UG scores top in entrepreneurial start-ups – and failures

Kampala day 4. In the annual Global Entrepreneurship Monitor, GEM reports, measuring entrepreneurship in 59 countries, Uganda is consistently among the top three countries in the Total Early-Stage Entrepreneurship TEA index.

Paradoxically the GEM report also indicates that Uganda has the highest score in the Discontinuation of Businesses rankings. The GEM reports, are made by The Global Entrepreneurship Monitor, a not-for-profit academic research consortium

I remember one of the first times I was in Kampala in the early 1990s. We stayed down town at the Equatorial Hotel and in contrast to now it was never hard to find a parking space in this area. There were basically not very many cars in town, and it did not have the energizing sizzling busybody atmosphere to it as it has today.

Honestly speaking, apart from some few market areas and Ange Noir!, the capital of Uganda was dead quiet and very slow. Around Equatorial Hotel there were some shops – maybe leftovers from pre-Amin – but the shelves were not exactly full of goods. I remember finding some curry powder in a tin in a small supermarket and feeling exited about my findings!

Late 80s – early 90s were the breaking time in terms of the young president Museveni’s economic and political strategy. Immediately after the bush-war he followed a socialist model for development. Then the World Bank, others and probably second political thoughts came along and changed all this, and the sleeping economy and the empty shelves became history. Everything was liberalised from the laws for traders, private enterprises and foreign investors to the airwaves. In no time the number of FM radio stations shot up from less than a handful to present days 150 plus. There is no doubt that UG woke up; within a few years the economic setup became what the experts in these matters call an enabling environment.

The economic strategy of the 90s definitely served a purpose; I supported it and I don’t know where we would bee now without it. It enabled some of the very established businesses we have today to expand and flourish, says prof. Waswa Balunywa who is part of the GEM team in Uganda, Principal of Makerere University Business School and Board Member of Bank of Uganda.

The enterprises the professor speaks about are among a dozen others the Mulwanas (Nice house of Plastic) the Wavamunos (Spear Motors, Vavah Broadcasting) The Madhvanis (Madhvani Group of Companies, Kakira Sugar, Mweya and Paraa Lodge) The Mukwanos (Mukwano Cooking Oil, Chapa Nyota Laundry bar) and they all saw an opportunities which they fully exploited. According to the professor 19 families the run 60% of all the industrial production in the country.

At the same time as the economy picked up and the impressive growth rates of 5-7% took off, the liberal approach ruined some of the structures that previously had held the country together. The famers cooperative unions and their infrastructure (transport, storage and markets) were dismantled by the government. With the crumbling of these structures life became extra hard for ordinary Ugandans – the 80% of the population who survive as small-scale farmers and trade mainly in the informal sector. Without the cooperatives to set the prices, store produce and distribute seeds, and lack of serious state investments in the agricultural sector left the small farmers free to survive or perish in the midst of the free market forces. In hindsight, an odd strategy considering the fact that agriculture to this day remains the backbone of the economy.

The consistent growth of our economy is due to the hard work of our farmers; they provide what we eat and they provide the majority of our exports. They are our every day heroes, says Waswa Balunywa

The important role of agriculture is not reflected in the national budget. Uganda is a signatory of the  Maputo Protocol and the Comprehensive Africa Agriculture Development Programme (CAADP) and thereby commited to assignat least 10% of the national budget to the sector, but has never lived up to this. In the 2011/12 budget agriculture is allocated 4.5%.

I agree that we have failed to create a productive environment for the farmers and I am among those who would like to see a strategy where we make sector favoring interventions especially for agriculture, maybe even specifically for coffee and cotton, says Waswa Balunywa and explains that Uganda is one of Africa’s leading exporters of coffee beans and have the ability to produce cotton of some of the highest quality in the world.

How does all this lead back to UG’s simultaneously positive and negative ranking in the TEA index?

Start-ups need an enabling environment. Apart from skills and an astute sense of business, it requires access to market, consistent electricity, reliable suppliers, middlemen and road infrastructure. If all this is lacking, there is not much hope for success. Corruption, fraud and nepotism is yet another factor for business failures. A start up entrepreneur can end up spending all of his or her money on bribes before the business can take of. Or if we are talking about the fishing industry; if all the fish in the lake are fished before they reach a certain size because someone official allows the fishermen to fish as they want for a fee (read bribe!) there will soon be no fish left to fish. In other words, if everything is possible, and there are no checks and balances and no backing provided to the small farmers ad business nothing becomes possible.

The global economic crisis has shown that a free wheeling liberal economic model is not sustainable alone. It needs back up mechanisms on many levels and a stench of the socialism we left behind in the 1990s. Uganda needs to export to maintain a stabile growing economy. It is about time that we tap into the farmers and the entire informal sectors entrepreneurial skills and provide the necessary support mechanisms, ends prof. Waswa Balunywa


One Response to “UG scores top in entrepreneurial start-ups – and failures”
  1. Dawn Smth says:

    I began a school in Bukimwanga, a village above Mbale, Uganda. We had an operational school for about a year. Then the court battles began. Even though our Elementary School in the US raised over $35,000 American dollars to build a beautiful school, it is locked. Several men who were involved with getting the school built claim the school is there’s.

    I certainly understand failed efforts in Uganda. Any suggestions would be appreicated.

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