By Patrick Bitature
Umeme, would like to congratulate the government for having successfully gone through the 2019 Manifesto Week, that run from 13th -24th May 2019.
We particularly would like to applaud government, for having attained a mid-term manifesto implementation score of 62 percent to date, according to the Prime Minister, Dr Ruhakana Rugunda.
There are a number of milestones presented by the various government Ministries, Departments and Agencies, some of the key highlights such as the commissioning of the 183 MW Isimba Dam and the expected commissioning of the 600 MW Karuma Dam sometime this year – altogether raising Uganda’s generation capacity to 1,767 MW by end of 2019 are worth mentioning.
Government’s revival of Uganda Airlines, completion of the state of the art Neo-natal and Specialised Women Hospital at Mulago as well the expansion of Entebbe International Airport and the rehabilitation of Mulago National Referral Hospital which are both on course are also key achievements.
We were also glad to learn that the country’s tourism foreign exchange earnings grew by 18% from USD1.37 billion in 2015/16 to USD1.63 billion in 2018 as a result of a 19% growth in tourist arrivals, from 1.3 million to 1.54million in the same period. This led to a 25% rise in employment- from 504,000 to 628,000 jobs.
In the 3 years, Uganda’s exports also grew by 24.7% from USD2.9 billion in 2016 to USD3.6 billion at end of 2018, as a result of growth both in local and international investments- Foreign Direct Investments (FDI) increased by 12% from USD626 million in 2016 to USD700 million (Source: UNCTAD)
Private Sector Confidence Index in the economy, as measured by Bank of Uganda is also growing, from 53.6 at the beginning of 2016 and is currently at 58.6 (April 2019) on the back of better prospects.
Thanks to these and many other achievements, real GPD growth, according to the IMF has improved from 5.8% in 2017/2018and is expected to reach 6.2% this financial year. It is then projected to grow at an average 6.2% for the next 5 years on the back of government’s continued investments in infrastructure.
The IMF in their recent May 2019 Country Report on Uganda estimates that if (infrastructure) investments proceed as planned, growth could range between 6 and 7 percent over the next five years (3 to 4 percent in per-capita terms).
Umeme is proud to power all these achievements
Umeme, is particularly proud of being government’s partner in powering all these achievements. In the last 13 years, Umeme has invested $627m (UGX2.4 trillion) into doubling the distribution network to over 34,000km from the 16,000km we inherited and growing customer connections by more than 4 times- from the 290,000 inherited to the current 1,291,811.
And specifically in these last 3 years alone, Umeme has invested UGX784 billionwhich has among many other achievements allowed us to grow the number of customers by 63% from 793,544customers at the beginning of 2016 to 1,291,811at end of 2018.
Particularly- commercial consumers (extra-large, large and medium industrial and commercial) grew by 63% from 69748to 113,579customers.
Suffice to add is that in line with government’s strategic goal to continue this steady progress and take Uganda to modernity through jobs creation and inclusive development,
Worth noting is also the fact the number of direct jobs created by Umeme during these 3 years, increased by 12% from 1,348to 1,514employees. But more significantly, Umeme continued reducing the number of expatriates, from 13 at the beginning of 2015, to 6 in 2016 and finally 4 at the end of 2018- as more Ugandans assumed more senior roles in the business, as a result of a deliberate skills transfer process.
Key noting is that in 2015, we appointed our first Ugandan as Managing Director, Mr Selestino Babungi.
With all the above investments and improvements in the electricity sector, it is therefore no wonder that according the Uganda National Household Survey 2016/17, by Uganda Bureau of Statistics, 27% of Ugandan households (50.1%, urban and 17.5%, rural) reported that improved electricity had made their lives better. Better electricity came second to improved transportation services (34%). In the third position was development projects (25%), construction of new roads (25%), construction of new schools (18%) and new employment opportunities (14%).
Umeme would like to acknowledge the far-sighted leadership of His Excellency Yoweri Kaguta Museveni that is championing transformative infrastructure investments, especially in the energy and transport sectors, that has formed the stimulus for much of the achievements enumerated above.
