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The road to serfdom

How Ugandans have cultivated a mindset that is making them servants of foreigners in their own country

THE LAST WORD | ANDREW M. MWENDA | My friend Henry Mayanja left Uganda as a teenager and lived in the UK for 20 years. He worked for the UK government earning a salary and thinking he had made it. When he visited Uganda in 2011, he found some ordinary guy he left in Hima – uneducated, riding a bicycle and selling milk – a successful entrepreneur in Kampala with 24 lorries and investments in real estate. The guy explained to Henry that he had grown from the bicycle to a boda boda, to a small pickup, to the lorries.

Henry felt challenged and resolved to return to Uganda and enter business. He went back to UK, got a second job, and was earning £35,000 (Shs170 million) a year – which to Ugandan ears sounds great. After two years, he had saved £15,000 (Shs73 million) and bought two lorry-heads and returned to Uganda in 2013. He partnered with a friend who provided him five trucks (pulled by lorries) and entered the logistics business. Today Henry has over 70 lorries with their trucks; his business is worth over $5 million and is diversifying into real estate and mining. The money he makes today in Uganda is 20 times what he was earning in UK.

The lesson from Henry’s story is simple but fundamental: Ugandans do not need to run to Europe and North America to prosper. Our country has many opportunities, which anyone entrepreneurial can exploit and prosper better than anything the U.S. and Europe can offer. Yet very many Ugandans, even the most educated and exposed, spend a lot of time complaining about how government has failed to create opportunities for them to prosper. This is the most dysfunctional mindset across our vast continent. Government cannot create opportunities for anyone. At best it can create an enabling environment for people to succeed.

For instance, we have an estimated 20,000 Indians (or South Asians generally) in Uganda i.e. 0.5% of the population. Then someone recently told me that Indians (or Indian owned businesses) pay 64% of our tax revenues. If this number is correct, then it reveals something fundamental about this country: the thinness of indigenous participation in the economy as productive agents – exactly as colonialism designed. Meanwhile 70% of Ugandans are peasants living on agriculture, which contributes zero in taxes. They are poor largely because we do not have entrepreneurs to create businesses that can employ them.

For many Ugandans hearing the dominance of Indian capital in our economy, the first intuition is to look for a villain to blame. The best way to make such a villain recognisable is to give him/her a human face. So President Yoweri Museveni becomes the villain. Of course Museveni personally carries part of the blame for this. He has been a strong advocate of Foreign Direct Investment as a driver of economic growth. He is also fascinated by Indians and sees them as more entrepreneurial than indigenous Ugandans. He has thus been willing to use the state to support some of them.

Yet most Indian entrepreneurs have never received any direct state support but they are thriving. In any case, limited local ownership of the economy is a characteristic feature of most of the economies of Africa. In Tanzania, Kenya, Zambia, Malawi, Ivory Coast, Liberia, Sierra Leone etc., foreigners own most of the businesses. This demonstrates that many of the problems we attribute to individual leaders like Museveni are actually results of broader, historical, impersonal forces. Leaders like Museveni are consequences, not causes, of the neocolonial character of the state.

I have grown increasingly to believe that one of the main causes of our economic backwardness in Africa is our mindset. This is inculcated in us largely but not entirely through our education system and in public media.

26 comments

  1. The only honest comment I have read from Andrew. It is so true and I can testify on this with similar stories in Kampala and beyond. The problem is who you trust with your ideas.

    Only wish Andrew would concentrate on such, trust you would have lost of young men behind you!

  2. Thank you my brother Andrew for such wonderful analysis, its true mined set but where is the origin of it? The level of poverty in our communities is too high, try to run business but expenses en challenges will make it collapse. There is no support from our government for Micro businesses, even those who have broken through don’t support upcoming one’s just bse they fear competition. I’m running a small company supplying medical items but its a straggle, capital is less to extent that you cannot compete with people with money.

  3. (Copied from a platform where this article was sheared) Andrew Mwenda can make someone believe that they are fools. Some people like him have sold their intellectualism to bread and fear.
    * I grew up in Masaka selling grasshoppers and so far it’s the food industry I understand best, the Mwendas are charging us 350k per bulb per season. Is this mindset?
    *Mr. Sembuule who owned the first steel rolling company and employing thousands of people only needed 4 billion Ugandan shillings to go afloat, they instead drowned him and compensated Basajjabalaba for a market he never ran for a single day.
    * I have just learned that the salaries of Ugandans working in the Arab world we’re reduced by a half as a result of the the directive from above. Is this mindset as well?
    As an enterprenuer, your government taxes you heavily irrespective of whether you are making profit or not? Why is it that Ugandan billionaires are not given tax holidays like investors who borrow money from our government, only to employ their fellow country men such as Chinese on our tax payers money? Is this mindset as well?
    People are doing their best and unfortunately, the arrogant class that has mastered the art of gun powder to only siphon everything Ugandans work for then hire people like Mwenda to spread their (bad language) !

