Mr. Andrew M. Mwenda, the Founder and Managing Editor of the Independent Magazine, has emphasized that it is manufacturing that will transform Uganda not foreign aid. He made the statement while delivering a keynote address at the 14th MUBS Annual Entrepreneurship Conference, which took place between November 14-15, 2019 at Speke Resort Hotel Munyonyo. It was organized under the theme ”Uganda’s entrepreneurial ecosystem; does it work?”.
He said, Uganda’s entrepreneurial ecosystem works very well for people with the right mindset. There are also many business opportunities in Uganda, those who seek and seize them, will make money although not everyone will succeed, but many people do succeed. He therefore called upon the youth to stop complaining that government has done nothing for them, but instead take advantage of the available opportunities in the country. He said “Despite the challenges in Uganda’s entrepreneurial ecosystem, many people have started businesses and have succeeded. So my appeal to the young people, stop yelling on social media asking the President to give you jobs, look for opportunities in the economy and if you are talented you will succeed. “
Mwenda further elaborated that successful countries have very few people in self-employment ,people are employed by successful entrepreneurs and of course the government takes away the money in form of taxes because it is the biggest employer in developed countries. In Uganda everybody is employed in their garden, kiosk, shoe shining businesses etc, and because 80% of Ugandans are self-employed that is why the per capita income is 850 dollars and yet in the United States it is 64000 dollars.
Uganda is believed to be the most entrepreneurial country in the world, but why is there a problem of entrepreneurship in the country? I think it is the kind of dis-function and mentality en-calculated to us through our education system.
For example, “Kikuubo”, the enterprising Centre of the private sector in Uganda, is dominated by successful people who are not or less educated. Those with degrees, masters and PhD’s are in white collar jobs, because our education system tells us that business is for the less educated.
Why Uganda lacks transformative investments?, the people who are involved in business are traders who buy goods from China and sell them here, this can not transform a country. We need to start manufacturing and exporting. The traders in “Kikuubo” can be converted into manufacturers.
The biggest challenge Uganda’s entrepreneurs face is capital. So if Uganda is to be transformed, the state needs to provide long term capital to support long term investments. Secondly, the state needs to play the role of surrogate entrepreneurship. As a surrogate entrepreneur, the Government starts businesses and makes them viable to attract private companies. Therefore, the Government needs to put in place incentives that can make certain investments irresistible for private companies. What can the government do to create a favorable Entrepreneurial Ecosystem? Uganda needs to make it possible for businesses to grow.
We need government incentives to build businesses such that when they reach a certain level of scale then they can compete. Government also needs to focus on incubating our local business. The focus should also be on structural transformation which involves shifting of productive resources from low productivity primary activities towards high productivity manufacturing activities, this is what defines a development. But because Government is not willing to provide incentives to support young businesses to grow and to compete with the big businesses, we have resorted to foreign direct investment and we are obsessed with the Chinese who cannot transform Uganda. We need to transform from agriculture to industry. There is no developed society where 80% of its population are peasants.
In America, agriculture contributes 2% of the GDP and employs about 7%, in Europe agriculture does not even employ 2%, in Japan 32% and in France about 4% as its highest agriculture population so why is foreign direct investment an inappropriate vehicle for our future transformation and why should we focus on incubating our local business? It is because development takes place within the context of international trade which is a value chain, some countries produce cotton, others mine iron core, and others design mobile phones. How much you earn from international trade depends on the niche you occupy in that value chain.
So why is foreign direct investment an inappropriate vehicle for our future transformation? It is because multinational firms do not transfer the most innovative components of a business in the subsidiaries so we need to begin somewhere and continue upgrading. So my quarrel with the government of Uganda is it’s absence from creating an ecosystem which requires a lot of government intervention at the level of financing, tax policy and at the level of even creating a protected market for our products which are things that will form the basis of transformation of Uganda.