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Sembule owners can aim beyond Museveni

By Joseph Were

They must start to think with their hearts and measure return on investment in emotional kilobytes

Maj. Gen. Benon Biraro is your typical gentle giant; big face, wide eyes, thick lips, and strong neck on a heavy-weight frame. He is planning to run for president in 2016 and is throwing some interesting ideas around. They include something he calls “LIFT” – Local Investment For Transformation.

Christopher Sembuya of the once-legendary Sembule Group needs Biraro’s LIFT. Unfortunately, Sembuya does not know it.

Instead, as last year came to an end, Sembuya was moving from TV station to radio station, and Parliamentary committees with what has become a national refrain; tusaba government etuyambe – ‘let the government help us.’

Sembuya is not a poor peasant, helpless widow, or street hawker. He is, in fact, Uganda’s very own Rockefeller; the embodiment of the steel, electronics, and construction aristocracy of yesteryears.

From humble beginnings in Idi Amin’s Uganda of 1971, two brothers; Christopher Sembuya and Henry Buwule founded a company; Sembule Steeling Rolling Mills. It grew into The Sembule Group. By the early years of scarcity in the mid-1980s Uganda of President Yoweri Museveni, Sembule Group had expanded and diversified into banking, electronics, construction, and trade.

Some of the older generation of Ugandans might see a quick link between Uganda Railways Corporation, Uganda Cooperative transport Union, DVD Engineering, and Bansel Engineering. The last MD of Sembule Group, Francis Sembuya, lists them as some of their business partners. All were household names in Uganda’s 1990s engineering and transport sector. All are gone.

Sembuya is attempting to hang on. Listening to him, one recalls a quote from Asheesh Advani, the CEO of Covestor; an online marketplace for investors. Advani wrote in one of his columns that “most businesses fail, not because they run out of clients, but because they run out of time.” Sembuya still has the right ideas and right products. But he ran out of time 15 years ago.

One of his companies, the Steel Rolling Mills Ltd, borrowed Shs 7 billion from a bank back then. Sembuya appears to have borrowed trouble and the bank has now come to collect.

That is why it was so painful to hear him say, before a committee of Parliament, those ugly words: “I request the government to help my company to pay its debt to Bank of Baroda.”

Sembuya says his company is worth Shs 27 billion. It might be. Unfortunately, the focus now is on Sembule’s cashflow. It is negative. Any smart investor hates that.

That is why one of the MPs challenged Sembuya to write a “justifiable business plan,” which the committee can use to convince the Office of the President to help the company. That does not appear to be Sembuya’s thing.

So far, Sembuya has focused on lobbying President Museveni directly for a bail out. Sembuya’s message is simple; you have done it for Indians, Chinese, Americans, and others, why not me, your fellow Ugandan?

Perhaps unknown to Sembuya, he is implicitly telling the government something Museveni might not want to hear; that his bail outs or investor  incentives; which look outwards in favour of foreigners and ignore locals to ferret inwards, need to be rethought.

Sembuya makes sense among long term pitchers. His argument is strategic and macro-level. But it is inappropriate for Sembule Group, which faces a short-term existential threat. If, Sembule does not get money soon, its assets will be auctioned off. That is why it needs to look for money differently, from other sources.

A good model for Sembule Group might in fact not be a “justifiable business model”. It might be similar to what is being called the ‘Toffaali’ venture launched by the Buganda Katikiro (Prime Minister) Charles Peter Mayiga to raise money to rebuild the ancient tombs of the kingdoms rulers that were razed in an inferno.

The architecture of the fundraising effort is as simple as its appeal. On paper, it might resemble Gen. Biraro’s LIFT because it involves getting a few shillings from a wealthy friend here, a relative there, and an excited fool over there – what Prof. William Wetzel, calls “angel investors”. It has worked for Buganda’s ‘Toffaali.’

It could work for Sembule because it is built on sense of loyalty and community spirit. It exploits emotion more than logic.

Sembuya cannot appeal to logic because it is quite clear he has the right entrepreneurial vision but wears business pants of a different era.

His empire may have stretched from banking, steel, electronics, trade and construction, but why did it collapse under his watch? He possibly has the right heart but the wrong head for business. If he had more head than heart, we would prescribe a pitch to a venture capitalist or to the Uganda Securities Exchange.

But the Sembule case does not promise certain and immediate return on investment. That, possibly, is the reason why President Museveni is keeping his checkbook firmly in his pocket.

Therefore, Sembule must make an emotional appeal. “Why should we let foreigners take our thing?” Sembuya has asked that question already, but he must do so again and again more stridently. He must also appeal to the self-interest of a carefully selected wider target of investors; the Baganda.

Even without an updated census figure, one can safely say there are more than six million Baganda in Uganda. If Sembuya convinced each of them to give him just Shs 1,000 (the price of a tiny wheat bun), he would raise Shs 6 billion. If he convinced them to give him Shs 2,000 each, he would get Shs 12 billion. Some, like Mama Fiina could easily give him millions; effectively covering for thousands of Baganda that might not feel moved or be unable to contribute.

Most of these will not be asking for a return on investment (ROI). That is the beauty of it; as the ‘Toffaali’ of Katikiro Mayiga has shown. At the core, these are investors driven by ethnic loyalty. To them, the ROI is measured in emotional kilobytes (EKs).

If Sembule could craft a similar model with a message for Ugandans, not only the Baganda, the project could grow even bigger.

The Sembule venture could take the form of a Collective Investment Scheme designed to encourage individuals who are emotionally attached to the notion of Uganda to come together and put a monetary value to their passion. Such an approach shows that what Sembule needs is, perhaps, not Museveni’s money, but a good brand manager; someone like Maj. Gen. Benon Biraro.

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