PROF EDWARD RUGUMAYO: THE POLICE’S LOSS WAS UGANDA’S GAIN

Professor Edward Rugumayo will be turning 90 at the end of next year. By virtue of his longevity, he has seen a lot. Being a Ugandan, more so. He may not have seen the heights to which his country can rise but he has definitely seen the depressing depths to which it can descend.

You wouldn’t tell when we met for an interview recently. Physically he is in relatively good health, a laugh not far below the surface, testament that the depravity of his country’s past has not infected his soul.

He loves his country, so much so that he once threatened a colonial administrator that for refusing him a passport, leading to his failure to study in the US, he was going to jump into politics and see English back to their country.

"The threat maybe, made in the heat of the moment was taken seriously enough that Miss King, the provincial education officer, within two weeks managed to wangle a scholarship for the young Rugumayo to go and study in the UK....

But before that Rugumayo was born in Mukole, in the current Kyenjojo district.

“We grew up in a huge polygamous but Christian family,” he couldn’t resist a smile at the contradiction. “I was the youngest of my mother’s children, but the other mothers were much younger”

Going by his account he seems to have been a hyper active kid eating everything and anything, running the village paths at will and getting up to no good. It took the firm hand of his mother – her kitchen he once burnt down, to set him on the straight and narrow.

“One day I skived, I did not go to school. I went up a mutoma tree and one day my mother looked for me found me up there pulled me down and dragged me back to school. I never played truant again… this was about P1,” Rugumayo remembered with a laugh.

"A voracious reader from an early age, Rugumayo wanted to be a detective after reading Sherlock Holmes, but his elder brother dismissed his plans of being a pipe smoking sleuth, arguing it was a waste of time and a good brain....

He wanted to be a reverend but that did not last very long.

After completing his schooling at Nyakasura School he wanted to be a doctor, but Makerere University did not offer him medicine but instead stuck him in Agriculture.

The hot headed Rugumayo protested this gave up his place at Makerere and returned home.

“My argument was that the colonial government only did research into cotton and coffee and not on food. That was my excuse,” said Rugumayo, who even now shakes his head at the fallacy of his youthful exuberance.

Back home he worked at the kingdom headquarters but was interested in a scholarship to the US to study facilitated by Dr Hosea Nyabongo. He had two options to go to Central State College in Ohio to study Mathematics or to University of Georgia to study pharmacy.

“I was no longer picky. After being in the village for three years with no real future prospects I was ready,’ Rugumayo said.

But fate was not done with him. Apart from the colonial administration throwing a spanner in his plans to go to the US, he met and fell in love with his first wife, Nesta. Their wedding almost did not happen as two weeks to the wedding he was diagnosed with appendicitis.

“When they did an enema to prepare me for the operation, I felt fine and told the nurse I was ok. The doctor checked and discharged me ‘this man had a special case of constipation he is ok,” he said. He has never suffered appendicitis since.

All these events put paid to his US ambitions and led to the fateful confrontation with Miss King. And his getting a scholarship to the UK. To study what?

“Education at Chester College.”

He eventually studied Botany & Ecology at the University of London before returning to Uganda. But he did not stay around much as he posted to Ghana to help author biology books.

Rugumayo taught briefly at Kyambogo, before he was recruited to the president’s office to do research. While there he had a regular Friday/Saturday column in The People newspaper, Katondokahozi.

During one of those days the newspaper got information about irregular allocation of government flats in Bukoto Housing Estate. According to the information, senior government officials were allocating flats to their mistresses.

On the night the column was published Rugumayo got a midnight call from his friend Pincho Ali. “Edward you are in trouble… we have been summoned to the president’s office,” his friend said down the line. The column had ruffled feathers in government.

He reported to the president’s office with his editor Ateker Ejalu and Pincho Ali. They were seen into the office where President Milton Obote, secretary to cabinet and head of civil service Frank Kalimuzo, inspector General of Police Wilson Erinayo Oryema and Akena Adoko head of the General Service Unit.

The journalists were grilled about the article, whether they did research and eventually asked by Obote, whether they knew it would land them in jail.

The tension in the room was so thick you could cut it with a knife. The journalists were by now quaking in their boots, fearing the worst. But Oryema and Kalimuzo diffused a potentially sticky situation by dismissing the article as the work of over enthusiastic youth.

