Encounter at State House: Museveni's Intellectual Prowess

The other day we went with the Nobel Peace Prize Laureate, Prof. Muhammad Yunus, to meet President Yoweri Museveni at State House in Entebbe. Prof. Muhammad Yunus has more fame than many of the world leaders and his works are now subject to major academic debate. Prof. Yunus is a Professor of Economics who became famous because of his novel idea of lending to the poor primarily women which resulted into the formation of the famous Grameen Bank.

The Grameen Bank of Bangladesh founded by Muhammad Yunus is famous for microcredit, giving small credit to women to change their lives. The bank is now owned by the borrowers who are the shareholders. The bank has over 8 million shareholders and to date it has lent over 12.5 billion US dollars in small loans. Over 90 percent of the beneficiaries are women. This effort by Prof. Muhammad Yunus and transforming the lives of millions of the poor in a poverty stricken country like Bangladesh is what gave Muhammad Yunus the Nobel Peace Prize. Earning a nobel peace prize is not an everyday thing. Such a person must be held in esteem and earns the respect of the entire world. This is the famous Prof. Muhammad Yunus.

Meeting with the President Museveni, I noted that Muhammad Yunus had met his match. Everybody would wish to listen to a Nobel Peace Prize winner speak and such people are respected and revered.

Three things I noted and possibly learnt from my interaction with Muhammad Yunus in the 2 day encounter I had with him and in the engagements that we had:

He is a very simple person and does not have the sophistication of the wealthy people. Indeed he represents poor people by his approach and I guess his life style. He dresses in the usual ordinary Bangladesh Kurta Pajama (a common dress on the Indian sub-continent) with the peticoat. He doesn't carry himself around as an important person. Indeed an ambassador of the poor.

Travelling around Kampala, he was moved around in an old Toyota TX. You would have expected that the State should have provided him with one of the BMWs that carry very important foreign dignitaries.

As an Ambassador of the Poor, Prof.Yunus led by example, a modest man.  While we waited to go to State House, we waited at the Imperial Golf View Hotel. Behind the doors, I talked to Karim Hirji, the owner of the hotel to arrange a comfortable room where Prof. Yunus would wait. He rejected it, preferring to wait at the reception. Luckily since he doesn't carry himself as an important person, nobody noticed that this simple man dressed in the simple Bangladesh dress was a Nobel Peace Prize Winner.

Indeed a cleaner in the hotel would have told him to move away and he would have obliged. That is Muhammad Yunus for you. A very ordinary person who caused a revolution to improve the lives of the poor through micro credit.  

As he presented his case, Muhammad Yunus was advocating for Social Business, a new concept. As he put it to President Museveni, I saw him fail to put across this very important concept which he came to preach to this country. This was my second lesson from my interaction with Muhammad Yunus; even the mighty are vulnerable especially when they meet with the prepared. Muhammad Yunus explained to the President what social business was and he simply failed to say it. Very unfortunate. He instead asked his aides to explain it and they did a bad job at it. They brought out a case study of one Robert Okodia in Lira. I have visited Robert and he is an outstanding young man who has won various prizes for his work. He is also going to benefit from a loan by the Yunus Social Business Fund. He has also met the President. I feared at that time that if the President had found out who it was, the whole story would collapse.

It wasn't a very good example, it didn't bring out the concept as professed by Muhammad Yunus. It was at this time that Museveni's best came out. Museveni listens a lot and pays attention to detail. He is very knowledgeable and widely read. It was visible during the meeting that he was tired and sleepy but still very sharp. Noting that they had failed to explain the concept to him, he turned to Prof. Yunus' background and activities. Muhammad Yunus was visibly shocked by Museveni's knowledge of Bangladesh's history and the current leaders of Bangladesh.  Museveni talked about the two warring women politicians Sheik Hasina and Begum Zia. Muhammad Yunus  would keep on saying "oh you know that.." showing surprise that Museveni knew alot about Bangladesh. Indeed he knows a lot about many things in the world. This contributes to his leadership abilities. Museveni mentioned the leaders who caused a revolution in Bangladesh and Prof. Yunus responded in the affirmative. The shocker was when Museveni talked about the role of Indra Ghandi in the war that created Bangladesh. In the room, I felt there were three people in the room who knew this. President Museveni, Muhammad Yunus and myself. I wished I could contribute to the discussion but when visiting the Head of State, there are rules and I kept the rules and did not utter a word but felt pleased that I knew the stuff.

The point in this discussion was President Museveni moving away from the main issue because they failed to tell him what it was to seeking more knowledge about the person. Muhammad Yunus also came out as a revolutionary. He was teaching in the USA and he was an activist who advocated for the breakup of Pakistan  then into the present Bangladesh and Pakistan. Muhammad Yunus returned to the country after the Bangladesh war in 1971. Museveni's knowledge amazed him. I am not sure whether all of us in the room noted his knowledge of Bangladesh was primarily knowing the revolutionaries  in Bangladesh, something he has for revolutionaries around the world of whom he is one.