We would also like to acknowledge the guidance from our regulators- directly, the Electricity Regulatory Authority (ERA) and indirectly, the Ministry of Energy & Mineral Development (MEMD) and Ministry of Finance, Planning & Economic Development who together with our generation and transmission partners have made it easy to come thus far.
An ambitious plan, needs solid investments
The next 5-10 years are going to be very critical in the energy sector of our country.
Uganda will soon have up to 1,767MW once Karuma comes on board and to absorb this extra capacity, government, has already set a very noble goal to extend power to 30% of the population by 2020 and 80% by 2040.
This goal is being supported by an equally ambitious free connections policy, targeting 300,000 new connections per year. This means Umeme’s customer base must have crossed the 4 million-mark by 2017.
From our estimates, achieving the above targets, shall require significant investments focusing on uptake of new capacity, increased access, and driving efficiencies in the business operations. The resulting large geographical footprint shall require opening more service centres, building more substations, extending lines, injecting more transformers and recruiting more people on the ground.
Over the next 6 years, we estimate, that up to USD450 million is required for both capital expenditures (CAPEX).
According to recent estimates by Ministry of Energy and Mineral Development, when Isimba and Karuma HPP are commissioned and fully absorbed/utilized, it is expected that the weighted generation tariff will reduce from the current US Cents 6.47/kWh (UGX243.43) to US cents 5.34/kWh (UGX200.93), representing a reduction of 17.45%, which shall be reflected in the end-user tariffs.
Uganda has tasted the wrath of underinvesting in the sector before- we should not wait to get to where Kenya and South Africa are today. Never again!
With the approved costs we have today, there is going be various negative implications on the power sector namely:
- Several of our new service centres will be closed and proposed new ones won’t be opened, leading to poor service delivery;
- The government free Electricity Connections Policy (Free connections), will be hard hit and ;
- Investor confidence, both in the energy sector and largely in the economy could drop and this has a ripple effect on all the other planned targets for government in other sectors as energy is a key driver.
Relatedly, there is need to urgently close the ongoing concession extension discussions, so as to allow Umeme to mobilised the necessary funding in preparation for the big task ahead.
Time is of essence, everyday counts.
EDITORIAL: Munyagwa’s attempts to prematurely exonerate BoU, fall short of the “high standards of accountability and transparency” professed by FDC, his political party
Two of the major functions of the Parliament of Uganda are: passing laws for the good governance of Uganda and scrutinising government policy and administration through, among others methods, ensuring transparency and accountability in the application of public funds.
It is largely for this purpose that the Committee on Commissions, Statutory Authorities and State Enterprises, (COSASE) was set up. COSASE itself is one of the three Public Accounts’ Committees (PAC), the other PAC Committees covering the Central Government and Local Government.
It is therefore surprising and disappointing when the Chairman of COSASE and Kawempe Division South Member of Parliament, Hon. Munyagwa Mubaraka Serunga (FDC) is the same person trying to frustrate attempts by Parliament to hold Bank of Uganda officials implicated in the irregular closure and sale of 7 defunct banks to account.
It has been reported that Munyagwa is trying to assist Bank of Uganda officials to account for UGX478.8 billion, the central bank said it injected into Crane Bank between 20th October 2016 and 25th January 2017, but could not account for, when asked by Parliament to do so.
A 20th December 2018 audit by the Auditor General ordered by COSASE, then chaired by Munyagwa’s predecessor, Bugweri County, found that out of the UGX478.8 billion, USD53.1m sent by Telegraphic Transfer from BoU’s Citi Bank Account and UGX77.5bn in cash from CBL currency centres to Crane Bank’s 46 branches- altogether an equivalent of UGX270 billion could not be traced to its final destination. Parliament asked BoU to provide this accountability before closure of the probe, but BoU officials failed to do so.
“I cannot confirm that the funds were withdrawn by bonafide account holders at the respective branches because the daily teller transaction reports provided (by BoU) did not indicate the customer account numbers and customer names,” observed the Auditor General, in his confidential report, titled: “Special Audit Report on the UGX478bn injected into Crane Bank by Bank of Uganda” and dated February 2019.
