Africa losing 58 billion dollars annually

It seems we are condemned to poverty.  It is us the poor who lose to the rich. According to a group of organisations including Health Poverty Action, the African Forum and network on Debt and Development and the World Development Movement among others, USD 192 billion is flowing out of the African continent every year in profits made by foreign companies through tax evasion (Paul Redfan, a special correspondent of the East African newspaper, issue of July 26-august 1, 2014).

In contrast USD 134 billion flows into the continent in form of loans, foreign investment and aid. The result is Africa is losing USD 58 billion a year. The report claims that this loss is not only repatriation of profits but illicit financial flows, illegal logging and fishing among other things. The report says that Africa is forced to say a further USD 10.6 billion to adapt to the effects of climatic change that it did not cause.  Mr. Martin Drewey, the Director of Poverty Health Action describes it as looting. He says “let us use more accurate language. It is sustained looting the opposite of generous giving.” When you do not have income and the little you have is siphoned away, you are condemned to poverty. It is not surprising that there is a school of thought that says that poor Africans should be given money rather than let them work. Is Africa’s leadership aware of this challenge?

Is Africa really growing as it has been claimed?

Razia Khan writing in the east African Business week of June 30-Jly 6, 2014, questioned whether Africa was really growing. His argument was that the statistics quality in Africa from different agencies did not enable Africa to know whether it was growing or not. According to him, the data in Africa is so bad that it does not enable any meaningful interpretation. Khan is head of Africa research at Standard Chartered bank in London. In a way he is challenging the school or thought that Africa has been growing rapidly in the last decade. I cannot agree with him more, poverty in Africa is simply increasing. Possibly we have economic growth without economic growth. Many world leaders and economists have been saying it is time for Africa to lead the way in economic growth following China. My view is that Africa is not ready yet. The concept of business is still foreign to many Africans given that approximately 70% or more of Africans are not yet in the business/industrial economy.

There is need to spend money on agriculture, are we spending it rightly?

In the Summit Business Review of January 4, 2014, there was an article that claimed that the Ministry of Agriculture was to spend shs 140 billion on implementing a national fertilizer strategy in Uganda. This was because government had noted that there was a need to boost the soils to improve agricultural production. When you talk about implementing a policy in government, the money normally goes to allowances. The newspaper report on NAADS indicate most of the most has gone into seminars and allowances. Seminars and allowances are indeed part of what is required to implement a policy the issue is simply how much is spent on getting actual results of the policy. According to the Summit Business Review, this expenditure was a wrong priority. Agriculture is the main stay of this economy. How should it be supported to grow. This is a question for others to contribute answers too.

Fred Muhumuza an economist with KPMG Uganda said with the Monitor of June 12, 2014 “that planning in Uganda is so scrappy as the President noted with NAADS(call it agriculture) where the bulk of money goes into workshops and seminars mostly allowances”. The President is possibly still doing more analysis and will soon add other ministries, departments and agencies of government. 

What is preventing Uganda from growing? Burying the dead

It is said that in Kenya when an ordinary person loses a relative they would store away the dead person until the weekend. It is also said that if you are a factory worker in Kenya and left your job during a week day to go for burial, do not bother to come back because you would have already been replaced. African culture has its wonderful experiences but also it has its not so wonderful experiences. The not so wonderful experiences act as constraints to business. burying the dead is one of them. I have a friend of mine who lived in the U.K and his father lived in Germany. We used to meet every January for almost 10 years. One time he told me he thought his father was dead and I asked him why. He said he did not receive a Christmas card from him! Such is the attitude to death in many developed countries contrary to what is in the developing countries. In Uganda to understand death, you must watch Bukedde TV. Our culture has immense respect for the dead and the need to attend burials. If a big man dies in this country say at the level of permanent secretary, you may have about 300 vehicles at the burial ceremony irrespective of the distance. This is a huge unproductive cost to the economy but on the other hand, culture demands that this be done. If you were a politician or anybody of substance, with some link to the dead person and you do not show up, you will be seen in bad light. It is not surprising that recently President Museveni, shared his frustration with investors over the too much time Ugandans lose mourning and burying the dead. Sometime in June at the Imperial Royale Hotel while addressing investors in the country, he said investors had to suffer the problem of wastage of time which was embedded in Ugandans culture. He gave examples of burials as one of the time wasters and called for changing attitudes of Ugandans. He said Ugandans were not taking up top jobs because of some of these cultures which made them inefficient. This contributes to my thinking that in Uganda business and industry is still a foreign concept. We yet have to appreciate it and give it its due value

The State of Entrepreneurship in Uganda

The state of entrepreneurship in uganda from Shakirah Ali

If It Ain’t Broke Do (Not) Fix: Using Unique Business models to Manage Change in a Changing Environment

If It Ain’t Broke Do (Not) Fix: Using Unique Business models to Manage Change in a Changing Environment from Shakirah Ali

Government never dies..