The third aspect was what many people from the Western world think of us as Africans including our Heads of State. Without mentioning names because I prefer not to embarrass people, many people from the West come to the country thinking they can meet with the President just like that. Of course the President has been very generous especially with investors many of who have been briefcase investors expecting that Government will give them money even for doing nothing.  I believe there have been such incidents where investors have come into the country and disadvantaged the country rather that create the required jobs. Many of them want to dominate you even when they don't know and show surprise when you actually demonstrate that you know. Many feel that without them, nothing will work and indeed they have this attitude of these poor Africans who they help to do things.

While waiting to meet the President, one of Muhammad Yunus' handlers decided that they should leave. I had warned them earlier that " if you are on appointment with the President, he will definitely see you but his meetings normally overshoot his planned time". Our visit was on a Cabinet day and the President was chairing Cabinet. Muhammad Yunus' handlers decided that they should leave. As a civil servant, I am bound by the rules of the Fountain of Honour . If I am scheduled to meet the President, I cannot go away because he is late.  I know now and again we have waited for Ministers at functions and they don't turn up. I normally go ahead with the function but not with the President. He has one million people to see and unless you are really loaded with money to invest, he would rather not see you. Our meetings have a cultural tinge. While many meetings with the President are on schedule, there is not much control about what the people who will meet him say. The President would appear rude if he says time over for his visitors hence the long wait for the various people who wait to see him. I thought it was disrespectful  for the country and the President for a visitor to walk out on the President.

Address Poverty, Address Agriculture

The commentaries after the budget was read were that agriculture is not funded adequately and yet 80% of the population live off it. The budget allocations over the years have never favored agriculture. As a percentage, this has been less than 5%. You could argue that if you want to transform society, you should target the principal producers. In this the farmers. Economic growth theories indicate that countries that become industrialized see a proportionate drop in the contribution of agriculture to GDP. It is about 3 percent for the most developed countries.The argument at the moment is, build infrastructure and agriculture will take care of itself. I don’t think this is entirely correct, though that has been the cry over the years. It is said that farmers produce and stock the products with them but the roads are too bad and that the market is not available. I cannot argue with this theory especially if I don’t have the relevant data, but do farmers produce enough? And if they do, do they have a high yield? I don’t think this is true. I was talking to an agricultural specialist who came to Uganda to do some research on cassava production, which is one of the country’s potential poverty buster. He said he was amazed by what Uganda can produce, literally everything. But amazed too, that we were not producing much; which is also true. Indeed a few of our farmers go out to produce large volumes but I guess more than 99% of them produce for self-consumption and sell off the small excess that they produce to buy sugar, soap and to some extent the school fees  for their children. According to him, the problem is not entirely roads, but the un-business like nature of farmers. The post-harvest loss and the comfort people have that they have property even if it is not being used. He recalled two important cases. In one case a farmer from whom he had hired and was interested him in doing what he was doing to make money. He urged him but the farmer declined instead the farmer offered to give him additional land for free to plant more. Another occasion was when a family in Uganda which has thousands of acres of land simply offered to them to use it in exchange for nothing. He thinks this is an un-business like behavior.

I have written and said if we are going to transform the nation, you need to increase agricultural production and agricultural productivity. But this is meaningless unless people understand that they are not growing products for self-consumption. They should understand this activity as a process of emerging out of poverty. They therefore need a motivation to produce beyond self-consumption. Africa has not yet experienced the industrial revolution. Even the few countries like Kenya, with some manufacturing sector, the revolution hasn’t taken place yet especially in the minds of the people. If the people don’t get the feeling of producing for sell, why should they produce? Why waste your energy to do something that is not required?

Today, Uganda feeds its neighboring countries but in an informal manner. The business men who know where the market is look for the agricultural products from wherever they are and export them especially to Kenya and Sudan. With some additional government support through sensitization and infrastructure, it’s possible that the production and indeed productivity of agricultural production in the country can change.

Post-harvest loss occurs at different levels, when crops are harvested and taken to dry, there is some loss that is incurred in the process.  Maize, beans, even coffee is dried in a very elementary manner. It’s possible that by the time this is dry, the loss may go up to 20%. An article in the local press talked of post-harvest loss of upto 90%. This is ridiculous. Drying these crops on the bare ground impacts on quality as they pick dust, stones and other undesirable materials. Storage in another challenge; rats feast on these food crops. Indeed during harvest periods, there is a large number of rats in people’s houses. There is need to sensitize people about all these. Not only do they lose the actual product, but the quality suffers. There is need to do more, especially I terms of research, actual experimentation, monitoring and evaluation to zero in on the best farming practices. It looks like the current research is focusing on improved seeds but not the actual farming practices. There is need to develop simple irrigation practices that will ensure availability of water even during the dry times. Several countries have had green revolutions, how do they do it? If the 80% of the population are farmers and are poor, there is still a lot to do to remove poverty.