Crane Bank shareholders, appearing before parliament told MPs that they did not believe their bank was that much undercapitalized and therefore did not need the entire UGX478.bn, raising the possibility that the missing UGX270 billion could have ended up in private pockets.
Joseph N. Biribonwa, the Crane Bank Chairman Board of Directors told MPs whereas a forensic audit report by PriceWaterhouseCoopers, showed that their bank had “a capital gap of UGX 130 billion” “when BOU took over management it spent UGX478 billion.”
“If CBL was undercapitalized to the extent claimed by BoU, then the assets of CBL would not have increased the assets of DFCU from UGX1.8 trillion to UGX3 trillion. This was an increase of 67% in the assets of DFCU,”said Biribonwa.
This anomaly was made worse by Crane Bank Statutory Manager’s failure to ascertain the liquidity position of Crane Bank during statutory management period since the audited Crane Bank annual report and financial statements for the period starting 1st January 2016 to 25th January 2017 were not submitted to BoU by KPMG, the external auditors, for nearly two years. It is these documents that Munyagwa is trying to assist BoU to present to parliament several months after the closure of the COSASE probe.
Analysts believe that to abet this anomaly, Munyagwa on Tuesday, 28th May 2019, hastily named a select sub-committee to probe what he says is “unfinished issues” in the BoU probe. The five-member committee is headed by his vice chairperson, Mr Ibrahim Kasozi of Makindye East Constituency.
The above subcommittee then went on to meet with BOU officials led by the deputy Governor, Dr. Louis Kasekende, and tasked them to respond to outstanding Auditor General’s queries, a move that some of the MPs have interpreted to mean, re-opening the probe that was concluded by then COSASE chairman and Bugweri County MP Abdu Katuntu.
Katuntu in his February 21 report found BoU’s closure of 7 defunct banks to be severally in breach of the Financial Institutions Act 2004, under which the same banks were closed. The Katuntu committee among other recommendations asked that the named errant BoU officials be held criminally liable and also proposed several reforms in the governance of the central bank.
The committee also recommended that the shareholders of the closed banks be compensated for the losses because BoU officials did not follow the due process.
Thankfully, Rt. Hon. Rebecca Kadaga, the Speaker to Parliament has since said the attempts by Munyagwa to restart the probe is duplicitous, especially when government has not formally responded and or taken action on the recommendations of the first probe.
Zero-tolerance to corruption and elimination of political patronage and associated political corruption is one of the core nine (9) principles on which the Forum for Democratic Change (FDC) – Munyagwa’s party stands. The party says it prides itself in “instituting high standards of accountability and transparency for political leaders and public officials.”
Certainly Munyagwa’s actions do not reflect these high standards and FDC should bring him to order.
Concession renewal: Umeme wants a win-win deal for all
For the last 12 years, Patrick Bitature has been Umeme Limited Chairman- since 2007. He has overseen the company’s $600 million investment into restoring and expanding the country’s electricity network.
During his tenure, Umeme has connected over 1 million more customers, increasing their customers by 328.4% from 303,000 customers in 2007 to 1,300,000 customers. Distribution losses have been more than halved from, 35% to 16.6%. The power distributor has also matured into a UGX2.5 trillion company, by assets, up from UGX350.3 billion company in 2007.
In this second part of our interview, he shares with CEO East Africa Magazine Executive Editor, Muhereza Kyamutetera, Umeme’s commitment to investing in powering Uganda’s development agenda with a long-term view to creating a world-class distribution network and affordable power for all.
Congratulations over the recent good Umeme results. You now have about 6 years to go on your concession. How is your performance on the concession targets to date?
I think we have done well; we had a 20-year concession and 14 years have gone down, so we are left with about 6 years.
In summary, I can say we have connected slightly over 1,000,000 customers from – 292,237 in 2007 to over 1,300,000 currently. To us, every customer is a unique milestone, a unique story- so if you ask me, I will say, today, there is 1,000,000 ++ reasons to believe in Umeme.
Someone might say it is premature to be asking about the concession extension or negotiations, but the fact that around us is that Isimba Dam has come on board and Karuma is coming on board this year- altogether raising Uganda’s generation capacity to 1,767MW by end of 2019.
