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#OutToLunch Is Uganda ready for vintage investments?

By Denis Jjuuko Coming from this part of the world, for many years, I was always baffled by what some of the people in the developed world spend their money on. I am interested in world news, and once in a while, I would hear that a piece of art was sold for millions of dollars at an auction. I wondered why in the world, would anybody pay top dollars for a mere piece of art. Not that I didn’t appreciate art, but as somebody with my background, I thought it was a total waste of money. My bewilderment or naivety if you like was that some of the pieces of art that these people spend a lot of their money on are not even by Picasso or Michelangelo. Many were made by ordinary painters though their owners had kept them in good shape for many decades. I decided to read more about this crazy arts business. I realized it wasn’t just art. Watches, guitars, whiskey, wines, books and many other such items were sold at crazy amounts. Only in August this year, basketball legend Michael Jordan’s game-worn sneakers sold for US$615,000. Jordan had won the pair in a game in 1985. Yes, a pair of shoes slightly order than NRM has been in power sold for a whooping Shs2.2 billion. As an ordinary Ugandan, you probably now understand why I was always puzzled by what folks in the developed world spend their money on. As I read more about this weird behaviour of spending a lot of money on ‘non-essentials’, I came to understand that art, vintage cars, and such others relics were mainly investment vehicles for the wealthy. The person who bought the Jordan Nikes will make a lot of money in 10 or 20 years. All that they need to do is simply keep them safe and in the conditions they are. These particular Nikes are already making the owner money same ways Ugandans invest in land or buy treasury bills. At one stage, somebody else will buy them at a lot more money and the cycle continues. In Uganda, given the size of our economy, we may not have grown to a level where we can buy paintings or even shoes expensively even though we can participate in this global business. South African president Cyril Ramaphosa was fascinated by the Ankole cows and bought some of them. At an auction in South Africa, Ramaphosa sold an Ankole bull at ZAR640,000 or Shs143.8m! A well-bred Ankole bull in western Uganda is sold at less than Shs3m. It can be worthless during a severe drought. So imagine if one had Akii Bua’s shoes he used when winning his famous gold medal, somebody would buy them today at an astonishing price. Joshua Cheptegei simply needs to keep his shoes and vests; one day long after he has stopped breaking world records on the track, he might be making millions of money from his sportswear. However, there are some Ugandans already making money from this industry. They mainly concentrate on vintage cars. One of my friends has a BMW, which is about 30 years old, he drives it mainly on Sundays and many people stop him offering him crazy money. He always smiles and continues to drive. I have another friend who specializes in old Mercedes Benzes. Anywhere there is an old Merc on sale, he will buy it. If it needs restoration, he will put in money and turn into a unit that turns necks in Kampala. He gets good money whenever he decides to sell. The Kingdom of Buganda has been relentless in their pursuit for the government to return its old Rolls Royces one of which was recently returned, 54 years after it was taken away during the attack on the palace. Although the Kingdom may never put it on the market, when fully restored, it would cost more than a brand new one. And since we are willing to buy old cars expensively, we could be able to buy other old stuff too. So a business model based on vintage stuff could bring a lot of returns to those willing to invest. Old houses, for example, that have been restored could be of interest to the growing ‘middle class.’ I know we have destroyed many of them for shapeless apartments and arcades, but I believe if you found one and restored it, it would bring a good return on investment. The writer is a communication and visibility consultant. djjuuko@gmail.com

