Does Uganda deserve an investor like The Aga Khan?
SHILLINGS AND CENTS<br><br>This week, President Yoweri Museveni and his Highness the Aga Khan, laid the foundation stone for the $800m Bujagali dam.
SHILLINGS AND CENTS
By Paul Busharizi
This week, President Yoweri Museveni and his Highness the Aga Khan, laid the foundation stone for the $800m Bujagali dam.
The dam will be the single largest power investment ever undertaken by the International Finance Corporation (IFC) – the private sector lending arm of the World Bank. It is also the largest single infrastructure development of The Aga Khan Fund for Economic Development (AKFED) Network worldwide.
The next day, the Aga Khan laid another foundation stone in Munyonyo for a $50m Academy of Excellence that will “nurture the spirit of anticipation and agility, adaptability and adventure.â€
Sub-Saharan Africa needs more investors like the Aga Khan.
Investors, whose profit motive is tempered by a sense of social responsibility, which probably comes with his responsibility as the head of the Ismaili sect.
Sub-Saharan Africa needs investors who have a long- term view and are willing to put their money in parts of the world that are not attractive investment destinations because of their corrupt governments, lack of physical and social infrastructure.
Uganda is not the most God-forsaken place the Aga Khan has invested in. A multi-million rehabilitation of the war-damaged Kabul Serena Hotel is probably the best example.
Sub-Saharan Africa needs investors like the Aga Khan who have got a more bankable international profile than the countries they invest in.
By leveraging such reputations, sub-Saharan Africa can attract the kind of investment that will make a long-lasting impression.
In the Bujagali project, AKFED partner sponsor is the Sithe Group, an affiliate of the private equity firm the Blackstone Group, who as of end of June controlled assets of $18b.
In July, the Blackstone Group put down $26b for leading global hospitality company the Hilton Hotels Corporation, which has 2,800 hotels worldwide.
No one can understate the benefit of the 250 mega watts Bujagali project to Uganda but co-opting the Blackstone Group into the project may have long-term investor benefits for Uganda.
But the Aga Khan also stands out as an example of how resources, pooled and invested wisely over time, can create meaningful change for communities.
Funds or donations from his minority Ismaili community are channelled into his development vehicles, which invest in schools, hospitals, hotels and in any number of industries through the entrepreneurial Ismaili community.
As a country grappling with the issues of poverty and development, partnering the Aga Khan presents opportunity and useful lessons.
Whereas the Aga Khan has a philanthropic agency, his most telling interventions have come not by throwing money at poverty (which never works anyway) but through investments in infrastructure both social – hospitals, schools, media, hotels and physical – power generation, manufacturing, property and telecommunications.
The Aga Khan’s “aid†model best mirrors the saying, “Give a man a fish and he will keep coming back for more, but teach him to fish and he will feed himself.â€
The fact that the Aga Khan chooses to invest in Uganda is credit enough. But Uganda should go beyond attracting his kind of investor, investors whose profit motive is coloured by a sentimental attachment to this country.
Investors like the Aga Khan are in short supply and unlike him, most of them do not feel obligated to have a presence in Uganda.
Uganda needs to make itself attractive to other hardnosed businessmen who unfortunately, or fortunately, control the bulk of the world’s capital flows.
Let us not delude ourselves that investors are falling over themselves to be here – high returns on investment not withstanding.
Top of the list of things to do in this direction is the removal of corruption, strengthening of the Government institutions and improvement of road, rail and power infrastructure.
A study in the 1990s showed that businessmen spend as much greasing the machinery of government with bribes as they do in paying taxes.
In business, money follows good management. Capital is a coward, it seeks stability and predictability. Investment rule number one is do not lose money. Investment rule number two is don’t forget rule number one.
So even if Uganda has very enviable returns on investment, the risks that accompany it are just not worth it. The investor will take a lesser return in South Africa or South East Asia or Europe than risk burning his fingers here.
pbusharizi@newvision.co.ug
By Paul Busharizi
This week, President Yoweri Museveni and his Highness the Aga Khan, laid the foundation stone for the $800m Bujagali dam.
The dam will be the single largest power investment ever undertaken by the International Finance Corporation (IFC) – the private sector lending arm of the World Bank. It is also the largest single infrastructure development of The Aga Khan Fund for Economic Development (AKFED) Network worldwide.
The next day, the Aga Khan laid another foundation stone in Munyonyo for a $50m Academy of Excellence that will “nurture the spirit of anticipation and agility, adaptability and adventure.â€
Sub-Saharan Africa needs more investors like the Aga Khan.
Investors, whose profit motive is tempered by a sense of social responsibility, which probably comes with his responsibility as the head of the Ismaili sect.
Sub-Saharan Africa needs investors who have a long- term view and are willing to put their money in parts of the world that are not attractive investment destinations because of their corrupt governments, lack of physical and social infrastructure.
Uganda is not the most God-forsaken place the Aga Khan has invested in. A multi-million rehabilitation of the war-damaged Kabul Serena Hotel is probably the best example.
Sub-Saharan Africa needs investors like the Aga Khan who have got a more bankable international profile than the countries they invest in.
By leveraging such reputations, sub-Saharan Africa can attract the kind of investment that will make a long-lasting impression.
In the Bujagali project, AKFED partner sponsor is the Sithe Group, an affiliate of the private equity firm the Blackstone Group, who as of end of June controlled assets of $18b.
In July, the Blackstone Group put down $26b for leading global hospitality company the Hilton Hotels Corporation, which has 2,800 hotels worldwide.
No one can understate the benefit of the 250 mega watts Bujagali project to Uganda but co-opting the Blackstone Group into the project may have long-term investor benefits for Uganda.
But the Aga Khan also stands out as an example of how resources, pooled and invested wisely over time, can create meaningful change for communities.
Funds or donations from his minority Ismaili community are channelled into his development vehicles, which invest in schools, hospitals, hotels and in any number of industries through the entrepreneurial Ismaili community.
As a country grappling with the issues of poverty and development, partnering the Aga Khan presents opportunity and useful lessons.
Whereas the Aga Khan has a philanthropic agency, his most telling interventions have come not by throwing money at poverty (which never works anyway) but through investments in infrastructure both social – hospitals, schools, media, hotels and physical – power generation, manufacturing, property and telecommunications.
The Aga Khan’s “aid†model best mirrors the saying, “Give a man a fish and he will keep coming back for more, but teach him to fish and he will feed himself.â€
The fact that the Aga Khan chooses to invest in Uganda is credit enough. But Uganda should go beyond attracting his kind of investor, investors whose profit motive is coloured by a sentimental attachment to this country.
Investors like the Aga Khan are in short supply and unlike him, most of them do not feel obligated to have a presence in Uganda.
Uganda needs to make itself attractive to other hardnosed businessmen who unfortunately, or fortunately, control the bulk of the world’s capital flows.
Let us not delude ourselves that investors are falling over themselves to be here – high returns on investment not withstanding.
Top of the list of things to do in this direction is the removal of corruption, strengthening of the Government institutions and improvement of road, rail and power infrastructure.
A study in the 1990s showed that businessmen spend as much greasing the machinery of government with bribes as they do in paying taxes.
In business, money follows good management. Capital is a coward, it seeks stability and predictability. Investment rule number one is do not lose money. Investment rule number two is don’t forget rule number one.
So even if Uganda has very enviable returns on investment, the risks that accompany it are just not worth it. The investor will take a lesser return in South Africa or South East Asia or Europe than risk burning his fingers here.
pbusharizi@newvision.co.ug