Government has invested in about USD1.6 billion in Karuma Dam and about USD500 million in Isimba Dam and at least USD1 billion in high voltage transmission projects to evacuate this power. To absorb that power effectively, to evacuate it to where it is needed- homes, businesses, factories, schools, health centres etc., we need to invest large amounts of money over a longer tenure; that is the most important thing. We need to raise and invest between USD1 billion to USD1.5 billion in the next five to ten years, so that over a period of 20 years we have a robust, reasonably modern infrastructure that distributes power to almost 60% of the population. The remaining 40% will be off-grid solutions e.g. solar solutions.
READ PART 1 OF OUR INTERVIEW WITH PATRICK BITATURE HERE: https://www.ceo.co.ug/a-day-with-patrick-bitature-drinking-from-his-cup-of-wisdom-on-success/
Most importantly, you have to remember that 60% is a moving target because 60% of the population today is not going to be 60% of the population in 10 or 20 years’ time.
We can choose to invest for the remaining 6-7 years, but if you have seven years, the banks will only finance for not more than five years and that will impact the tariff, greatly. So we are looking for longer term funding- 15 to 17 years and then we can spread that cost- amortize it over time. That shall have a lowering impact on the tariff- that’s the principle reason we are beginning these negotiations now.
Secondly there has been a huge complaint about our rate of return, we demanded a rate of return when we were negotiating for these concessions 14 years ago, of 20% and that was appropriate at that time because the country was under perceived high risk. Today the perceived high risk of the country is much lower than then, so it is easier to attract capital. The policies of this country have been very stable, the movement of foreign exchange, the amount of inflation etc. the risks in many of the areas have been mitigated.
If the high rate of return is the pain in the thigh of the government and the public, we are willing to consider a few points on our rate of return, as long as it makes business sense- for our customers and shareholders.
We are Ugandans running this business; we have investments here as well and we are paying these bills too. You cannot say I want Umeme to profiteer at the expense of my hotels, my businesses. No, we must find the right balance- where there is a point of equilibrium- our customers are flourishing, the country is growing and is competitive, but also our shareholders, many of whom are also Ugandans are happy too!
If we are not competitive, as Ugandans, then we shall depend on Kenya or Rwanda or Ethiopia and that doesn’t put me as a Ugandan in a healthy position. I don’t want us to be in a weak position as a country, so we’ve got to negotiate what is fair for everybody. I am first a Ugandan and one day am not going to be the chairman, maybe I will not be having shares in this company anymore, but my children will still be here, my grandchildren will be here.
The key question here is how do we move our country forward? In such a competitive environment, we need to bring that tariff down as much as possible but it must also make sense for the people who are giving us money so that they are sure of their return and also those who give us their equity get a dividend. That is what we want.
Speaking of the negotiations, how are they progressing?
Well, the government has been negotiating first on its own, and we have been preparing on our own. These preparatory meetings are so important. We have got a feeling that the government is much more responsive and the tone they are setting is that they want to negotiate in good faith, because it is also in their interest that they do something in good faith that is sustainable, robust and can endure the test of time.
We are looking long-term, we are not asking for one or two years because what we do should help this country move forward. The people making decisions on behalf of government have to be balanced; not to crush the negations. It is not about one side winning and the other losing- we need to come up with a win-win formula that is good for Uganda and good for shareholders.
GoU has set itself targets to connect 300,000 customers every year with a target to achieve 60% access by 2027. Is Umeme up to the task? How are you readying yourselves for this?
I think Umeme is well prepared for that. We have had lot of time to build capacity- for anybody to do such an ambitious thing you need at least five or may be 10 years of experience- not just any experience but experience in Uganda.
You may want to bring another international company, thinking they will just copy and paste their experiences elsewhere here, but most often that does not work.
For example, connecting customers is one thing, but making sure that you are collecting money from them is also very important- you need to look at the whole ecosystem in totality. That is why I think Umeme is a leading candidate so far; better someone you know with a safe pair of hands.
We are trusted to a high level by our stakeholders. We been touted as the best power distribution company in Africa by the World Bank and other international organizations- because what we are doing is leading the way, it is cost effective, private sector led, with no subsidies and customer centric.