November 2, 2020

News

#OutToLunch. 10 businesses one can start with capital of Shs150,000

By Denis Jjuuko There is an increasing number of Ugandans especially in Kampala starting roadside businesses since the partial lifting of the lockdown. On the roads to the suburbs where people live, there are more people selling fruits, liquid soap, and other such household items. Some look like people who have been formally employed before given their dress code and some how they speak. Some vend from fancy and expensive vehicles. With many jobs lost, this is a good thing. Over the weekend, there was a post circulating on social media (mainly Whatsapp) where somebody was inquiring what business they could do with start up capital of Shs150,000. Some people ridiculed the post as something impossible while others argued it was possible. I thought of businesses one could start with Shs150,000 and came up with 10 of them. In no particular order, here they are. Fruits vending 60 passion fruits (Masaka type) are retailed at Shs10,000. This means that one can start such a business. So with Shs150,000 one can start with more than 15 packs of 60 fruits. An apple is sold at about Shs1,000 at whole sale prices and retailed at Shs1500. So one can start selling them with 140 apples. Many other fruits can be sold with the said start up capital. Toilet paper Toilet paper vending in traffic is common these days. Retail prices range from Shs10,000 to Shs20,000 depending on the quality and location. This is another business one can start with Shs150,000. Liquid soap Making liquid soap is so easy and ingredients are readily available. One just needs to learn how to make it. A 5-litre jerrycan is sold at Shs10,000. This means that one can easily start the business with 75 litres. Shoe shinning The new normal of working from home seems not to be working. Offices are open again and Kampala is full of people. The dust in Kampala isn’t about to go away. So this is one business one can be able to start with Shs150,000 if they identified a busy location. Household supplies If you identify a few families in your neighborhood, you can start supplying them with household items. With a capital of Shs150,000 you can buy stuff from the market and you are paid on delivery. Hair plaiting Once you have the skill, you can identify a salon which you sub rent per a hour whenever you have a client. The capital is then used to purchase hair braids or weaves. Where weaves are more expensive, you simply ask a client to pay in advance or identify a shop where you can get them on credit. Fresh beans and peas vending In Kampala’s traffic, you can easily vend fresh beans, peas and vegetables all of which you can start with Shs150,000 or less. You can also identify buildings with many offices and ask for permission to deliver to clients in their vehicles as they depart after work. Bricks and sand supplies A small tipper (Elf) carries about 800 bricks. Each brick made out of ordinary soil is about Shs150. You can hire a truck and deliver them to people’s construction sites at a profit. You can also deliver sand to sites. Social media influencer I assume you already have a smartphone. You can start a business of tweeting, and making posts for organisations and individuals. Many of those standing for election don’t know a thing about social media. You can start making favourable posts for them. All you need is data and OTT. If you don’t have a phone, you can still get an affordable one. Cleaning services There is need for cleaning services in homes and business premises. You simply need soap and some pieces of cloth all of which cost less than Shs150,000. You can even employ other people to help. Where you need machines such as vacuum cleaners or high pressure pumps, you can hire them. Imagine if you negotiated with an office block and they allowed you to wash cars as office people worked, you could easily clean 10 cars a day earning Shs100,000 a day for at least five days. You can also hire brush cutters to slash compounds. There are hundreds of other business ideas one can start with Shs150,000. I just picked these ones. The writer is a Communication and Visibility Consultant. djjuuko@gmail.com