"Just before he left the room Obote spoke to him directly, “Rugumayo…. Let us see how you will behave when you get into power.” This must have been around 1970, Rugumayo thinks.

Rugumayo eventually served in Idi Amin’s government briefly, was instrumental in the transition from Amin to the Obote II government and served severally in the NRM government as ambassador and minister of internal affairs and eventually trade minister.

The good professor not wanting to give up too much in his book, called the interview to an end.

His book “Why fireflies glow” will be launched tomorrow 20^th May in Fort Portal and will be available in leading bookshops and for delivery from mahiribooks.com

THE FUTURE IS HERE. ONLY JUST.

Last week two of the region’s biggest telecos released their annual results. In the case of MTN it was the release of their annual report.

Kenya’s Safaricom continues to post jaw dropping numbers. The company, the biggest in the region, posted revenues of kshs311b (sh8.5trillion), net profit of Ksh62b (sh1.7trillion), this on the back of capital expenditures of Ksh96b(sh2.6trillion) most of this Ksh55b directed to setting up their new operation in Ethiopia.

But my favourite Safaricom numbers are those of their mobile money platform, M-Pesa. 

First off, every second 856 transactions are done over M-Pesa, these include transfers, withdrawals, business payments, remittances from abroad and lending. The network has a capacity to do 2600 transactions a second.

Think about the efficiency this brings to the Kenyan business environment. That’s why everybody from the lowly vendor on the street to businesses carry out transactions with M-Pesa. According to Safaricom 32 million Kenyans have an Mpesa account and three million businesses are signed up as merchants.

With that kind of network, it should probably come as no surprise that Kshs36trillion (one quadrillion Uganda shillings) flowed through it last year. To give some perspective this figure is about ten times the amount transacted on the MTN mobile money platform last year or just over half the GDP of Uganda.

And because Kenyans are so plugged into M-Pesa, withdrawals from the system is the only service not growing in double digits. Why withdraw when you can pay for everything off the phone?

Also interesting is that $20m in remittances from abroad came on the M-Pesa network and going by last year’s growth, this figure is set to double every five years, probably faster as the service gains traction.

MTN, the only network whose full results are publicly available, are beginning to follow the trend. In 2021 was the first time in the company’s history that revenues from voice slid below 50 percent of total revenues. A trend that continued last year but in addition revenues from voice came in less than in 2021, the first-time voice revenues have fallen year-on-year.

Meanwhile revenues from both data and fintech grew by 24 percent and 25 percent respectively, going by this, revenues will be doubling every three years, which further means revenues from data and fintech will each surpass voice revenues by 2026...

Unlike in the story books, in real life revolutions take time to happen.

This column has argued for a long time that one of the major challenges of our economy is that we do not aggregate our resources, be they land, labour or capital, into meaningful wholes that can then benefit the greater society.

For the longest time we have been gritting our teeth on how to get more Ugandans into the formal financial sector. This is important because all that money that is lying idle in our wallets and under our mattresses, if banked can be used to finance people who need the money.

And it is quite significant by some estimates more than half the money in circulation is lying around doing nothing.

With the introduction of agency banking the banks have managed to extend their reach, more than they have since independence. But now imagine that the 25 million or so mobile phones can extend this reach even further.

In the 14 years since mobile money was introduced to this country between them MTN and Airtel reported about two trillion shillings in deposits, at the end of last year. In MTN’s case assuming they maintain 25 percent growth in deposits they will reach Stanbic Bank’s current six trillion shillings by 2030...

Like in Kenya where twice the GDP of the country was transacted over M-Pesa last year, mobile money will soon be major component of our GDP.

By first mopping up our small monies and then reducing the friction that comes with using cash, the growth of mobile money is set to bring greater efficiencies to the economy.

I remember in the 1990s reading an article about a town in the UK that was going cashless. The story was that the town would issue cards to everybody, essentially debit cards and these would be accepted by all traders.  At the time we had only one Atm in the country, at Barclays Bank, Kampala Road and it would take stretch of imagination to imagine cashless society here.

It is still early days, but the people at MTN Momo are grappling with the challenge increasing transactions using their platform, they estimated less than a million of 11 million subscribers actually transact over the phone. But a 90 percent growth in transactions was reported last year, helped by the tripling of merchants to 173,000 last year from 53,000 in 2021.

