Investments

Out to Lunch

#OutToLunch: Are investment clubs ruining your life?

By Denis Jjuuko The internet has led to connectivity we probably never imagined. Previously, you left a job and that was it. Today, if you leave one, most likely somebody will add you to a WhatsApp group of former employees of Company Z. If you don’t leave the job, you belong already to several WhatsApp groups. The schools you attended also have another WhatsApp group. And of course, another for the particular class say Law Class of 2005. If you attended many schools, you are in several of these. The neighbours also have another group. Your ancestral village has another one for its Kampala diaspora. The religion you belong to has several others. The one where you live, and another from your ancestral district or diocese. The gym colleagues have another one. The social clubs you belong to also have others. The list of WhatsApp groups can be endless and sometimes it can be hard to catch up. Some people, perhaps afraid of annoying people if they left, resort to being silent or what Ugandans call akamooli (watching from the sidelines). However, most of these WhatsApp groups have one thing in common — investments or savings. There is perhaps no WhatsApp group where an investment or savings club hasn’t been mooted. Because everyone wants to save and make some ka-money, the idea usually is supported by many members. And indeed some of these investment or saving clubs have blossomed. Some old students or church associations now have billions in assets under management. Many people feel that they shouldn’t be left out and go ahead and sign up to many investment or savings clubs. Each of them expects one to pay a set amount of money every month. Failure to pay can be psychologically torturing. Treasurers are cajoling each one of the members to meet their obligations. Meetings spend half the time devising means to ensure everyone is paying and how to discipline those falling short. I know of somebody who was consistently broke. He was earning a decent monthly salary but he was always stressed and pitiful. I found out that he was belonging to several clubs in Kampala and his ancestral village. They took a significant part of his pay. He was living a miserable life as he tried to meet his obligations with the several investment clubs he belonged to. Saving and investing is a very good thing but it should be of a certain percentage of one’s earnings. If you save and invest for example 70% of your earnings, you must ensure that you can survive on the remaining 30%. If you are saving 70% of your earnings and then playing dodge ball with your landlord at home, failing to get basics for your family, then it makes no sense. Being super stressed because of saving isn’t probably the right thing to do. The repercussions can be dire. Many people suffering to meet their saving obligations in clubs as largely a result of subscribing to many clubs. The best way is to identify a club or two which meet your aspirations and concentrate on those than being in so many clubs and failing to meet your obligations. It frustrates everyone including yourself. Investment and savings clubs however good they are for people and economies, they are very conservative. In order to protect people’s money, they usually invest in assets that are considered safe but sometimes without even regular returns. People can have money in these clubs but they aren’t taking home anything regularly. If a club invests in land or even unit trusts, they have to wait for a long term for either the land to gain value and sell or for the unit trusts to compound significantly to provide a worthy return to the members. Are you willing to wait for that long? Those that lend money to the members charge very high rates, sometimes as much as 3% per a month. Annually, that is 36%. Just because there isn’t much paperwork, collateral and are swifter than commercial lenders, the interest rates are simply prohibitive given that members are essentially borrowing their own money. Investment and savings clubs if they want members to make money, they need to lend below annual interest rates of banks. Since they do short term lending, they could do 0.5% a month. People who are borrowing this money, they could then be able to make money with what they have borrowed. So as your WhatsApp group proposes yet another investment or savings club, be careful before you sign up and see if it makes sense or the ones you belong to are enough. The writer is a communication and visibility consultant. djjuuko@gmail.com

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Out to Lunch

#OutToLunch Covidex and Kiira provide a case for indigenous knowledge investment

By Denis Jjuuko In many parts of rural Uganda, when people wake up in the morning, they grab some water in a small container and head to the kitchen where they pick a piece of charcoal from firewood used the previous night and then start brushing their teeth. If you have lived in urban areas all your life, you will be shocked by this practice. You will call these guys villagers, which they are and you may add that they are backward, which they might not be. Recently, multinational toothpaste conglomerates have started packaging charcoal-based toothpastes and they cost more than ordinary toothpastes. They also have packages that are labelled herbal. What do villagers know that urbanites don’t? Yet the reason most people in villages use charcoal and other plants to clean their teeth today is because they don’t have money to buy packaged toothpaste. For many years, we regard western products as superior and our indigenous ones as inferior. Ugandans on social media love coming up with memes with those in English or have western names as superior and those in local names or languages as inferior. We abandoned our indigenous knowledge in pursuit of products whose intellectual properties we don’t own. How do we return to indigenous knowledge in making our products? Last week, the National Drug Authority (NDA) under enormous public pressure approved Covidex, a herbal drug said to provide relief to COVID-19 patients. Covidex was developed by Prof Patrick Ogwang at Mbarara University of Science and Technology (MUST) if you ask one group. Another group will say Prof developed it on his own. Whatever the story, it shows that it is time to invest more in our indigenous knowledge. Covidex is said to be largely from a tree known as Mukuzannyana/Mukuzannume or Warbugia Ugandensis. The tree has been around for generations and has been used to treat respiratory ailments but we hadn’t done much to exploit it before. There are hundreds of other plants which are medicinal and used to cure people before western medicine took over. Had Covidex been made elsewhere, NDA wouldn’t have perhaps taken the path they took to authorize its use. If Covidex continues to do its magic against the monster that is COVID-19, it presents a case for much more research and investment in indigenous products. However, even if it doesn’t, it provides a case for more research and investment in indigenous knowledge. Before the Bazungu turned up in Uganda, people knew and had developed expertise to deliver babies through caesarean births using local brew as disinfectant among other innovations. Today, we even import some ingredients for sanitizers! If we are to succeed with the next Covidex, we need to significantly invest in research and development. We must encourage young people to innovate beyond the development of payment apps. It is not a surprise that Covidex has its origins at a university or developed by people involved in a university, just like Kiira Motors before it. Universities are centres where people dream and develop capacities to research products. Many innovative products (Google, Facebook, Microsoft etc.) start that way but we must be intentional about them by providing the necessary funding. Talking of Kiira Motors, as the country was consumed by the approval of Covidex and indeed the deaths as a result of COVID-19, there was a story that didn’t grab national headlines. Kiira Motors has entered into agreement to produce 1,030 buses for Tondeka, a company that wants to deploy them in Greater Kampala Metropolitan Area (GKMA). The deal is financed by Rentco, an outfit that is involved in asset leasing and has worked on similar projects in Tanzania and Kenya among other countries. The automotive technology partner is Xiamen Golden Dragon, a Chinese giant that specializes in making buses. This partnership will lead to the development of our nascent automotive industry. Kiira Motors should now bring in its indigenous knowledge as it builds not only these buses but also its other products. What are those things that make a car truly Ugandan and we can sell to the world? How do we keep very old cars on the old and what kind of knowledge do we have that can make vehicles last longer? But for this to work, it means that there is need for much more effort to exploit indigenous knowledge. If you go to rural areas, parents immunize their kids with indigenous medicine. They cut kids on the shoulder (same area where jabs are administered for some vaccines) and apply it. How can we use this indigenous knowledge to come up with vaccines and other innovative products? The writer is a communication and visibility consultant. djjuuko@gmail.com

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