August 5, 2020

News

#OutToLunch We can’t make face masks and then wear used underpants

By Denis Jjuuko A week ago, seven factories were opened in Namanve near Kampala. The president was there as ever to launch them. As ever, none of these factories which will make stuff such as tarpaulins and gumboots belonged to a Ugandan. It seems foreigners are seeing what we can’t see. What makes foreigners set up factories while we happily board the planes to go to China to import stuff the Chinese are happy to make here? There are many theories I hear one being that the government favours foreigners. I don’t want to agree. Foreigners come from a background where stuff are made and have understood that making things isn’t as difficult as many Ugandans think. The seven factories, according to The New Vision, were worth a mere US$12 million or approximately Shs44.4 billion. Each factory, therefore, cost just Shs6.4 billion. These seven factories will employ more than 2,000 people. This sadly reminded me of the debate some Ugandans love to make about manufacturing and assembling especially when it comes to vehicles. These Ugandans like to argue that you can’t manufacture cars in Uganda (yet 90% of buses on Ugandan roads are made in Kenya). That you can only assemble them and therefore that Uganda has not manufactured a car! Can anyone manufacture a car? An average car has more than 20,000 parts. Carmakers the world over source parts from the global automotive value chain. This value chain is comprised of hundreds of companies majority of which many of us have never heard of. I drive a small Japanese car. At the back of its key, there is a logo of the carmaker and something in small print that reads “Omron Corporation.” Omron Corporation made the key system as well as its automation system that detects many stuff including rain and whether I need a break from driving or not among others. Another company called Takata made its airbags. The music system is from Sony while the tyres are from Bridgestone. I can list many other parts but it will bore you. If you are keen about cars, you will also notice that some vehicles resemble each other even when they carry a different nameplate. Spear Motors sells Fiat Fullback Double Cabin pickups that look exactly like the Mitsubishi Sportero double cabs sold by Victoria Motors. The Tata lorries of the 1980s, if you are above 40 years old, that belonged to your school look exactly like the Mercedes Benz trucks of 40 years ago. South Korea’s Ssangyong Musso has a partnership with Mercedes Benz to use its technology same way Kiira Motors works with China electric car giant CHTC. There are many collaborations when it comes to the production of stuff. Buying parts or technology from the various suppliers is how stuff are made. If you are reading this on iPhone, know that Apple made no single part of what you are holding. Every part comes from somebody in the smartphone value chain. Let us bring this closer to home. Think of Kampala Serena, a 5-star hotel in Kampala. They prepare a buffet every day. The stuff they use to make that buffet comes from various suppliers from the food value chain. They don’t grow matooke or peanuts. They make no cooking oil. They don’t produce cooking gas either. Many suppliers bring the ingredients that Kampala Serena uses to make the buffet. Serena designs the menu and their chefs decide how it tastes and how it is presented to the customer. And ladies and gentlemen, cars are not made any different from the way Kampala Serena makes its food. The foreigners have understood that any product is made by many suppliers. That is how they come here and set up factories to make or assemble TV sets and fridges as we Ugandans fly to Dubai, of all places, to import finished products. We like to argue that something isn’t made in Uganda simply because many of its parts were sourced from suppliers from all over the world. The foreigners simply say this is Ugandan made, walk into Uganda Investment Authority and get tax incentives. In a few years, the foreigners who come here with little money are billionaires while we Ugandans are crying of slow business. We are happy to call them to employ our kids who we were paying Shs2m a term for 19 years. If you have been importing TV sets and fridges, I am sorry but Hisense is going to lead to the closure of your shop. If you used to import ceramic tiles, you know this so well. Ugandan entrepreneurs must think beyond importation, stop arguing that they can’t make anything and line themselves up to become suppliers of parts for the factories that are being launched every day or set up these same factories. Kiira Motors is building a factory in Jinja to make vehicles. Can’t a Ugandan set themselves up to provide nuts and bolts? What is so difficult in making brake pads for vehicles? Why do we still import car wipers and even headlight bulbs? How can we be so happy to replace parts in our cars with the junk that is sold in Kisekka Market? If we have managed to wear new face masks made by Ugandans, why do we still wear used underwear? The writer is a communication and visibility consultant. djjuuko@gmail.com