  4. The same could be said about Ugandans who were exiled in Kenya and Tanzania, they generally do well because they had no choice but to succeed.

  5. Much as Mwenda’s Henry Mayanja’s example could be true, it however, does not depict the true nature of doing business in Uganda. There is a bit that Mwenda does not reveal. Ugandans are one of the most entrepreneurial beings in the world. However, a survey carried out in 2004, by Makerere university Business school revealed that 50% of the business fail. The survey showed that 20% of small businesses failed in their first year of opening and 30% failed in the second year. The survey also stated that another 50% failed after five years of operation. Mwenda’s picture of Henry’s business is another picture of roses without the thorns. Mwenda claims that Henry started his business with £15,000 which purchased two trucks (heads). He claims that Henry now boosts of 70 trucks and his business empire is worth £5 million. If Henry owns 70 trucks and if he used £15,000 to purchase 2trucks then Henry’s 70 truck business is only worth £525,000. Uganda’s rate of return on investment is about 5%. If Henry invented £15,000 in 2013, how do we arrive to£5m in a span of just over 5years? Uganda’s most “investible” business is not “transport” but “gas and oil.” What is the true story Mwenda? We all want/crave to be part of a success story. This one has something missing.

    • That is why I admire Kakyama. He knows how to find them out using basic arithmetic. Mwenda is of course not being truthful about ‘Mayanja’ If he had said Sembuguya of the Sembuguya estates’…the billionaire of goats, I would agree that fortune favours the bold. I will remind Kakyama that there is a factor called ‘buona fortuna’ that hovers over most enterprising and adventurous folk which economists don’t know and accountants cannot understand. When I was a child, I saw Rwebembera start from a bicycle distributing cigarettes…..to a Suzuki motorcycle and to a brand new peugeot 403 pickup in less than 4 years because I was still in same same primary school so it can’t have been more than 4 years.
      The Sembuguya I alluded to however, was given government goats to multiply and the government forgot all about them so like the 1972 windfall, he multiplied them for keeps.
      The Uganda of the 60s and 70s that Mwenda cannot possibly know had cooperatives and people worked less than 8 hours per day and noone failed to pay secondary school fees. When you see a successful person in business, know an embezzlement is being laundered therein.
      The mindset was borne of failures upon failures caused by government. It is called apathy..it happens on the battlefield where someone becomes so fed up that he can walt to enemy or just lie down and wait for what may come no matter how bad.
      Struggle and fear and pain have limits beyond which the human body no longer cares.
      It still puzzles me how President Amin expropriated Indians and gave Ugandans their businesses (he himself never took even a chicken) without any visible shock to the economy because we were eating and drinking as we were before the Indians went, same year Uganda was invaded from Tanzania and enemy was routed mercilessly, sabotage continued unceasingly yet Amin was buying railway cars and aircraft cash no debts and people were drinking until sabotage took toll and the economy caved in.
      Recently I found women by roadside in Nagalama selling banana fingers that looked liked they had been picked from an off-loading bay , they were emaciated,dirty and looked like they had bathed for days…poverty was too apparent…..now that place is rural….why the hunger. This government will at a certain point in time find itself without people……..just zombies who walk and forage for a living and the tax base will die slowly by slowly until the trickle will dry up.
      Talking of apathy…..do you see Ejakait any longer in this forum? he has resigned himself to fate because of anger ..seeing he cannot mend anything of the damage these people-in-power are inflicting on the helpless population.

    • Dr. Eng. Kant Ateenyi

      Hi brother Rajab – do not get messed up with figures like Mwenda sometimes does! Starting with 2 truck ‘heads’ and eventually owning 70 ‘full trucks’ after 6 years does not mean you simply multiply the 2013 unit cost of the truck heads by 70 to get the present worth of the total business! There could (and indeed ought to) be other assets accumulated – or even reactivated – along the way following the investor’s relocation.

      Secondly, do not get messed up by those sweeping statistical average figures of 5% as RONA in Uganda, and the 30-20-50 % failure rates – which in themselves contradict the overall 50% failure rate. Just identify specific businesses with good entry barriers (i.e. those not for every Namusisi, Kanyarusoke and Opondo to imitate) and with good returns, create unique attributes in them, focus on them and see how you grow. And by the way, do not be swept by the kayoola tide of oil and gas. There are many other areas: Africa/Uganda is ‘green’ territory for those with the ‘right’ attitudes.