In addition, they are looking to revamp their overdraft offering to go alongside their small loan product.

These two initiatives will not only digitize money but also provide a treasure trove of data can be mined to determine what works and what doesn’t in issues such as poverty eradication programs.

Now we do not have to go all the way to the UK – visa hustles and all, to see how a truly cashless society will look like.

A few years ago while in Mombasa I had to get an uber in the morning, when it was time to pay for my fare, the driver had no change.

Annoyed I asked him how he can start the day without change, “And you how can you not be on M-Pesa?” was his swift reply.

 

 

 

 

OF KING CHARLES III CORONATION ECONOMICS AND POOR US

By the time you read this the pageantry surrounding the coronation of King Charles III will be done and the UK will be enjoying a public holiday to extend the festivities or to work off their hangovers.

At the time of writing, it was estimated that the coronation would cost the British tax payer $125m (sh465b). But that was small fry compared to the estimated one billion pounds (sh4.6trillion) in inflows that will ensue as a direct result of the event. Observers have it that London hotels were enjoying 96 percent occupancy in the lead up to the event and tourism in general and the pubs in particular expected a £337 million (sh1.6trillion)....

I like to think that these are conservative estimates. In the heat of all the euphoria I suspect budgets – personal and public will be thrown out the window and the British economy may very well – for a few weeks, pull itself from under the dark cloud that has economy for the last two or so years characterized by the growing cost of living fueled by historically high inflation.

The party poopers – never far behind, also point out that the extra public holiday today, May 8^th will cost the economy 0.2 percent of GDP.

Just like in 1953 when Queen Elizabeth II was crowned the UK is in need of optimism. Seventy years ago, the UK was still a bombed-out shell following the Second World War, as result was rolling back its empire and the coronation, which was filmed in scratchy black and white, brought some cheer back to the British Isles.

This coronation was beamed to the four corners of the world in real time, high definition colour. More significant changes have happened to Britain in between the two coronations, not least of all how the British economy has changed beyond all recognition.

In 1953 manufacturing accounted for a third of the British GDP but today that figure is less than 10 percent with services being the major driver of the economy. At last count services – retail, finance, tourism, hospitality, social services, accounted for 79 percent of the economy.

The shift away from manufacturing to services seems the logical progression in development. The UK attained parity in the share between manufacturing and services at the end of the 19^th century.

"The just witnessed coronation ceremony is more than symbolic of the trend, where economic activity is now dominated by the intangible and ephemeral. The western economies have mustered the art of taking events and turning them in to money spinners....

Meanwhile they have shifted most of the low value manufacturing abroad or abandoned it all together for higher tech processes.

The shift can not happen by mistake but is a function of a more educated population and government sensitive to the shifting trends and looking to enable innovation.

The English Premier league is one of the biggest export of the British Isles. Though accounting for only £8b (sh38trillion) of the £3trillion economy, shows how big the services sector is.

 For countries like ours which are pre-industrial the coronation should focus to take a look at how to maximise the potential of events, not just see them as items to tick box.

I am particularly excited about the Rwenzori Run, the second edition of which is set for September this year. The Rwenzori mou3ntains has been with us forever, but we are only just creating an even to leverage its history and mysticism now in the 21^st century.

What will happen when someone looks through similar lenses at Lake Victoria, the source of the Nile, our various Kingdoms and numerous natural endowments. And that is only just sports/adventure tourism.

What would happen if the trick to improving our education and health services, would be to get it into somebody’s head the billions of dollars we can earn in foreign exchange from people coming to study here or health services?

What would happen if made Uganda regional or even continental filming hub? Our natural endowments would look absolutely stunning in HD.

The trick is to first create a narrative, that projects the country in the best possible light or not.

"When King Charles forefathers were running around the world empire building, far from the romanticized version of summer holidays in Kashmir or the idyllic lifestyle of the white settlers in Kenya’s rift valley, the empire was forged with steel, blood and a liberal doze of racism....

But with having to cede control of the empire in the last century, the brutality of colonialism was washed over and a more romantic narrative has emerged, no, generated. At the center of it is the royal family and the reality show that they are.

The house of Windsor is not only powerful in keeping their citizens the hard questions about their relevance in the modern world but are useful too for keeping our eyes on the UK.