July 19, 2020

News

#OutToLunch Business bet: Grow food within 120km of Kampala

By Denis Jjuuko Last week we argued that most parts of greater Kampala will be urban in 30 years. Before that, Kampala’s population is estimated to grow to approximately 7.5 million people in the next 10 years according to the World Population Review. Urbanization means that they will be less land devoted to agriculture within Kampala’s 40km radius. Yet people still need food. Africa imports food worth approximately US$35 billion a year according to the African Development Bank and is estimated to grow to more than US$100 billion in the next 10 years. This is a result of “population growth, low and stagnating agricultural productivity, policy distortions, weak institutions and poor infrastructure,” says a report by the Food and Agriculture Organisation (FAO), a United Nations agency. Many of African dollar or even shilling billionaires are involved in food. In Uganda, we even import cabbages, onions and such other things! Yet our land is so fertile and the climate still favours agriculture. Uganda has a water body almost everywhere and even if you are to sink a borehole, the water isn’t that deep in most parts of the country. As Kampala expands and its population grows, there will be more demand for food than ever. The government is pushing industrialization as one of the ways to create the elusive jobs. With the internet and advancements in technology, many non-traditional jobs will be created leaving many youths working outside the agriculture sector. As Kampala expands, some people will become middle class. The middle class will demand more organic foods. They also don’t work in the gardens. Over the last few decades, many people have abandoned agriculture preferring to look for jobs in urban areas. The declaration that now some towns are cities will also lead to more people migrating to urban areas in search of jobs. At the end of the day, they will need food. There is a news video circulating online that the price of Matooke, the staple food in many parts of Uganda especially the populous central region has significantly gone down over the last few months. This has been largely attributed to the COVID-19 pandemic. However, the market and generally demand for food is enormous in central Uganda given the way Uganda’s economy is structured and the level of urbanization. One way farmers can cut costs and increase their incomes is by growing food that is needed in a particular market. If, for example, you grow a particular food crop where the market isn’t available it becomes expensive to transport it to the market. Let us take an example of Matooke. If you grow Matooke in western Uganda, the transport costs are enormous to bring it to Kampala where the market is. This means that the farmer will get less as the traders have to factor in the cost of transport. In the news video I referred to above, the farmers in Isingiro say the price of a bunch of Matooke is now between Shs500 and Shs3,000 instead of Shs15,000 on average they were being paid recently. In Kampala, a bunch of Matooke costs between Shs5,000 and Shs15,000 today from about Shs12,000 to Shs30,000 a few months ago. This means that most of the money the farmer could get is now taken by the transport man. With increments in taxes levied on fuel, the farmer will get much less. As you know, our value addition on Matooke is still in its infancy even though there is a factory that is being set up to make flour among other products. So the best bet for a farmer now to increase their profit is to grow food within a radius of about 120km from Kampala. This will cut down the cost of transport significantly and avoid price fluctuations that result in flooding the market. When a farmer is far away from the market, they may not be able to predict the market as they need much more time to bring the product to Kampala. A farmer within 120km of Kampala can easily monitor the market in Kampala and decide whether to bring the Matooke to the market or not since the delivery period is short. In two hours, a farmer can have his Matooke on the market if the plantation is within a radius of 120km. This calls for zoning the country so that farmers whose products are perishable like Matooke grow it near their biggest markets. Produce with a long shelf life can be grown anywhere even though the transport challenges would remain. So for those who are looking for post-COVID-19 business opportunities, growing food within a radius of 120km from Kampala is a smart bet. The writer is a communication and visibility consultant. djjuuko@gmail.com

July 9, 2020

News

#OutToLunch One of the idiot’s guides to retire with a million dollars

By Denis Jjuuko A few weeks ago, I read an article of how one can retire at the age of 65 with a million US Dollars if one saved and invested from the age of 25. That is 40 years of saving. The author argued that one needs to save about US$150 a month. I was intrigued. However, the article was meant for the American audience and therefore some of the stuff listed that one could do aren’t applicable here. I have been thinking about it for those few weeks and came up with a model that could work in Uganda. At today’s exchange rate, US$150 is about Shs560,000. I decided to round it off to Shs600,000 a month. This model is for those who are employed and therefore don’t have time to do business. I also moved the age from 25 to 30 for one to be able to start saving Shs600,000 a month or if they are a couple, Shs300,000 each. I know many people can’t save this much but many can do that. The age of retirement remained at 65 but my model is for only 30 years. If one saves Shs600,000 every month, it means that they will have Shs7.2m a year as savings. Many people reading this article can save this money if they wanted. I went back to 1990, which is 30 years ago and imagined the map of Kampala. How did Kampala look like 30 years ago? It was a nice town where most people lived in a radius of less than 10km from the main post office on Kampala Road. The rest of the suburbs where Kampala residents reside today were burial grounds. Uganda’s population was just 17 million people with Kampala accounting for approximately 755,000 people according to most statistics I could find online. Areas like Naalya were bushes. A friend says there were no major roads in Najjeera. Some of the current roads only existed as footpaths they used to take to raid jackfruit trees. Uganda’s population is expected to grow to 100 million people in 30 years. So if you are 30 today, you will be 60 years old in 2050. What kind of Kampala do we see in three decades? You can replace Kampala with any town or city where you live. Unless Uganda fights some wars and annexes some parts of its neighbours like Idi Amin unsuccessfully tried, the land size will remain the same. There is going to be unprecedented pressure on land with a growing population making the price of land skyrocket. Areas today that are devoid of urban dwellers will be urban and worth a lot of money in 30 years. So anybody or a couple that can save Shs7.2m a year for 30 years will be able to retire with a million dollars by just investing in land. What the couple needs to do is to ensure that they buy at least a plot of land worth Shs6 million a year. That would leave them with Shs1.2m to pay for the transfer of titles and even plant some trees on it (depending on the location). If a person or couple do this for 30 years, they will have 30 pieces of land in areas that are becoming urban. Areas like Matugga, parts of Mukono, Luweero or Mpigi where land is sold at such prices, will be very urban. Replace Matugga or Ziroobwe with any area where land is being sold at that rate. So in 2050, somebody who has been investing consistently will have an asset base that is worth a lot of money. Remember the plan is to retire at 65 with a million dollars. In 2055, at 65, one will start liquidating the first 20 properties bought. That means selling the pieces of land bought between 2020 and 2040. This means that you would have owned each of these 20 pieces of land for 15-35 years. Let us go back to Kampala of 1990. The growth of Kampala and other urban areas coupled with an explosion in population means that the same scenario will still exist in 30 years. So if you invest Shs7.2m in a property today, in 30 years, the investment will be worth about Shs200m in today’s money. This is based on the current rate of land. Just 15 years ago, a plot of land in some parts of Kampala was going for Shs3 million if bought from the real estate dealers. It was much less if you bought from the original family. Today, the same plot is approximately Shs100m. This means that a piece of land has been growing at Shs6.66 million per year. So 20 plots of land will be worth a minimum of about Shs4 billion in today’s money. To cater for taxes, commission, inflation and other stuff, you will need to sell another five properties bought between 2040 and 2045, which you would have kept for between 10-15 years. With a million dollars earning a net of about 6% per annum in financial markets, you will have US$5,000 per a month to ensure you don’t have to ever call your children for any money during retirement and create generational wealth for the grandkids. The writer is a communication and visibility consultant. djjuuko@gmail.com