Saving the shilling

Margaret Thatcher, one time said, “You can’t buck the market”, and indeed you can’t. The market knows best and it’s so powerful that no single individual can drive it. Yes, a few individuals can manipulate it in the short run, it can burn your fingers if you meddle with it. The current slide in the Uganda shilling will hit the Shs.4000 to the dollar soon. It is something I have mentioned in an earlier post and is attributed to low export volume, low productivity, the uncontrolled foreign exchange market, the high appetite for imports, the strength of the dollar and two other silly reasons: the fact that the ordinary person doesn’t know what is happening to him and is therefore helpless, while the shilling slides and secondly, a political reason, lack of nationalism, a very interesting reason. All these factors are working together to drive the shilling through the roof. These are the market conditions. Attacking the shilling is foolhardy. The causes are the factors to deal with. Exchange rates is what one currency exchanges for the other and is a function of what you export and import.

As our maize crop and other products dry, and there is something for us to sell to Sudan and Kenya, the slide will slow down. But that is a short run reaction. In the long run, without productivity increases, the right attitude to work, and an export drive, we cannot achieve much. The market is also punishing us for putting peanuts in agriculture. The Minister of Finance was on the on record other day talking about exports as one of the factors driving the shilling to slide. The market is rewarding his budget allocation to this important activity. Uganda’s economics guru, Tumusiime Mutebile, has given a lengthy explanation about the shilling woes and even according to him, exports is among the key factors. Indeed he also talks about repatriation of profits by foreign companies enabled by the liberal forex market. Am not sure where the country’s economic think tanks are, but we need to seriously examine our economic chess board to be able to fix the economy. A slide in the shilling coupled with the season we are in which is prior to a harvest before an impending elections, we are likely to see inflation return to the economy sooner rather than later. Am writing without looking at the figures, but the last time I checked, a large percentage of our export earnings is “kyeyo” money. These are remittances by Ugandans abroad. This means the economy itself is not producing much and yet it has this massive imports. What is the problem?

While I have given the causes, I think the causes and the problem are the same. The problem is that Ugandans have appetite for imported goods and yet, neither do they produce enough for export, nor do they produce even for local consumption. Besides, there is not sufficient thinking and resultant policies to guide production both for local consumption and export. The thinking and policy should have a holistic approach on the economy. Where should the economy go and how should it get there. We are looking for, I guess, improvements in the standards of living of the people. That’s our objective. And how do we achieve it? We have resources and constraints. We are an agro based economy but we are constrained by the interactive environment. We operate in an international environment that is highly competitive and where the best competitors win. If we don’t produce much and we are not competitive, we cannot achieve the transformation we desire. The best who win are those who have high levels of productivity, employing modern technologies in their production processes. Transformation can only be achieved with that kind of competitive effort. To achieve high levels of production and indeed productivity, we must engage the ordinary people to produce more and better, especially mass consumption of products and export products. We must delicately balance numerous policies to achieve this.

Another measure is to foster entrepreneurship post agricultural production. The entrepreneurs can bring in value additions to what the farmer is producing. There are numerous small items that can be produced in Uganda, that are currently imported. This includes confectionaries, drinks, all of which can be produced locally giving value to the farmer, creating wealth for the country while creating jobs during processing. It is important to get the farmer to understand that without doing this, they will forever remain poor this is the role of political leaders. Those who are unable to produce, especially in outside countries, will export to those who don’t produce and the poor will remain poor simply because they have nothing to exchange. They will actually borrow to buy what is produced by others. .  If we cannot produce, we can only sustain our appetite for imports though foreign borrowing. Greece is in trouble for borrowing too much and producing little. Many of the African countries are not different from Greece, if anything, it is even worse.

There are numerous policies in the country that need to be articulated and fixed to address the shilling.. These include, the agricultural policy, an export policy, import policy, among others. If well done, they should provide a basis for economic activity in the country. I must admit as I write, that am not sure what these policies are, but there are bits of actions like NAADS, Export Promotion Board which are a manifestation of these policies. If these policies are in place, it means they are not working or they are not correct. The current trade deficit means the policies are not working. But we as a country know the challenges? At one stage, there was an effort to create a national vision, get people to rally around it, and be proud of their country. They will then stop begging and be able to produce and support themselves. Unfortunately, we are a begging country. We want to be given free things, by government, by foreigners, by friends, by relatives. It is also unfortunate that all the government effort to support and promote business has been construed by beneficiaries as free handouts.