So to do what we are doing- mobilizing resources, investing them carefully and making sure you get a decent return, is exemplary. We are leading the way.
I think we stand a good chance, we have made a good case. If we can finalize these negotiations with the government- am optimistic before the end of the year, these things will be wrapped up.
Our share price should be much better, because it also affects our valuation, and it helps us to raise money. When we go out people look at our balance sheet- people look at the numbers.
I understand, the Electricity Regulatory Authority (ERA) has cut down the allowable operational costs- Umeme had applied for USD 65m but was given USD 41m for 2019 – almost the same amount in 2012 (USD42m) when you only had 400,00 customers. How are you going to pull this through yet you have the tight government targets to execute and the new supply from Isimba and Bujagali to absorb?
The first principle here is that the quality of service we give is a function of the amount of money that we invest. If you want first world infrastructure and customer service like in Japan or South Korea, you have to invest in a lot of money. Japan and South Korea are able to invest and still supply power below US$5 cents because they are a very rich country. We can’t afford to do that here yet, without having to get subsidies; so if ERA squeezes us, then that is the quality of service we are going to get.
People are complaining they don’t want to have an outage for more than an hour- also me as a Ugandan I will be proud to know that there is nowhere in Uganda that has an outage of UMEME for more than an hour. I have been chairman for quite some time now and it is embarrassing I feel it like someone is holding my breath when power goes away.
Slowly we had moved away from many of the major distribution issues; we have invested significantly in more transformers, more grid lines, reliable service and a fast responding customer service team- we have set the stage for a world class electricity distribution.
If you choose to choke us now, suit yourself; you are the regulator, we can only do so much with the amount of money we have been given. Because you are the regulator and you are in a strong position, you can do anything at the stroke of a pen, but it has consequences.
The task ahead, needs significant investments. Yes, we are open to discussing our ways of work but we must keep our eyes on the ball. For example, we are switching to concrete poles because the wooden poles used to be designed to last 15 years but because of some terrains like swamps and heavy rains, they can’t last more than 10 years. Switching to concrete means we need new equipment, because a concrete pole can’t be lifted by human beings, so we have to double capex in some of these areas.
It is unfair to think that we can have a better-quality service going forward if we are going to reduce the budgets. But we are talking to the regulator- the good thing is there is dialogue, there is openness and the regulator is very sincere.
We think it is in their interest too, because they shine when we shine; if we do poorly, they will not shine.
A day with Patrick Bitature; drinking from his cup of wisdom
Patrick Bitature is a Ugandan businessman and serial entrepreneur. He is the founder, Chairman and CEO of Simba Group of Companies. Founded in 1998, Simba Group is a conglomerate of East African companies spanning telecommunications, real estate, power generation, agro-business, oil and gas, tourism and social enterprise.
Among the many boards he chairs, is Umeme, Uganda’s major power distributor and Private Sector Foundation Uganda (PSFU) – an umbrella private sector body made up of 230 business associations, corporate bodies and the major public sector agencies that support private sector growth.
Our Executive Editor, Muhereza Kyamutetera, sat down with him at his magnificent Naguru Skyz Hotel- his freshest project yet, to pick his mind on several issues;
Who is Patrick Bitature? How do you describe yourself?
I am a businessman.
Lately am an opinion maker or an influencer- because I sit on the chair of Private Sector Foundation and that means that I must now look at all aspects of the economy, not just the narrow areas where I do business.
I must now have interest in everybody’s business and in everybody succeeding, because for us to uplift this country, we should all succeed together. Lately I have had to come out to talk a bit about the issues around, including those that go beyond business- issues like health, people’s welfare, fighting poverty etc. I find that as a responsibility. I have to speak out, sensitize especially the youth and entrepreneurs.
Whatever knowledge I have acquired throughout my experiences- some call it wisdom, I feel the responsibility to share it freely on social media and in the different written works that I circulate. I am always happy to share with especially the youth, so that they don’t have to go through the learning curve some of us had to go through and repeat the same mistakes that we made.
Speaking about your learning curve and journey, what would you say are the 2 or 3 great decisions that you made- that got you here? What lessons can today’s entrepreneur draw therefrom?
