Start a business, watch it collapse slowly, one theft at a time

Thursday February 21 2019

Nakivubo in Kampala

The bustling trading centre of Nakivubo in Kampala. PHOTO | NMG 

By FREDRICK GOLOOBA-MUTEBI
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Over the years, research by, or example, the World Economic Forum, has shown that Ugandans are easily East Africa’s most entrepreneurial people.

Every year they start large numbers of new businesses, small and medium-sized enterprises especially. Perhaps even more interesting, again every year, businesses collapse in their multitudes.

One way of reading this is that, much as we Ugandans have a penchant for starting businesses, many of us are, at the same time, rather hopeless at doing business. That may well be the case. However, it is not the whole story.

The story of Ugandans and entrepreneurship would be incomplete if it is not properly contextualised and the effect of history and politics brought into the picture. The link between business and politics goes as far back as the colonial times when the authorities made it easy for Asians to become dominant in commerce and manufacturing.

Then came Idi Amin’s “economic war.” Among other outcomes, it culminated in Africans filling the gap left by his expulsion of Asians in 1972. What followed was that, for the most part, the Ugandan Africans who took over formerly Asian-owned businesses did not do so well. This was mainly the result of inexperience, itself the outcome of the relative absence among Africans of a tradition of trading.

The damage Amin’s economic war inflicted on the economy during the eight years he was in power and the depressing effect it had on people’s incomes from public-sector employment and on livelihoods overall, also had an effect on the business sector. The hard times forced many Ugandans to take to “doing business” on the side.

Almost everyone became some kind of entrepreneur in order to supplement meagre incomes from salaries whose value kept declining. In this way, “doing business” became a kind of epidemic that continues to afflict large numbers of Ugandans.

Earning a side income is now what everybody does or tries to do. In many ways this, besides explaining why Ugandans are so entrepreneurial, has contributed significantly to the high casualty rates among new businesses. How does that happen?

Well, first there are not that many people with an aptitude for doing business. Success cannot be simply a matter of having cash to invest, contrary to what a lot of people with money to spare believe. Nor can it be a matter simply of copying what someone else has done and been successful at, which is what would-be entrepreneurs who are lacking in imagination but have money to invest, tend to do.

This copycat culture explains, for example, why one finds so many fruit and vegetable sellers, drinking and eating joints, hair salons, car washing bays, “fast food restaurants,” “supermarkets,” “hotels,” and mobile money kiosks, within say an area covering one square kilometre, all fighting for the same customers. Invariably, many of these collapse within a short period of being launched.

But perhaps most lethal for the small and medium-sized businesses that Ugandans launch in their thousands on a daily basis is the belief held by the people they employ that a job opportunity ought to be an opening for one to start planning to start their own business.

Yes, large numbers of the desperate unemployed, who by some stroke of luck land jobs with would-be entrepreneurs, immediately take to scheming and exploiting every opportunity they get for making money on the side.

By way of illustration, while out shopping for some livestock to take to his small farm, an acquaintance found himself in a strange situation. He had gone to buy the animals from an upcoming farmer who nonetheless was not farming full-time. Employed as a bureaucrat, he had entrusted his enterprise to a “manager” to run.

This trusted person offered the shopper a deal: He would sell him some animals on the side, about which his boss should not get to know, because “some of these animals are mine.” The would-be purchaser saw this for the nonsense it was, rejected the deal and bought only those animals that the boss was guaranteed to know about.

Had he accepted the “deal,” the boss would probably have been fed on some bogus story. And if buyers kept accepting such deals, the farm would likely collapse at some point, in which case the trusted caretaker would go on to start his own and also fail along the way.

Another story I heard recently, was from an acquaintance who decided to invest her savings in a sauna and massage parlour. She had heard that owners of such establishments were making a killing. So she found premises and purchased all the inputs necessary. And for some time after she launched the business, it seemed as if the sky would be the limit.

However, soon enough, stuff started disappearing: Soaps, lotions, towels. Although she devised ways of combating the disappearances, including sackings, it seemed as if the thieves were always a step ahead. In the end, the business collapsed.

It all goes to show the dark side of the drive for success that sometimes underlies the laudable dynamism of sections of Uganda’s private sector.

Frederick Golooba-Mutebi is a Kampala- and Kigali-based researcher and writer on politics and public affairs. E-mail: [email protected]

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