July 9, 2020

News

#OutToLunch Let people buy their radio sets and face masks

By Denis Jjuuko When COVID-19 struck, the government promised some people food and indeed some households got. It somewhat showed a government that cared for its people even though the distribution was bogged. Even the biggest economy in the world, the United States, gave its citizens something with adults getting checks of US$1200 and children US$600. In Uganda, there were arguments that instead of food, people should have received money on their phones to boost spending to restart the economy. From free food, we were told of free face masks for everyone above six years old. Like it was with food, many people have never received their free face masks. Then last week, the government promised free radio and TV sets to enable kids to learn during the lockdown or enable politicians campaign now that the electoral commission is talking of campaigns carried over the airwaves. Ugandans are supposed to go to the polls next February. The newspapers said 10 million radio sets will be distributed each costing Shs38,000 or approximately US$10. Ugandan governments since independence have run a mixed economy. Providing free medical care in government hospitals and free education. With Universal Primary Education (UPE), a child can study for free up to university. Many farmers today receive agricultural inputs in seeds and other stuff to boost their income. I think some progressive farmers have made significant progress taking advantage of these freebies though the majority have remained dependent on the seeds. A face mask on average in Kampala costs Shs2,000, which is less than a US dollar. Even when the economy has been shut down during the COVID-19 pandemic, we should assume that the majority of people should be able to buy themselves a mask that costs that much. If they can’t and therefore need to be given free ones, then there is a major problem we need to address. There is a famous saying sometimes attributed to the Chinese that posits that it is more important to teach people how to fish than giving them fish. With face masks and free radios and everything free, we are giving people fish when they can fold their sleeves, get on a canoe and catch the fish themselves. If they learn how to fish, they can always get themselves what to eat. If we give them fish, they will be looking at us every few days even when the lake full of fish is just in their courtyard. We have had many poverty alleviation campaigns for many decades now, it is time to assess their impact. If these campaigns have had any impact, we shouldn’t be now thinking about giving out free masks and now free radio sets. Many years ago, people may have lacked TV sets (like they still do today) but most households had radio sets. How come today they must be given free ones? We should campaign less on giving people free stuff rather enable them to afford the basics of life. We should ensure that any household that needs a radio set worth approximately US$10 can have it by buying it themselves. The same applies to the face masks. This can be done easily by creating markets for mainly agricultural produce because the majority of Ugandans depend on agriculture. Many years ago, if you moved into an area where people, for example, grew coffee, you would find either a coffee factory or a store. It meant that people in that area had somewhere to sell their produce. Many people when they needed anything, they could simply present their delivery notes for credit just in case the factories hadn’t paid yet. People took their kids to expensive schools because of coffee and other cash crops. This is something that could be done again. The money that has been spent on free face masks and what will be spent on radio sets is approximately Shs500 billion. There are 134 districts in Uganda today. This means that Shs3.7 billion or approximately US$1 million per district. This is enough money to set up a project at least in one of the district sub-counties that can significantly, if well managed, change the lives of the ‘vulnerable poor’ in that area. If we continue tuning the mindset of the poor that everything will be given to them, nothing will change. The dreams we have of a middle-income country will remain just that — dreams. Of course, there could be people who benefit when people are so poor but we should not forget that the poor are the same people who will be used to challenge those who are currently benefiting from them. The writer is a communication and visibility consultant. djjuuko@gmail.com