I don’t know him personally, but I am willing to bet if King Charles could do away with all this fanfare he would. But he has been brought up to recognize, his role in the larger scheme of things, among which is to put appositive spin on Great Britain.

It is simple but not easy. We need to seat down and generate our own narrative (mindset change would help) on a strategic level and be more opportunistic in taking advantage of our natural endowments.

MOST OF THE ERRORS IN OUR BUSINESS ARE EMOTIONAL

Every so often in our lives something happens to us that makes us pose, do a double take, reevaluate everything we know. Strangely it may affect only you out of the many people around you, who have had the same experience. It may be that they have experienced it before, got the lesson and are applying it in their lives or they don’t get it at this time. Their time will come.

That you get it now, or previously, not yet or never does not make you superior or lesser than the next man.

I had one of those moments, last week.

A twitter handle I follow, @BusinessMind posted last week “Most of the errors in our business are errors of emotion”....

It doesn’t seem like much but think about the profoundness of that statement.

A business is supposed to solve a particular problem in society and in the process make the business’ owner some money. If it doesn’t do that, then society will reject it or if it doesn’t do it in a cost-effective way will soon shut down.

The promoter of the business among other things, needs to sensitive to the society’s changing tastes and ensure his good or service remain in step with these changes or be slightly ahead of them. The way to do that is to be in constant touch with the market. Easier said than done.

Assuming the business’ management have taken this to heart, the next thing is to ensure this understanding is not only known but appreciated at a deeper level up and down the organisation.

Whenever a businessman complains that the economy is not doing well, it is at the tip of my tongue to ask whether his customer service is a up to scratch. You will be amazed how much business is turned away by lapses in customer service.

The saddest thing – for businesses, is that the majority of customers who don’t like your service and do not complain, outweigh those who complain. We are in a liberal economy; chances are they can take their business elsewhere.

Taking customer service as one business process the negative emotion of the frontline employee can cost you millions, billions or your whole business.

But at a strategic level, many businesses sink or swim depending on their asset allocation...

Ideally asset allocation should be slanted towards those assets that bring in more revenue to the business rather than costs.

Asset allocation is one place where emotions should be stored away and decisions be made with cold blooded precision.

So, take for instance the bank which breaks the mold of the high street bank and offers attractive propositions to depositors and borrowers. Soon the funds are flowing in, at a rate that they probably don’t know what to do – a good problem to have.

Staying with the normal bank business of collecting deposits and lending seems boring in the light of this avalanche of money. The managers start thinking they have hacked this money-making business and they can do no wrong, so they start speculating with the money – going into other businesses, bankrolling startups and dabbling in the stock exchange, they even build themselves a swanky new headquarters with all the whistles and bells. But soon the mismatch between their short-term deposits and their long-term assets catches up with them.

Another bank in the same industry, much bigger than the first, sells its headquarters to finance a roll out of computer system around all its branches, while renting its new headquarters. With the new computer system installed the bank can first, have access to all the resources mobilized around its countrywide network and attract customers, because now they have access to their funds from wherever they are in the country.

Twenty years down the road the first bank is history, remembered by older members of society during beer soaked reminisces, while the second is making money hand over fist, but still renting its corporate headquarters.

"The first bankers were making emotional decisions like we make as individuals. We want to buy land, build buildings and stock ranches, so we can point them out to our friends as our own and let them marvel at how progressive we are. The failed bank did that chest thumping on an industrial scale....

The second bankers – heartless bastards, let the numbers tell the the story. And numbers if looked at with cold logic, don’t lie. They cut back their costs, shoveled the savings into making their branch network more efficient and the rest is history.

This story does not apply to banking only. We saw it in telecommunications, media and nightclubs.

So, if you are to bet on one businessman or another shun the flashy businessman with the big, latest, four-wheel drive guzzler, with a company mansion atop the hill and expense account at the five star hotel, for the business still housed in a warehouse, holds its AGMs in the car park and whose CEO drives -- a four wheel drive nevertheless, but a ten year old version.

 

KEITH MUHAKANIZI: HOW WOULD UGANDA HAVE TURNED OUT WITHOUT ECONOMIC REFORM

Prompted by the recent passing of Keith Muhakanizi I got to thinking what would have happened to Uganda if we had not bitten the bullet and made the hard decisions in the 1980s and 1990 required to resurrect the economy?