Mine is such a long journey; I don’t know if I can reduce it to just two or three things. It is extremely hard. All I know is that you have got to be resilient- resilience is a key word in my life. Even when it is really dark and gloomy, you have got to persevere. If you are resilient, you remain in line- because people will throw all kinds of things at you, you will meet so many challenges. Resilience; perseverance is about having a strong indomitable character that cannot just go down- if you want something just go for it.
READ PART 2 OF OUR INTERVIEW WITH PATRICK BITATURE HERE: https://www.ceo.co.ug/concession-renewal-umeme-wants-a-win-win-deal-for-all/
Second is focus- remaining focused has helped me. In life, you will find there are so many things that seem to require your attention, but you have got to learn focus. Choose that, which you want to do and can do and let go of others.
Thirdly and related to resilience and focus is discipline- self-discipline. You need strong self-discipline to be able to influence the things and people around you to be able to achieve results out of them.
Some people will tell you that some of these traits are inborn- that one is successful because their parents were successful, but I try to discourage people from that kind of thinking. It may have a small portion; it may contribute in a certain way, but largely you’ve got to determine your own destiny.
Many an entrepreneur or would-be entrepreneur have burning desires and dreams but the fear of failure seems to curtail them from making that big move- the crossover to the world of the unknown. They would rather maintain the status-quo. What tips do you have about dealing with the fear of failure?
It is true that nobody wants to fail, but the reality of life is that we all fail sometimes.
This obsessive fear of failure is rooted in our upbringing; we are trained not to fail. From primary school, you are taught not to fail. We are told, it is a bad thing to fail. Our parents, society, our peers all don’t want us to fail- when you don’t do well, they look at it as a terrible thing. If you have to repeat a class, if you don’t win a race, you are a failure and that is a terrible thing. But as managers, parents, and friends and as individuals, we have got to overcome the fear of failure and promote the culture of appreciating that it is the culture of participating in doing things; the culture of starting that matters most, much more important than winning. After all you can’t win if you don’t start.
I have failed in so many areas that most people never get to know about. There are different businesses that have failed to work out, I have lost money here and there but these things happen all the time.
People tend to focus on the things where you win more and occasionally you will do one bad thing and they will remember only the one bad thing you have done and forget about all the good things but that is society for you. You’ve got to determine your own course, set the footprint or the roadmap you are going to follow, and stick to your road map, and that is what I chose to do. I have decided for example that I will not go into politics because I have not dealt with politics before- I want to do business and I want my business to have a positive social impact on people.
Choose where you want to go but also allow yourself to evolve with time. Being resilient, focused and disciplined does not mean being rigid, you have to evolve with the times. If you are too rigid you just end up being broken like a tree that is very rigid. You’ve got to be flexible to move with the times. Sometimes when there is strong wind, you bend with the wind.
There is a temptation to think that successful business people do not make mistakes- but like you have just mentioned, mistakes form an important learning curve on the journey to success. When you look back, what are some of the things you have done that you probably wished you shouldn’t have done or could reverse if you went back in time?
Of course there have been so many mistakes but every day you wake up, believing and working towards rising from those mistakes and picking the lessons. I have made mistakes in choosing people to trust, in partnerships and in some investment decisions for example by pulling out at times too early.
I bought Safaricom at shares at about four or five bob and I sold at 7 or 8 bob, but today it is 30 bob. Is that a mistake? May be not- but the lesson learned here is perseverance. When you do certain things with a long term vision, take a long term position and when you are doing things for the short term, take a short term position.
You must know what you want and be focused, don’t easily be swayed by the crowd. Making mistakes is both good and bad and by making mistakes you know you are doing things. When you are building a project, you don’t know if you will finish it, but you need the commitment to start first. Once you start it, you need the consistency to go through it till the end. Sometimes you may need to collaborate with different partners, you’ve got to have the ability to co-create, because let’s face it, sometimes you cannot complete some tasks alone.
God created us from nothing- it is only God who has the capacity to create things from nothing, but as human beings most often, to create something of significant value, something incredible you have got to do it with other people, so we co-create, we collaborate, but either way, consistency is key.