      It is tough yes – and there is no guarantee you will reap the benefits: (Incidentally my award winning Dec 2018 Hong Kong conf. paper now being published by an Elsevier journal, addresses the over 20 key challenges some African entrepreneurs have to navigate). You might find it useful particularly if you have an analytical mind.

      Cheers brother,
      Dr. Eng. Kant Ateenyi

  6. Mwenda you say Museveni is partly to blame but I think Museveni is to blame 98%y. H Joon Chang( who I read after your very good recommendation in one of your articles) writes about how countries can only develop with protectionist policies. But Joon Chang argues that lately, western countries have established intricate education and economic systems to keep third world countries poor by discouraging protectionist policies . Joon Chang writes about the Tudor monarchy’s protectionist policy started by Henry VII and adopted by his successor Elizabeth. Joon highlights how these policies failed for decades but where supported until they yielded fruit after 100 years!
    But we are stuck with a president who at best says Ugandans are useless and can only manage salons and bars. Museveni reminds me of a father who constantly abuses his children and little wonder the children end up as brutes or criminals with no productive capacity for society. And yet Museveni is an exceptional leader in other aspects but when it comes to the indegenisation of the economy and the fight for ultimate freedom he has failed miserably. A president should approach tthis question like the Tudors did. A president should be like a father to the country. A president should encourage and incentivise citizens to reach their full potential and not abuse and inadvertently promote eugenic based theories.
    But no, he gives Mukwano grants and gives “investors” loans to develop hospitals as opposed to investing in indigenous Ugandans!! The president should simply incetivise Ugandans and encourage competition among citizens.
    And what do we get as local investors? The right to pay bribes to URA officials just to get simple things going. No tax holidays and no subsidies but high taxes and high loan interest rates to pay!! But even then we have many examples of successful entreprenuers. Imagine if we had leadership like that of Henry VII that gets it. Leadership that sets the tone and understands that there is no freedom without economic freedom and control of a country’s destiny!

    The blame sits squarely with the leadership because even in such circumstances Ugandans have prevailed.

  7. Hi Andrew, we appreciate the message,it remains me ,when our professor at university four years go ,brought to us copies of failed enterprises which had failed to celebrate there 1st,2s &3rds birthday and one them where the closed banks we where shocked in class ,but to my surprise today some banks where illegally closed due lack political will and since then all those amazing entrepreneurs Ugandan citizens where shut down and they are laqushing in poverty ,so one example you have quoted to us is not enough it suits 1980 but not current issues facing young majority thanks my brother for god and country.

    • Dr. Eng. Kant Ateenyi

      Wilson,
      Thanx for appreciating M9 – and pointing out that one example is not enough.
      My concern is really about the ‘English’. I am worried that if this is how some of our current/recent graduates are communicating (which I accept should not be typical), then it can be difficult for some employers to recruit them for jobs. While I personally do appreciate and pick your message, it could be a very different matter with others, or in different circumstances.

      Cheers.

      • It has been my main quarrel with the visionary Dr Ateenyi. Painful to elders like me and disappointing to others, this regime has overseen the compromise and lowering of standards to pitiful level such that our offspring, who should under normal circumstances become brighter, haven’t been what we want r expect. Greed has produced consequence upon consequence until we just throw in the towel.

        • Dr. Eng. Kant Ateenyi

          Hmmm, ‘visionary’ I hear! Anyway, my dear elder comrade, I just want to say: We should not ‘just throw in the towel’. How will the future judge us: elders of today? It is better to keep trying till we are gone – even if our younger compatriots opt to block their ears and eyes. You never know – one or two could pick something. It is also nice for them to see us occasionally respectfully disagreeing with each other.
          And now to brother Ejakait, when you get time, chip in at least once in a while.

      • Unbelievably bad!

  8. Ramadhan Kareem. On another day I would be infuriated by some of the comments here but it’s Ramadan.
    What Mwenda provided was a summary of Henry Mayanja’s financial statement. In accounts it is a trial balance showing financial standing of Henry’s business. So, Mwenda starts by showing Henry’s annual income. He then indicates the savings which Henry used to start a business. He goes on to indicate the purchases of the business. The start up capital is in form of the two trucks. Henry’s business according to Mwenda’s statement boosts of 70 trucks as assets. However, he values the business at a whooping £5 million. Mwenda does not mention of any liabilities accrued by the business, which begs the question: what “balances” the 70 trucks which account for the only assets the business possesses and the valued price of £5 million? If 70 trucks at cost value amount to £525,000, then what makes up for the rest of the £4,650,000?

