By John Odyek and Raymond Baguma
Business magnates have cautioned people against using bank loans to start businesses suggesting that building the first business without loans is a better plan.
The local barons also warned against diverting bank loans to other activities, saying it could lead to business failure and cause the ignorant and unwise borrower problems.
During the third edition of the Pakasa Forum organised by Vision Group at the Kampala Parents Primary School auditorium, entrepreneur Sudhir Ruparelia, who was one of the panelists, advised Ugandans to build a saving culture so as to succeed in business.
Other panelists included Charles Mbiire, the chairperson of MTN Uganda; Patricia Ojangole, the chief executive officer (CEO) of the Uganda Development Bank Limited; Francis Kitaka, the founder of the Quality Chemical Industries and Danstan Kisuule, the CEO of Y-Save Co-operative Savings and Credit Society Limited. The forum, attended by hundreds, was moderated by Vision Group’s CEO Robert Kabushenga.
trueSavings make better capital Sudhir Ruparelia, chairperson Ruparelia Group
Sudhir said cultivating a saving culture was important in Uganda, if one is to succeed in business. He said personal savings create a cash flow, which makes businesses self-sustaining, instead of using money borrowed from banks.
“In China, people save about 15% of their income. In India, it’s about 40%. But in Uganda, most people seem to only save through NSSF or through buying land. If you can, avoid borrowing for your first business,” Sudhir advised.
He said it is appropriate to borrow when a person wants to expand their business because that time it is self-sustaining. He revealed that when he returned to post-war Uganda in 1986 from the UK, he met young Ugandans who were engaged in business, struggling to survive and made it amidst poor infrastructure and ethics.
“If you make a profit of sh100, make sure you invest back sh90.” Sudhir said since his businesses are in many sectors, he has put in place the right management teams to ensure that he gets all information on their performance by 7:00am every morning.
Ruparelia Group is a conglomerate of banks, insurance firms, hotels, schools, a university, real estate and commercial farming.
trueDunstan Kisuule, CEO Y-Save SACCOS
He started a savings club at Watoto Church to teach young people a saving culture. Today, the club has a membership of about 4,000 members with savings of more than sh3b and assets worth more than sh7b. Kisuule, an engineer by profession, resigned his job with the National Housing and Construction Corporation to manage the Y-Save SACCOS as a CEO.
He said the business has thrived because of its leadership, which comprises people of integrity and honesty.
“God has guided us in the decisions we have made. We have also had trust of the members. It has been hard work. If you want to move quickly, move alone. But if you want to move far, move as a group,” he noted.
trueFrancis Xavier Kitaka, chairperson MTK Holdings Ltd
Kitaka, a trained bio-chemist, said while studying in Scotland, he did odd jobs to earn money. Kitaka, who was raised in a family of six children, said his father, who was a trader, told them to strive for self- employment.
He advised parents to involve their children in what they do and urged people to be trustworthy, especially in business relations with other partners.
“We learnt to be hardworking and trust God. I grew up knowing that unless you have done something, you would not be paid. I imparted it into my children and I am lucky they are hardworking. If you are not trustworthy, you will never be successful,” Kitaka warned.
He also noted that people usually approach him with ideas seeking quick financial gain through schemes.
“When they come to me for money, I tell them that I borrow money from the bank. The bank charges me interest. I always advise them to use what they have to generate more money,” he said.
trueCharles Mbiire, chairperson MTN Uganda
Mbiire said he was not born with ‘a silver spoon in his mouth’. He noted that he was raised by strict parents, who wanted him to succeed.
He expressed his business philosophy in ‘a water tank model’, saying the valve that brings in water should be bigger than the one that takes it out. Mbiire related this to the principle of not spending more than what you earn and working hard. He said a business can collapse, if the cash flow is not good.
On starting businesses, he advised that starting a business does not require only money, and noted that entrepreneurs must have bankable ideas.
“Have credibility and protect your name and brand because it is a principle that makes business.”
Mbiire cautioned youth against having information on the Internet that can damage their reputation. In hindsight, he noted that money is a constant, which moves from one sec - tor to another. So, investors have to perceive which sector it is moving to. Mb ire cited the movement from franchising in the 1970s, to telecoms in 1990s and oil and energy in 2000s. He cautioned youth against greed and corruption.
Mbiire said there is no free money, but there are free opportunities, adding that people have to organise opportunities into saleable ideas. He advised investors to be alert to changes in the industry and ‘disruptive innovations’, adding that cutting costs and attracting customers keeps a business running.
“A business collapses because you made the business you. Recruit properly, look at key performance indicators and continuously appraise staff,” Mbiire advised.
“Always pay attention to detail. Even prescriptions from doctors; check them on the Internet. Thirty per cent of them make mistakes. Don’t take anything for granted,” he added.
truePatricia Ojangole, CEO Uganda Development Bank Limited
Ojangole said when people seek to borrow money they must demonstrate that they know what they are doing.
“When people come to borrow they think it is free money. We can’t finance you 100%. If we do that, where is the business? You have to contribute to a portion of the loan. If we see viability, the banks are willing to partner to pro - mote the business,” she noted.
Ojangole said most borrowers divert loan money to other ventures.
“The risks are different for every business. People don’t want to employ professionals and establish systems in their business. Implement good governance in business.” Ojangole cautioned against get-rich- quick schemes.
Jackline Birungi, a nurse, noted: “I am planning to start my own business after the forum. I am now confident that I can make it. I have learnt to be strong and be trustworthy.”
Juliet Nanvuma, a network marketer, said: “I have learnt that in any business there are challenges, but I should not give up.” Andrew Mulondo, a printer on Nasser Road, said: “I learnt how to make a business strong. Instead of having one business, you can have a chain like Sudhir. Mbiire told us not to spend beyond what we earn.’