When I started building this hotel (Naguru Skyz Hotel), I decided to do it differently- rather than build a tall structure, I decided I would do 4 blocks of 7 stories each- a very big and challenging project whichever way you look at it. Then came the economic downturn, but because I had already began I chose to stick it out. I had already made the decision- it is like if you are already pregnant, you can’t back out from what you already have. I had to go through all this quietly. People wrote all kinds of things about me, it didn’t matter because none of them was going to feed me or look after my children. I just had to finish my project and I was not about to compromise on the quality of the product.
But now it is finished and we gave it all our best- the best quality. We have just been accredited now as a Marriott Hotel and are now on www.marriot.com. Right now am proud of this establishment because it is probably the safest building in Uganda in terms of fire and health safety. We have been challenged to the high Marriott standards and when I look back, we are glad we made the investment we did in ensuring quality and something that is up to standard.
Patrick Bitature is a serial entrepreneur with a string of businesses and many other board, charity and family responsibilities to run. How do you stay sane in the fast lane? What are your winning tips on how to keep your busy schedule in order and maximize performance?
I think it comes back to self-discipline.
You have got to learn to control yourself, don’t let things phase you, don’t lose your temper and don’t let small things make you angry. It is important to stay calm especially in and through hardships- some people just don’t manage their emotions as easily. I have learnt to harness different habits of staying calm, avoiding confrontation and generally avoiding things that will cause unnecessary stress.
It is also important to try and stay average- don’t be too excited and don’t be too angry or disappointed. Also don’t expect too much, then you will not be easily disappointed.
If you learn to manage people well, most things will seem to work for you because people are the most complicated. Items such as machinery and buildings are straight forward but managing people is very important.
But all in all it takes time.
What would you say is the greatest piece of advice you have ever received?
Unfortunately my dad died when I was quite young, but one thing he used to tell us was: “You must work hard every day. If you have not done anything the whole day at least go outside, dig a hole and fill it but don’t go to sleep without doing something.”
That I remember.
My mother taught me a lot of things; she is the one who raised me largely, that is why some people say I have got a little bit of humility. I think I got it from my mother because she really trained us to be humble and that was a big plus.
My wife has also taught me to keep my feet on the ground at all times. Even at home when we have dinner, I pick up my plate and take it to the kitchen but also as an example to children. I listen to her and at home she is largely in charge and I give her, her space and respect and we have raised our children to see that. These are the people who have played a big role in who I am today.
One other piece of advice I hold dear, I got it from the President. One day, he told me a word in Runyankore, which I did not fully comprehend; he told me: “Otarihemuka.” I didn’t really understand at first and he explained to me that it was about protecting my reputation. “Stick to your word,” he said. Getting that from a head of state was very inspiring – I have since learnt to be careful about my name, my reputation, so that I won’t say or do anything that will shame me.
In the business world I look up to people like Dr. Sudhir Ruparelia, Mukwano and Karim Hirji from whom along the way I get small nuggets on how to overcome some of the challenges in day to day business life and how to be practical when building a business. I have found them to be excellent mentors.
You are both a local and a global entrepreneur. You chaired Uganda Investment Authority (UIA) – do you believe local entrepreneurs are getting enough support from government especially in policy and actual business opportunities? It appears government is paying too much attention to foreign investors- what would you change if you had the means to?
Government’s decision to support foreign direct investments even when it appears to be at the expense of local investors was justified because they needed capital. If the government had the capital then maybe they would never have liberalized the space for private sector to play. But many of our private sectors are small players; most of us are SME businesses. We couldn’t make the big decisions to set up the big businesses- manufacturing plants, cement factories, the power projects, the large sugar estates and the other big projects that would create thousands of jobs. So government had to look for foreigners to do that.
The second thing is that we did not have the technologies and the skills to do certain things- so we had invite the people who have that- we needed an affirmative policy for that. As a government you have a choice to lock yourself in and love your people but then you won’t make much progress. That’s why government had to open up that space and appear to be favouring foreign investors. We needed these big companies, to bring in the big capital, the skills and meaningful jobs- we needed the MTNs and Stanbics to come in and invest.