First of all what did Uganda look like in 1986, when we can safely say the real recovery of the economy begun.

"Going by the first budget read by then finance minister Professor Ponsiano Mulema it is hard to tell objectively what Uganda was like...

“It was, however not possible to get reliable statistics. Such figures as we now have are rough estimates based on the few statistics available and lots of assumptions,” Mulema siad in the budget speech he read in August 1986.

He however managed to report that the industry had broken down due to poor management, inadequate working capital and was unable to get enough hard currency to buy raw materials, spares and other inputs. Coffee exports amounted to about 2.5 million bags but he suspected this was an understatement of the true production as a lot of coffee was being smuggled by individual and official agencies. Mulema also told the National Resistance Council (NRC) that sh402.5b in revenues were collected that year at the official rate of sh1400 to the dollar this came to about $287m or just over a trillion shillings at today’s rates. PS Ramathan Goobi would be unreachable if he had a resource envelope that light today.

Total budget that year was sh514.3b or $367m or about sh1.4trillion in today’s money. The 2023/24 budget is set to touch sh50trillion and we will still have a cash squeeze.

Numbers aside the anecdotal evidence draws a better picture. Everything was in short supply.

"It was not uncommon for grown men and women to cut work, on a predetermined day, to line up outside the Resistance Council I (RC1) chairman’s house for a piece of a bar of soap, a liter of kerosene or a kilo of sugar. While driving, your main preoccupation was to fall in the porthole that would cause least damage to your car, you couldn’t dodge them all (sound familiar?). Keeping left was a luxury car owners could not afford. At Makerere University when water run out, you went to Katanga to fetch from the protected well there. Being run over by a car as you crossed Bombo road wasn’t a concern as there was little traffic in those days. There were several wells around Kampala for this purpose. (Do you know he well nearest your home today?) Electricity was a rumour and we didn’t even have generators or power inverters...

I am sure living in today’s Uganda you cannot get the picture.

At a macro level as described by Mulema there was little economic activity – of the 80 factories surveyed at the time only 10 were working at 30 percent capacity, therefore there was little tax revenue -- Revenue collections to GDP stood at around five percent and therefore government had little to no leeway to provide public goods.

Government therefore had to suck up to the money men – The World Bank and the International Monetary Fund (IMF) for a start, who had the resources we badly needed. But in order for them to open the money taps we had to bring government expenditure under control, privatise the inefficient public companies and liberalise the economy, by for one, breaking up government monopolies. That was the cost of their money more painful than the few percentage points of interest that would be due on some of those funds.

There were some idealists and armchair economists who thought we need not suffer the pain of the reforms to get the economy back on its feet. That if the donors want to help us it should be unconditional aid, they give us the money, don’t ask for repayment and let us spend it as we saw fit. The naivete of these people boggles the mind.

So, let us say we had taken that route, what would have happened?

Chances are in lieu of tax revenues the government would have printed more and more money – it was already doing that. Mulema reported that currency in circulation had grown 90 percent in the preceding year. And then inflation would have taken off. Inflation is a disincentive to business because you can not plan and discourages lending. The net effect of which would be that the government would be unable to provide essential services, services critical for lifting people out of poverty. Shortages of everything would persist and we would continue with our sub-human existence and we would be worse off than we were in 1986.

"We would be a cross between Eritrea, with its scarcity commodities and services and Zimbabwe, with its hyperinflation and useless currency....

What people don’t know or choose to forget that the economic reforms that pulled us out of the hole were not only necessary to unlock the donor vaults but at the heart of then they were good economics – control government spending and the let the private sector be central to economic growth.

While it is true that no country has developed using aid, the initial aid is useful to get the economy up and running. To take us to the next level, to transform our economy will require to improve the productivity of our labour, land and mobilise more of our own resources, which arguably will need the next level of policy beyond monetary discipline.

 

KEITH MUHAKANIZI AND THE PASSING OF AN ERA

Last week the permanent secretary in the Office of the Prime Minister (OPM) Keith Muhakanizi passed on in Milan, Italy where he had sought treatment for a long-time ailment.

But he is better known for his time at the finance ministry, where his role in the reconstruction of our economy since the early 1980s is indisputable.

While work to begin economic reforms begun with the Obote II government, the National Resistance Movement (NRM) government is the one which really had to roll up its sleeves after 1987.