    • Henry Mayanja has a brother who was in the procurement dept of UNRA. Does this answer your question?

  9. It’s 4,475,000 and not 4,650,000.

  10. Today, I went to the beach with my kids. I found a sea shell and gave
    it to my 4 year old daughter and said “You can hear the ocean if you put this to your ear.” Shee placed the shell to her ear and screamed.
    There was a hermit crab inside and it pinched her ear.
    She never wants to go back! LoL I know this is totally offf topic but I hhad to tell someone!

  11. kambere godfrey

    Tx Andrew this article reads like those popular American self help booklets which have invaded the shelves of all respectable bookshops. You read one and feel you are armed to face your destiny . Its the air on the street that reminds you that you are in Uganda. Nothing works as planned . If entreprise was the way foward in Uganda those thousands of chapati sellers and boda boda riders would be showing this country the fruits of their labour .Get time and talk to any one of them. What would you compare the interest rates on bank loans in this country to other countries. And those celebrated foreigners why are they from almost the same countries and do similar or related businesses. Every year I have promised myself that i will read the famous Marshal Plain but some how i think that is where the government has a part to play. thank you

    • Yes, this is a “rich Dad poor Dad” article, purporting to carry a profound truth about how to succeed. It actually carries the opposite message. Now, Mayanja’s story is that he was able to save 15000 pounds in two years, enabling him to start his trucking business. The chances of accumulating this much in two years this in Uganda if you are not very well connected is zero. Also, given Uganda’s interest rates, servicing the interest on a 15000 pound loan will kill off most businesses. So the actual message from the article is that spending some time in the UK is a good way to start off a business career!

  12. kambere godfrey

    And yes i really forgot the miracle of the Independent Magazine .If you have followed the lifespan of magazines in this region you will concur with me on this that having the right ears in the right government places will keep you place on the high-table where those better equipped have failed. Here am thinking about the Focus on Africa magazine after which the independent seems to have copied every design except if i may recall the last page which used to feature ‘letter from the president’. This quarterly magazine folded! And have you noticed that on most government functions and most canteens in government facilities Pepsi is the drink of choice. The invisible hand in successful entrepreneur and tax avoidance am afraid is the only way to enterprise. If you dispute this scratch below the veneer of these tax defaulters (once a year the names do get in the papers) you will see that the owners of these companies have the right ears .And to qualify this search for the list of the top 100 tax payers in Uganda 15 or 17 years ago ! Finally it is rare for economists to agree on anything what i normally ask is at what stage do they agree that an economy has failed!

  13. kambere godfrey

    And last evening I was thinking that having the right ears in the right places in government ensures a place at the high table . I think it is this link that has ensured the Independent magazine a place on the news stands for the last 9 years. Yes even the BBCs Focus on Africa magazine folded and you wont miss the close resemblance in design – all except the last page of the BBC magazine – letter from the president. This i say because of the lifespan of most magazines in this region. It is for thes ears that you will be sure to find a specific brand of soft drink that is served on most government functions or sold in most canteens of government establishments ! And if you scratch below the veneer of the tax defaulters you will notice companies owned by government related officials . Quickly scroll the top of the list of 100 tax payers and compare this to the same list 15 to 20 years ago you will notice who has quietly walked out of the race. From his high place M9 can look at his college mates and wonder whether they sat before the same lecturers he only has to thank his gods that his palm kennels were cracked for him. yes let the government play its role am sure sucessful entreprise will be difficult to hide . Entrepreneurs from as far as Chile or Argentina will be here Even sellers of decent new clothes will be here . I got surprised to see in a republished copy of the uganda Argus adverts of Van hausen shirts !That was in 1962 . The last time I saw the genuine shirts of similar brand in the shops is about 10 years ago what sells as van hausen , Rael brook and other brands is made of polyester. Would you still want to interest your readers in the economy of cotton farming and the second hand rags imported for our citizens to wear. you will notice the shops of second hand wear have taken up prime shopping space next to shops tat sell trinkets and beads . Just spare two hours of your valuable time and shop on luwum ; william and market street or Namirembe road.

