I’ve been back home a day or two now and I’ve processed
through the immediate rush of e mails, mail and phone calls that inevitably
pile up. Now I have a little time to reflect on the two weeks that I’ve spent
in Uganda.
I think this was probably the most encouraging trip that I have
been on in recent years. I had a sense of real progress that is being made, by
us and by our friends in both Arua and Uganda. This is happening against a
backdrop of increasing difficulty in the community.
The country continues to be challenged by the world’s economic
situation and the downturn in NGO investment. Some of this is because of the
economy, but much has to do with the poor results from Billions of dollars of
spending over the years. Top down money doesn’t work! Add to that a
debilitating culture of corruption and it makes it very hard for the average
man or woman to make ends meet, never mind to try to build a business and
create wealth. There is so little available free cash, that even the smallest
investments in machinery or working capital are hard for the average business
person to make.
However, there remains great opportunity, and when we match
a person with strong entrepreneurial skills, a fertile business idea and some
capital, real progress can be made. The key is to identify each of those
elements successfully. We’ve clearly made some bad bets on people over the
years. Some have been deliberately dishonest (very discouraging among those who
claim to be Christians). Others have tried and failed: some because the business
idea didn’t work others because they were unable to operate successfully.
But the majority of
our investments are with honest folk, with good business ideas who are learning
to implement as we all go along. These are the people that energize us, whether
they are building thriving medical clinics in rural areas, or milling rice and
maize or recycling plastics from dumps or growing passion fruit on a commercial
scale. In each we see the delight that comes from dreaming, from seeing things
come to fruition, from realizing that things are possible and from seeing their
lives becoming productive. In each we see the awakening of hope and a glimpse
of God’s purpose for work in our lives.
The projects that people are bringing to us seem to be
better conceived as well. Their ideas are cogent and match the market
realities. The plans are simple and operable. They need a lot of work, but that’s
the value we add.
In particular in Arua, I have found a way to get people to
move away from a “grant” mentality to a business mentality. What do I mean by
that? When I first looked at business plans I couldn’t understand them. There
were people who had not made or sold anything bringing me 25 and 30 page plans
that had everything in it except a good business model! And the investment
monies that were being asked for were totally unrealistic. Often the proposal
called for a new building, cars and trucks, state of the art large scale
manufacturing equipment etc. Simply stated they didn’t make sense, and the
investment levels were in the hundreds of millions of shillings. What I began
to realize is that this is grant writing, not business planning. This community
has survived by writing big proposals and hoping that a number of them would be
granted as a way of bringing money onto the community. The grantor was only
concerned with giving to projects so that it could report back to its donors
and the recipient was only interested in using the money. No one focused on the
simple question: is this a good business proposal and is there a management
team here that can execute? As a result, you can wander all over Uganda and you
will find facilities that have been built and equipped that have never worked
or today remain idle. There is a coffee processing facility in Arua that was an
investment of the Uganda Coffee Development Authority and US Aid. It cost
hundreds of thousands of dollars to build and equip, and yet it never processed
one coffee bean!
The business mentality that I am driving people toward asks
a completely different question. It asks: How much can you do with the smallest
amount of money so that we can get going and test our ideas, learn from our
mistakes and grow out of the profits? We know this as classic start-up
thinking. It minimizes risks and maximizes the likelihood of success. An example
from Arua. Samuel brought a plan to us in June for creating a major poultry facility.
Samuel has some experience in the business, so he starts at some advantage. But
the plan was expansive and covered several different aspects of the poultry
business all at once. He was, not surprisingly. Looking for a grant from the
Ugandan Government at the time and this was his “grant” plan. However he
thought it worth bringing to us too. We shared with him the need to start
small, to think about walking before running (or crawling before walking) and
told him that we couldn’t fund his plan. He was very disappointed, but instead
of giving up, he worked with Blasio for the next few months to create a
completely different approach – starting small. That was the business plan he
brought to me this last week, and the plan that we funded. In fact we liked the
plan and Samuel so much that while he already has a loan, we have agreed to make
that convertible into equity. So hopefully we will be the minority shareholder
in a poultry enterprise in Arua soon. I believe that Samuel ahs a good opportunity
to build the integrated poultry business he brought us in the initial plan. But
this way it works!
Finally I would say that my enthusiasm is buoyed by the
people we have on the ground. We’re all learning together and it is a steep
learning curve, but we’re getting there. So thanks, Ted, Grace and Sam in
Kampala and Blasio in Arua. Thanks also to the steady hand of George in Boston,
and Ross on the Investment Committee.