From the thinking at the highest levels of politicians and think tanks, detailed policies and actions in specific areas will emerge.  An export policy for instance, should be able to encourage production for exports. Many foreign business people and a few local ones have started export related business. The objectives are personal, not national. Many of them want to make money. But despite this, is there a deliberate effort to export? As a country, we are blessed with good soils, two rainy seasons and we have the capacity to feed our neighboring countries. What measures are in place to encourage farmers to produce for the market? Storage facilities, processing facilities, of course, roads. What do we have on the ground? There has been some effort on roads, but the effort in export appears to be dismal. This touches the essence of the Uganda economy. It is the peasant producing for export. But the peasant has neither the incentive to produce, nor sufficient return on the investment. The policy must be backed up by resources not the peanuts agriculture gets annually from the National budget. It is not surprising therefore that our peasant farmers spend two three hours or less in the field and for a formal worker, it’s an eight hour day and for those who really make the money, they do up to 16 hours a day. Vietnam was not a coffee processing countries, they planned to diversify export earnings and they introduced coffee. Today, Vietnam exports more coffee than Uganda does. This is a result of the policy and thinking of a nation; also a result of an export drive to increase earnings.

Another policy that needs to be addressed is foreign exchange. Uganda is a small country and if you have nothing to export, it is not very wise to have a free for all foreign exchange market. I firmly believe that market forces are efficient in allocating resources but there is need to have some controls. People bring in and take out as much as they can. Recently, MTN declared a profit of 240 billion shillings. This money had to be repatriated. Hardly a month after, Stanbic declared a net profit of 135 billion shillings. They line is endless. Hundreds of companies including the host of Indians and Chinese on the streets are expropriating profits and believe you me, this is a country where you can make lots of money even by selling sweets. There is need to impose some limits on how much a company or an individual can take out of the country, without this, money will continue to flow out of the country and since the demand exceeds the supply, the shilling can only depreciate.

Imports is another thing that we need to deal with. Import substitution policies of the 60s to 70s failed but what lessons did developing countries pick from them. Does Uganda have to import confectionaries? Look at the imports and you will be amazed. Slippers, strings, wooden brooms, baloney!

We have lots of government imports that are lying in wastes including fish processing plants in different locations on Lake Victoria. They are idle because of possibly wrong project conception, the fact government cannot do business and possibly due to the begging mentality among the population that prevents us from working. In a song “Do they know it’s Christmas” world artists came together to collect funds for the starving Africans. This was in 1984 following the famine in Ethiopia. The song had an amazing title; did these poor Africans even know it was Christmas? Do our people know they are poor? Will they be concerned about the declining value of the shilling? Do they know what it means? This is a major issue in many African countries. I have suggested that to a large number of Africans, business is a foreign idea. They are used to production for self-consumption and they are happy with that. The small surplus from that consumption is what puts them into the mainstream economics of the country as they buy manufactured consumer products and possibly pay fees for their children.

It is these people that will aid the country in the transformation process. They are the players and the beneficiaries. They need to be harnessed and this is the role of political leaders. They should be harnessed to produce and to change their life patterns to support economic change. Many African countries have never experienced the industrial revolution that ushers in the business culture. They are happy to live the way they live as subsistence farmers. Leaders therefore have the major role of determining where the country wants to go and evolving the strategies to get it there.

While you cannot buck the market, nothing beats affirm production in a country. Japanese resilience despite its disputes with the United States is due to its strong production capacity. The late Akio Maurita founder of Sony Corporation warned the Japanese against indulging in speculative activities on stock markets. He said, the power of japan lay in manufacturing. This is true and so is the power of Germany. Despite the challenges these countries have gone through, it is high productivity in manufacturing that has kept them going.

“The importance of exports is demonstrated in the stability of the Arab countries currency despite the turmoil there. I have known the United Arab Emirates’ currencies to be but 3.5 dirhams to a dollar from the time I first went to Dubai to date. That’s more than 20 years. Not only do they export oil, but the Dubai leadership has created another source of export earnings; tourism. With the turmoil in the Middle East, who would dream of having such large numbers of visitors as those that visit Dubai?”

The first time I understood the shilling as a currency to trade against a dollar, one dollar fetched 7 shillings. If you put the two zeros back, today the dollar fetches 40 thousand shillings. That development is a result largely of Uganda’s uncompetitive business, lack of export products and most probably, the lack of the policy and thinking for the country. The challenge is within the people in the sector to do the right things to the economy. Otherwise, we brace ourselves for a further escalation in loss of value of the shilling and the attendant inflation it carries with it.