  14. The Henry Mayanja story is very incompletely reported.
    Apparently the fellow has turned 15000 UKP of capital into a business worth $70 million in just six years! Not impossible, but I have checked with someone who is actually in the trucking business. First, two trucks worth 15000 pounds in 2013 would have been virtually scrap, unlikely to last long on the road. Returns from a trucking business in Uganda are in the 10-20% range for “return on capital”, meaning that a $100000 investment can reasonably expect about 10000 to 20000 in profit per year.
    But somehow in the six years the business has expanded to 70 trucks! How? Certainly not by reinvesting the profits from two trucks bought in 2013. That is just plain impossible, trucking does have big paychecks, but it also has big expenses to keep the trucks on the road. Actual profit margins are modest.
    The capital to buy 70 trucks came from elsewhere. Now, there is the friend who entered as a partner at the start, there might also be some other cash-rich investor. Or there might be a big loan from a bank. Whichever way it is, the $70 value of the business today is not the same thing as the net worth of Mayanja. His actual equity might actually be negative, if he has invested personal loans bigger than his current share of the value of the business. It might be about 50-100K pounds (my knowledgeable friend’s estimate), meaning his time in Uganda has not been much more financially profitable than his stay in the UK.

  15. Thank you Sserukeera. The £15,000 buying two trucks means that each truck cost £7,500. That cost buys you a “fuso fighter” which is “single axle.” Meaning, that it carries a single wagon of approximately 10 – 15tonnes. Such trucks are mainly used in agribusiness. I am familiar with the maize business. A fuso truck fetches UGX 1,500,000/= per week when hired. This amounts to 6m a month and 72m per year keeping all other things constant. If all this income is saved and then reinvented, Henry can only purchase two more trucks at the end of the year. If Henry saved all the earning from the four trucks to buy other trucks, he would purchase four more trucks bringing the number to eight. At most at the end of 5years, Henry’s business would possess not more than 36 trucks. But to own 70 trucks and have a business empire worth £5 million is a lot of “speculative mathematics.” And it calls for the creation of a “suspense account” which would need clearing.

  16. UDAH LUTABINGWA

    Dear Andrew,

    let me phrase these few questions?

    What is the interest rate in Uganda?
    Why should some one borrow from Some other country which is not Uganda?
    Where is their sources of finance that they invest in Uganda?
    Who is responsible for the formal & informal education sector?

  17. ejakait engoraton

    On TV , some programs are aired where people carry out stunts, stunts which may seem doable but many times very risky. At the end of the program, or sometimes at the outset, the viewers are warned “not to try this at home”.

    Mwendas MAYANJA story( I wonder why it was not a Rwabogo or Rwakakamba) fall sin that sort of category. I wonder why he did not quote the story of “some lady” who reared goats, sold them at a hefty sum of was it 5 billion, carried the money in some bag two flights on Nkurumah road and bought some property from UBC!!!!!!!.

    First and foremost, in the Uganda of today, especially in the 21st century, its hard to relate ones income and wealth to their lifestyle and there is usually more than meets the eye. How do you explain how a lowly civil servant, or one of any grade for that matter owning assets 1,000,000 times their known salary.

    And if one must know, transport is one of the biggest loss makers, unless where one is an “owner driver”. So for Mayanja to have been able to find 1 honest driver and tonney boy would be a miracle, to find 2 sets would something else. And there is the ” welcome to Kampala/Uganda where any one who ventures into Uganda is more than likely to lose a big part of their investment, if not all of it on top of running up debts, something which happens even to ” city borns” , let alone the hapless MAYANJA who has been away all his adult life.

    There would be pitfalls every step of the way. This is the reason , even at the height of UTODA , KATONGOLE did not own a single taxi. In the old days , civil servants were known to own taxis and these were seen leaving and entering the compound morning and evening. The story would then go that one taxi was feeding the family, one was paying the fees in some expensive and the others, 2 or 3 were responsible for putting up the mansion in some exclusive part of town. The reality was these taxis were heavily subsidized loss makers and the only people feeding their family, paying fees or building from the proceeds were the pilot and “musika lugyi” and the stage touts and the stage master.

    On the issue of how and why Ugandans have failed to effectively make a breakthrough in business in their won country, I have already given my two cents worth and is not a subject I will go into here.

  18. I am thrilled by the discussions above. It touches me deeply. I miss that critically analytical Mwenda that once lived!!! The fact that many innovative local business giants have gone down is not debatable. The political economy of business in Uganda is deliberately illusive. It does not give room for objective promotion of positive mindsets. The environment does not statistically nurture local entrepreneurship because this is believed to be a threat to the status quo. As a result, we are increasingly becoming what I call, “A lejjalejja population surviving in a bodaboda economy.” Ugandans are casual workers for all including the Dinka!!! They are casual workers both abroad and home!!!

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