Recently an article appeared in the papers talking about that we had too many institutions. In an industry, there should be no barrier to startup of institutions. This promotes a competitive spirit and allows provision of better and cheaper services to the customers. Universities in Uganda and indeed secondary schools have taken this dimension. For secondary schools, the demand exists and the supply cannot be any better than what we have. The good schools like Kampala Parents are charging a premium. The 3^rd world schools also charge what is affordable in their respective markets. For universities, the shakeout will come more quickly like what is happening in the banking system. Universities will close if they cannot offer efficient services.

Of course some may try to hold on politically but customers vote with their feet. If you service is mediocre and your service charge is too high, they will definitely go away.

However in government, there is a luxury of being able to open up any new institutions and even if the performance mediocre, it will survive, government never dies. Recently, the government of Uganda proposed the establishment of African Graduate Entrepreneurship Institute. The artistic impression of the proposed Centre is here.

MUBS initiated the teaching of entrepreneurship not only in the country but in the region. We offer programmes in entrepreneurship including PhDs. We are the best in this. However when government opens a unit like this and we have no idea, nor input not even consulted, it seems the right hand does not know what the left hand is doing.

Our existing institutions are poorly funded. We need to strengthen what we have before we venture into others. Portfolio entrepreneurs open a multiplicity of businesses with numerous objectives in mind. At times they take time to explore their core competencies. At times they see an opportunity and open a business for a short term to exploit that. For instance, it is opportunistic for a bank to go into insurance (though in Uganda, this has been prohibited). It is also opportunistic for a big trading company to start an insurance business. The motivations are not very clear unless if they are political.  Government should have strengthened the entrepreneurship education and training function other than opening new institutions with no capacity to manage them in a technical sense.

The human resource to manage such an institution can only come from MUBS at the academic level. However we watch the space and see what will happen to the institute. Government is not short of solutions.

Africans cannot do business, not just yet

Africans cannot do business, not just yet

I am responding to Timothy Kalyegira’s interesting article when he wonders why Africans cannot succeed like Indians or whites in business. in another article by Andrew Mwenda in the Independent, he wondered whether Africa will be the next big thing in terms of economic growth. These two people, Kalyegira and Mwenda are journalists I respect for their knowledge and objectivity over the years. Not that I do not respect others but to me they have proven themselves. One of the key things about their writings is that they are informed, they are researched.

Poverty and jobs are on everybody’s lips as one of the biggest challenges that Africa has. I will pose a silly question, do Africans know they are poor? Many Africans are comfortable and pleased with themselves with their state. They are happy to have their extended families and eat the communal food that they eat and live day to day. Indeed, negative literature about Africa, has said that all Africans do is make noise, have sex and produce children. They has been these articles circulating about what former South African President Botha said and what the Israel Prime Minister Netanyahu has been saying about Arabs and Africans. Netanyahu’s attitude towards Barack Obama is well known. Invariably, Europeans get surprised by the conduct of Africans and of course I must add Arabs in this category. They will also be surprised at the business attitude and practices if both Indians and Arabs.

My proposition is Africans cannot do business, not just yet. It is foreign to them. The concept of business emerged in the western world following the industrial revolution. At that time, the west had to transform from the feudal society to one where the peasants had to work in factories to live. Around the same time in Europe, there was a period of renaissance, a period of enlightenment, education and training emerged as part of life. The socialization of west was transformed from the feudal society to an industrialized society. Majority of the population in Africa, still live in rural areas and depend on subsistence farming. A small number of these who become urbanized or educated, attempt to go into business. indeed they are very good civil servants because the training makes them that but they are not good businessmen because they do not have that training. They do not have that socialization. Their socialization continues to be one of the extended family and happiness sought in having children, and belonging to a society. To be able to get where they are, the developed countries have gone through tremendous change. The world wars killed millions of peoples. The civil wars in the United States, the Bolshevik revolution in Russia among others were part of the transformation process. Reading books like the Grapes of Wroth will explain to you the transformation of countries like the United States from a feudal society to a modern industralised society. Unfortunately this has not happened in Africa. Business is foreign to Africans. As long as there is a fallback position of family, friends and even political massaging, Africans cannot take business as a way of life. We need a revolution that will transform African societies to prepare it for business. We need the insecurity that is created by the factory system where if you have no job, you will not live. It is only then that Africa will wake up and compete with the Asian and European communities in business.

Timothy, to me this explains why in many Africans countries, it is the Indian, Chinese or the European that is commanding business. they have been socialized to know that without an economic activity there will be no future.