The first budget of the NRM in August 1986, painted a really bleak picture of the economy.  

"Revenues were thin as coffee exports, Uganda’s top tax earner at the time, were largely being smuggled; money in circulation had jumped 90 percent in the previous year, fuelling the already triple digit inflation, a situation not helped by the floating shilling, which was depreciating everyday for lack of foreign currency. As Uganda’s industrial base had been gutted and most things even the bare essentials like bar soap, sugar and cooking oil had to be imported, the depreciating shilling was a nightmare....

So, while the beginning of Structural Adjustment Programme (SAP) had already begun, “The financial programme failed …. the government was not particularly disciplined and therefore expansion in money supply to finance unplanned and in many cases irregular government spending,” then finance minister Professor Ponsiano Mulema reported in the 1986 budget speech.

It would take more than a few paragraphs to describe the dire straits into which the economy had sunk. No less a figure than Singaporean prime minister Lee Kuan Yew, credited with leading his island nation from “third world to first in one generation” did not give Uganda a chance in 1988,

“When I met the leader of Uganda, I knew I was meeting a leader whose world has collapsed and may not be put back together for another 100 years,” he said in an interview at the time....

This is the situation the young economist Muhakanizi found himself in. There are many people who were involved on getting Uganda back on its feet but for longevity, former Governor Emmanuel Tumusiime Mutebile, Muhakanizi’s predecessor as finance permanent secretary and secretary to the treasury Chris Kassami, stand out. Muhakanizi was the understudy of his predecessors, an uncharacteristically vocal one at that.

In 2006 I interviewed Muhakanizi to commemorate the 20 years since the currency reform. The interview was at his farm in Sembabule where I drove for miles without seeing anyone, before getting to his door. I joked that even the loudness of the Bakiga would do him no good here in trying to talk to his neighbours.

He dismissed the explanation that Bakiga are loud because they had to communicate across valleys in Kigezi, explaining that the loudness of the Mukiga comes from confidence, which confidence comes from being the first place that the colonialist succeeded in titling land in Uganda, after futile attempts in Buganda and Busoga.

The psychology of a man who has his own property is very different from another who is beholden to another, for even the land on which he lives.

I have to admit I have never tried to verify this claim. As far as I was concerned, it was as good an analysis as any and I was not going to let the facts get in the way of a good story.

But this is a critical element to the turn around of Uganda’s economy. When the NRM came to power among the things they did was to stop the IMF program signed onto by the Obote II government. Their revolutionary fervor could not allow them to kowtow with the Bretton Woods institutions, the symbol of “western Imperial hegemony”.

"But President Yoweri Museveni, a quick study, soon realized that with empty coffers, no means to fill them and a political project that was about to die before it begun, later in 1986 called in then, central bank governor Leo Kibirango and Mutebile, then chief economist in the planning ministry, to chart a way forward. These two of course were already branded the “imperialist agents” whose voices had been drowned out by the “revolutionaries”....

Mutebile, a mukiga, was more forceful in his argument than Kibirango and thankfully, Museveni saw the logic of an about turn on the course the economic direction. The rest as they say is history.

But the devil is always in the detail. And it was left to technocrats like Muhakanizi and others to do the “dirty” work.

This entailed the freeing up of the foreign exchange market, the liberalization of produce marketing, the privatization of the state enterprise and bringing much needed discipline to government spending.

There were many moments when the government wavered, seduced by populism, and it took the combined efforts of the three – Mutebile, Kassami and Muhaknizi to show the politicians the error of their ways and reset the course.

The results are there for all to see in the more than three decades of unbroken economic growth – the last time the economy contracted was in 1985.

Muhaknizi, his strongly held convictions making him a polarizing figure, in his later years at the helm of the finance ministry maybe run into the limits of his own powers. The major criticism against him was that the market friendly policies he fronted seemed unable to translate into a transformation of the whole economy, especially the agricultural sector, in which seven in ten Ugandans derive a livelihood. Failing health and the conservatism that comes with age, maybe blamed for his seeming inability to embrace a new turn in the road.

"But it would be a very hard man to disagree that the net effect of his favoured policies have been positive for the economy and have set the basis for the economy’s future take off. And as such his passing – as the last of COO of the finance ministry involved in the reconstruction of the economy, although he was not in the finance ministry at his end, may very well signal the end of an era or at least a major milestone in this country’s economic journey.