June 25, 2020

News

#OutToLunch George Floyd, bank mergers and lessons for Ugandan SACCOs

By Denis Jjuuko As the United States of America was engulfed in flames following the killing of an African American, George Floyd, in police custody, an interesting story surfaced online. In the story, African Americans were urging each other to support fellow African American or black businesses. The story says black banks, for example, had experienced substantial increases in the number of blacks opening accounts. At the same time as this story was spreading, Bank of Uganda gave no objection to the merger of NC Bank and CBA Bank. Both banks are Kenyan owned and have been in Uganda for a couple of years but as small players. Their merger, we were told, has created a bank with assets worth more than Shs500 billion. The merger followed an earlier one in Kenya where both banks are headquartered. The merger in Nairobi created a behemoth worth US$4.4 billion or a whooping Shs16.2 trillion in Uganda currency according to Reuters news agency. This moved the two merged companies from mid-tier banks to the third-largest bank with more than 38 million customers. Before that, in 1991, in South Africa, some small banks merged to create the Amalgamated Banks of South Africa commonly known as Absa, which recently entered the Ugandan market by acquiring the assets of Barclays in Africa. The merger of small banks created a unicorn that is now a big financial power on the continent with a recognizable brand plate. These stories made me think about our SACCOs and investment clubs. There are thousands of them in Uganda with many assets releasing billions every week to millions of members but in such small amounts that they go almost unnoticed. What can they learn from the business lessons emerging from the death of George Floyd many miles away? What stories do they get from the merger of NC Bank and CBA Bank? These SACCOs and investment clubs have money in billions but they haven’t earned their place on the table. They are not controlling the economy. Many invest members’ savings in commercial banks earning a small fee on their fixed deposits. If they merged, they would become a force to reckon within the financial sector. They can start directing the economy. They can become banks though they don’t necessarily need to do so to create impact. There are many business models. Many SACCOs and investment clubs give members loans to buy imported boda bodas. How about funding a factory to assemble the boda-bodas? They would fully control the boda industry. A boda-boda costs less than US$300 in India but sold here at about US$1500. The SACCOs working together can change that narrative with their boda boda production plant. They already have the money; they just need the vision for big business. In many villages, there is what is called VSLAs or Village Saving and Loans Associations, which collect money every week. They enable each member to borrow and do their little business usually in the agricultural sector. How about if they simply agreed at a parish or even a sub-county level to change a little bit and decided to invest in one or two crops say the growing of onions. Such a village will be known for onions. It will attract onion buyers there and significantly reduce the cost of transport for onions. They would also collectively bargain for better prices as they would be a big force in the onions market. Government agencies such as NAADS will pay attention to this sub-county and probably set up a processing plant for them to add value to their produce. But if each member in the same village, parish or sub-county continues to grow their own crop on their own little pieces of land, they will remain poor substance farmers for life and the cycle of poverty will continue for generations. Many big companies also have SACCOs from which staff borrow to pay school fees, build rentals that bring almost zero returns and cry when jobs are shifted elsewhere. Yet some of the SACCOs can easily turn themselves into businesses that supply that very company where the members work. They can supply the company with raw materials if they are a factory or even consumables for offices. They can supply others as well. Of course, these ideas can only work if the SACCOs institute proper governance structures and have qualified managers in place. I believe that the money in SACCOs and investment clubs lying idle in fixed deposits and dormant land investments can easily create a revolution in this industry. We simply need to think like NCBA Bank or Absa before it. They can pull money to do big business like we are seeing African Americans learning from George Floyd. The writer is a communication and visibility consultant. djjuuko@gmail.com

June 12, 2020