, inflation is now around 40 percent, digging them further into the hole they had already dug for themselves....

You can imagine the jubiliation in the streets of Colombo, as there would be in Kampala, at the announcement that government had abolished PAYE! The short lived cheap popularity has led to the collapse of the government, whose collapse was accompanied by the most riveting footage of angry protestors last week, rolling ministers’ cars into the river.

The repercussions of the ferterliser ban led to low food production, which has not helped the inflation situation. It also means the exports of their main crop, tea, have fallen off the cliff, leading to a collapse in foreign exchange reserves. This situation was so bad that last week the government announced on Wednesday they had only one day of fuel left, this despite the fact there was an oil tanker off the coast ready to offload its load but Colombo had no money.

What Ugandan populists ignore in calling for tax cuts, is that tax cuts will have to be matched by expenditure cuts. Already painful expenditure cuts are being effected as the economy tries to get back on its feet, to cut taxes further would cause more harm than good. And in fact like in Sri Lanka can lead to the collapse of the government, as frustrated Ugandans look to focus their anger. It would be foolhardy to believe what is happening in Sri Lanka cannot happen here. Which raises the question about the motives of these arm chair economists!

Thankfully the Ugandan government seems steadfast in its resolve to not to succumb to populism.

This is particularly important because the rising prices we are experiencing now are not as a result of runaway government spending but due to external factors, most especially the rising world oil prices and supply chain problems triggered by the two year Covid lockdown.

That means that the factors driving price increases are not in government’s control as it would be if the price rises were because of increased government spending...

If that were the case the quick fix would be for government to cut back on spending and for Bank of Uganda to put the brakes on banking lending. In this case those two remedies would send the economy into recession and more problems than we want.

It would be nice if government could give us some relief, maybe dish out a few shillings all around, that would only be digging our graves further but thankfully strapped for cash Kampala cannot afford that luxury.

There is pain all around, a liter of petrol barely gets us around, our waistlines are in danger as food prices soar and even – horror of horrors, we are getting less beer for our shilling.

The one thing government should, no, must do, is to continue to be disciplined its expenditure so as not to fan the flames of an already bad situation. It is called tough love.

If this can be maintained we will look back one day – a year or two from now and thank god we made the necessary, but hard decisions to stay the course of fiscal discipline.

That being said it’s a good time to take a long hard look at what we are spending cut out the excess, maintain the productive expenses – those that produce income. Because even this will pass.

 

CREATING JOBS, MUST BE JOB ONE

It was reported last week that two Ugandan ladies died in Abu Dhabi and in India. In the former’s case a real time video of her jumping to her death from the fifth floor of an apartment block did the rounds on social media. In the second case, while it was at first reported as a suicide, on closer scrutiny a more sinister reason was suggested.

Most people would rather work at home than abroad. The comfort of family and familiar environment compensate for higher pay abroad. So often when people go to work abroad its normally because circumstances have forced their hand. War, disaster, economic hardship, political and other persecutions could be the cause.

"Most of the Ugandan youth fleeing abroad do so in search of greener pastures and less for other reasons. They are voting with their feet, this economy is not able to sustain them in the way that they would want....

So we have seen hundreds of youth file out of the country every month to work in the middle east which has taken over from Europe and the US as the preferred destination for our immigrant workers.

So how come we cannot make enough jobs for our youth?

The private sector is the major driver of job creation. Its inability to create jobs means either that there is not enough economy activity to warrant its expansion and therefore greater job creation or they are automating processes therefore needing fewer workers as they expand.

There has been criticism of our economic growth over the last three decades, that while on paper it has been laudable – averaging about six percent a year, it has not come with the commensurate job creation.  This is particularly disturbing especially since our population doubles every 25 years and if we think we have problems it can only get worse before it gets better.

Every first Friday of the month, the US’ bureau of labour statistics reports the Non-Farm Payroll (NFP), as the name suggests the number of jobs created outside the agriculture. This is a major indicator of the health of the economy and its future prospects and is awaited with bated breath as it can affect the dollar price or whether the Federal Reserve increases or lowers its interest rate.

It is a recognition that whatever happens in the economy is about people. Numbers are good but they are useless if they do not translate into the improvement of people’s lives.

They say too, that what you focus on expands. BY choosing to focus on job creation as they do, it ensures that the policy makers ensure that any improvements in the macroeconomy are transmitted to the man on the street. You may question the success the US bureaucrats have had on this but at least they try.

In Uganda, like in the US, we have monthly reports on inflation, the state of the economy and every quarter we have other reports on the state of the economy, but we do not have a report dedicated to job creation, even annually. So if we are going to create jobs in this country this would be a good place to start...

We complain about our education system and how it is focused on rote learning and not skill development, but we forget that all job holders today have gone through that same system. While skills development needs more work, my thinking is we go to school to learn how to learn, especially in this age when knowledge becomes obsolete no sooner have you put your text book down.

Skills development is being pushed with the hope that future school goers can make their own jobs, but is possible that one can learn a skill and fail to create a job on a sustainable basis.

 A major oversight of many of this skill development programs is that they do not teach accounting or financial literacy, which would help these graduates monetise their skill.

An engineering graduate many years ago – things may have changed, once confessed that he knew everything there was to know about engineering but nothing about how to run an engineering firm. His firm lurched from job to job mainly on the strength of his salary, without that subsidy the clocking would be ticking towards the firm’s doom.

Government can go a step further and integrate financial literacy in the school curriculum as early as in primary school. 

"We are poor as a country not because we do not have resources but because we have failed to aggregate our resources, be they land, capital or labour, into meaningful wholes. Hardwiring financial literacy in our children early through a formal process may very well be a game changer...

That being said it maybe in the youth’s best interest to take advantage of the skilling projects being offered in the country before they head for the exit, so that at least when they go abroad they can be more valuable workers. As it is now many of the technical colleges around the country are struggling to enroll students.