Fare thee well Keith Muhakanizi.

LIGHT AT THE END OF THE TUNNEL FOR THREE WAYS

Jeff Baitwa has been to hell and back.

Draining court battles and the near-death experience of his company are an understated snapshot of the journey he has been on.  But he can now see light at the end of the tunnel and his business, BroGroup Ltd seems set to return, stronger and wiser.

While the rest of us after university, in the mid-1990s, set out to find jobs, brothers Oscar and Jeff started Three Ways Shipping, which is now the flag ship of their BroGroup holding company. They struggled to get a foothold in the highly competitive clearing and forwarding business, building the business to the point that, at the height of its success about a decade ago, they were reporting top line revenues of $30m(sh110b) and were employing at least 750 people across a network that stretched from the Mombasa and Dar es Salaam to their operations in western Uganda, where they were gaining a foothold in the oil & gas industry.

"Ironically, the oil & gas industry almost did in all their hard work. After the commercial viability was determined in 2006 the frenetic work around the exploration slowed to a crawl. Critical legislation, a tax dispute with UK-based explored Tullow Oil and negotiations surrounding the development of the oil fields, most especially the pipeline to Tanga in Tanzania, were to blame for the slowing momentum in the sector...

The slowdown badly affected Three Ways Shipping, which had positioned itself as the leading local logistics company servicing the sector.

Their bankers put them under receivership in 2016, before the company extricated itself from it in 2019.

In the meantime, the company found itself in a debilitating court battle with their client telecom company, MTN, which is still winding its way through the court system, but which Jeff thinks, is about to be resolved.

Just as the company battered and bruised, was girding its loins to begin a comeback, the Covid pandemic happened, setting them back deeper into the hole they had found themselves in. In Uganda and globally the Covid pandemic prompted a worldwide lockdown, that started around March 2020 and only last week did the World Health Organisation (WHO) announce the pandemic was finally over.

“I think we are over the worst now,” Jeff told Business Vision last week in his office on Jinja road. But not without pain.

In order to resuscitate the group, the brothers have had to invite new shareholders, offshore investment firm, Delux Group, which took a 20 percent stake in the company and brought in much needed financing to tide the company over its earlier challenges.

“The new investors are college alumni, some of whom are Ugandan who saw our situation and thought they could help us get back on our feet not only with resources but with their own experience,” Jeff said.

As a result, Jeff is now co-managing the company with Daniel Pettersson and a new, Chief Financial Officer (CFO), Chief Operations Officer (COO) and Human Resource Manager have been hired.

“Before our challenges we were servicing multiple industries -- trade, infrastructure, produce oil & gas and not only in Uganda but in Kenya ana Tanzania. In Kenya and Tanzania, we are already working through joint venture partners,” he said.

Already in Uganda, the BroGroup is in a joint venture partnership with the Johannesburg Stock Exchange (JSE) listed Grindrod Logistics Africa, focused on freight forwarding business opportunities.

"With BroGroup’s ducks lined up, Jeff is confident about the company’s future, but this hope is tempered by the experience of the last decade.

“During the challenging times I have better come to appreciate the need for self-belief, perseverance, patience as personal attributes. Also, good friends, supportive family and supportive workers and all those who stuck with us in various ways during the period,” Jeff said. “The relationships we developed have remained largely intact and we are grateful for that.”

It started as a two-man operation – Oscar in the UK taking orders and Jeff in Uganda doing last mile deliveries – it was called Equator Freight Services. That was in 1996, 27 years ago.

Jeff says, these last few years were as close as the company has ever come to being shut down and maybe that is what was needed for it to bring in new partners and reach for the next level of its potential.

"In the immediate future the group will be focused on the oil & gas sector, where first oil is expected by 2026, but there is a lot of logistical work needed to be done over the next three years and hopefully carry everyone along with them.

“We will be looking to employ local, buy as much as we can from here and even source funding locally. We will try and get as many opportunities to locals in a sustainable manner,” he said.

In the medium to longterm they are going to see more corporate evolution as they mature.

“I may still be the MD for the next two, max five years. We are trying to drive the business so that management is more independent from the shareholders,” he explained.

Jeff thinks they are definitely out of the woods, never mind that the enduring lesson from the Covid pandemic is to hope for the best but expect the worst.