By Prof. Augustus Nuwagaba (PhD)
Of recent, I have been engaged in a debate regarding the changing character of business environment in Africa and the need to change our business behaviour accordingly. It is understood that the 1970’s were characterised by the “dearth” of the formal institutional structure in Uganda.
The economy virtually atrophied, giving rise to what came to be known as the informal economy. This informal economy was mainly prompted by the expulsion of the Asian community in Uganda who largely constituted the businessmen and industrialists.
President Idi Amin had expelled the Ugandans of Asian origin in what he had termed “Africanisation of the economy”. This period was characterised by appropriation of business earlier owned by Ugandans of Asian origin and relocating them to indigenous Ugandans.
Those Ugandans who were “lucky” took over full stocked shops and maximally functioning industries. However, within a twinkle of an eye, the shops had closed and the chimneys of the industries were smokeless.
Reason, the Ugandans who took over the shops and industries largely comprised the uneducated “black millionaires” who did not know how to restock the shops or where to purchase raw materials for the industries. One by one, the wealth that had been acquired overnight also sublimed at the same speed. As the old age states “easy come, easy go” and “what comes round, goes round”.
This period of Africanisation culminated in the black market (magendo economy) with all its ramifications across all sectors. Indeed, there was triumph of informalism that quickly pervaded all operations in the Government as well as in the non-state sectors.
Because of the ease in which people acquired wealth, there was a creation of an attitude that “education was useless” after all, why should one spend all that long time in school when one can simply smuggle coffee and become a millionaire overnight. Actually, most of us in Kabale who were near the border of Rwanda continued our education by the Grace of God.
People painstakingly and persistently conflicted with themselves as to why they should remain in school, when one could take coffee across into Rwanda and obtain millions of money just in a matter of hours.
Continuing with education was, therefore, a highly “naïve undertaking” among a cross section of people. However, the good news is that people who continued with education have been vindicated. Most of my friends with whom we engaged in business made money, yes, but they tell me that they are facing serious problems.
Most of them entered into deals that have turned sour, simply because they could not clearly analyse the dealings. Others have been out rightly cheated due to lack of ability to comprehend all the details of particular business transactions.
Those who have actually succeeded in business have employed professionals who have turned around their operations, modernised them and made the businesses profitable. This is the triumph of formalism over informalism.
It has, therefore, glaringly emerged beyond any reasonable doubt that the most robust inheritance one can give one’s children is education.
The major questions I continue asking my friends in the business community are: How old is their money and more seriously, are they still working for money or the money they have is working for them? Some of my friends (and don’t mind I have friends aged over 70 years) are still heavily involved in day–to-day business activities.
This is not working hard but “being a slave of your money”. At the age of 50 years, money should be working for you. You should not be worn down and stressed because of day-to-day operations of your business.
You do not have capacity to do that. This is the model employed by people like Mukwano who inculcate all the required business skills to their children so as to make sure that their business enterprises are sustained. Indeed, Mukwano senior retired to Fort Portal, confidently leaving his children to manage the businesses.
Because the children were involved right from the start, they have done so well that the Mukwano business empire has actually expanded many folds. Ironically, many Ugandans instead of involving their family members in business, they treat their businesses as “secret” as possible. Of course, when God calls such entrepreneurs, the business goes a long with him.
This is the greatest challenge to African and Ugandan entrepreneurs, business people and industrialists. Therefore, for those who own business enterprises, how confident are you that your business enterprise can out live you? How “old” is the money you currently have? How robust is your wealth?
To answer these questions, it is pertinent that we understand the theory of money, wealth and income. Income/money is like a river flowing into a lake. The lake is wealth, and such lake will only keep the water level, to the extent to which the river keeps flowing into it. So, you cannot sustain wealth without ensuring constant flow of income.
Secondly, no one can beat the law of nature. As one grows old, one must realise the need for “money working for you’. Yes, poverty reduction and wealth creation is about working for money, but this does not mean being a slave of the same money. The law of wealth creation dictates that “you work for money only up to the extent to which the same money should work for you”.
One practical way to ensure that you have ‘old money’ and the same money works for you is to professionalise your business. You must practice corporate governance in your business.
Have a board, management and employees and ensure “best practices” in all operations. Separate your “person” and give the business “a separate entity status”. In Japan, there is a restaurant which has been in operation for 700 years!! Now, the big question is; what is it that has kept the blood for such restaurant to flow for all these years?
The other practical way to have money work for you is to either list your company on stock exchange or buy shares in listed companies. This will allow one to relax, sustain your business and have money work for you. Short of this, one will continue muddling through life without ever enjoying the future one worked for.
Remember, when you were a child and youth, you worked hard in order to have a bright future. Now, that you achieved that future and you have a viable business, enjoy the fruits because there is no other future. The future is now! The writing is clear on the wall.
The writer is an international Development Consultant and Winner of International Award for Significant Contribution to World Society. Can be reached at: email@example.com