But I think the government has now come full circle and it is trying to see that the playing field is levelled.
With specific reference to the oil & gas industry, do you feel Ugandans and Ugandan companies are getting enough opportunities?
First of all am grateful to the Petroleum Authority of Uganda (PAU), because they have ring-fenced certain areas for local Ugandan businesses. For example, a company from China or France cannot be allowed to supply local foods that are available here- preference is being given to local companies. If there are failures in certain areas, either because of capital or technology or understanding the systems, then they recommend that you partner with an international company and that to me is a step forward.
When it comes to other complex areas like logistics, I don’t see a Ugandan company with more than 1000 trucks, but even then, there are windows for partnerships with Ugandan companies with certified trucks- but by and large, where Ugandan companies can qualify, preference shall be given. But most importantly, the fact that they have reinforced some areas of business for local people only is a big starting point.
In areas where we can compete with other international players like welding, mid-scale construction like for housing units etc., Ugandans will have a role to play but even for the larger jobs, Ugandans have opportunities for subcontracting from the bigger companies and this is the way to go.
We don’t want to slowdown the project simply because we want to ring-fence for Ugandans; because we simply want them to get a share of the cake.
Don’t you think our oil has taken too much time in the ground? By the time we get it out, will the cost in foregone time and time match the benefits?
Certainly, for anyone living in Uganda will fill it has taken a long time, because it is now seven to 9 years since the oil was discovered. The fact of the matter, however is that we were not ready. These are uncharted waters for us as a country, we didn’t have the policies, we didn’t have the laws, the people, the legal framework etc. so we had to build capacity and learn along the way. We didn’t have competent people to set up the Uganda National Oil Company, the national advisory council on how the funds will be managed etc., all these things needed to take time and to build a consensus.
Wherever the President felt he needed caution or he didn’t want to make a wrong call, he would rather hesitate, take a bit longer but eventually come up with a prudent decision to proceed. For example, we had issues around the environment because our oil is in the national park and many environmentalists around the world are looking at how we shall handle that; so we had to raise the bar- not just for the oil companies, but on ourselves as a country.
May be if this was a personal business, the president would have made a call, but because he’s doing this on behalf of so many people, he had to be on the side of caution and we have to give him credit for that. I believe he needs this money much more than anyone else because it would have made so much difference on the country during his administration. He has always complained for being a beggar, because he has to go looking for funding to finance some of the projects like building roads, dams, schools, hospitals etc. he needed the money quicker, but in his wisdom, he knew that if he did in haste, we could have lost the plot.
I think the price we have paid in waiting is worth it.
I think the demand for oil will still be here in the next 20 years- there are over 1 billion vehicles, versus 2 million electric cars globally. By the time electric cars, replace fossil fueled cars completely, even our oil here will be finished. The key therefore lies in investing the oil revenues wisely and safely such that those revenues support other key sectors like agriculture, manufacturing, social services as well as capital development.
Next week the budget will be read. If you were the minister of finance- what are the major 5 things/policies you would front to stimulate the economy and get us back on track to our middle income targets?
In the first instance, the Private Sector Foundation which I chair is a key stake holder in the budget process and typically 70% or may be 80% of our proposals are adopted or set in the budget, so we are more or less in sync. Where we have asked them to increase taxes on certain products they have listened and done that so as to protect us so that we can support manufacturing in our country.
On the other hand where we don’t agree via certain things, because they need revenues and they feel that the private sector can give much more, we have had to agree; it is called compromise. So I think this year’s budget is friendly especially to Ugandans, because it clearly points in the direction where we want the economy to go.
The budget embraces local manufacturing- this idea of people bringing goods, making us their supermarket has to stop. Our market is growing very fast in terms of numbers and income, so those who export to Uganda have to choose either to come or set up the factories here or we will set up these factories ourselves. That is the direction that the country is going.
The era of globalization where goods move just freely, is coming to end or rather is being revisited. It began with America-first and now every country is looking at protecting itself. Much as we are talking about the African Continental Free Trade Area and the East African Community, we also need to look at the basics. We need to build independence and self-reliance on electricity, security, manufacturing etc.
No one wants to be a supermarket to their neighbor.
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