#Uganda: Banks make “insane” profits: Time to go PLC?
Banks in Uganda made profits in 2011 and if they did not; they grew their revenues in a year that was considered tough for the economy due to double digit inflation and volatile shilling. Labelled as “sharks” who are interested in making humongous profits at the expense of their customers, the banks don’t seem to be moved by such sentiments. Talking to various economists last year, one would get answers like “the banks will struggle to post profit” or “the profits might shrink”. However contrary to the expectations of the economists, the bank profits have been insane in a period where some of the businesses in the country have huffed and puffed.
A bank is essentially meant to make money for its shareholders to earn dividends. They essentially lend, and with their floating interest rates criticized by customers as they kept rising, the banks turned this as an opportunity to make a killing. Whereas banks in Europe and USA are struggling to make profits, grow revenues and increase their assets, it seems to be a different case in Uganda. So putting aside the frustrations of high interest rates by customers, investors reaped big and they will probably look an even healthier 2012.
Traders earlier this shunned banks and closed their shops in protest of high interest rates
Is this a good thing? Well on one side, yes and on the other it’s a big no. As a shareholder and investor returns on investment and ability to have the cash to payoff long term debts is simply paramount. It also means that Uganda is a potential investment hub for investors who are mostly foreign. On the other hand, they act as the sharks, which bite hard. The balance sheets of most of these banks maybe apart from Barclays Bank, are proof that banks made a killing from earnings on interest on loans and advances. Whereas customers cried foul, the bankers smiled to the vault and probably the bonuses will also increase and more taxes will be paid to revenue authority coffers. Understanding the profitability of the banks means that the managers will walk away with huge bonuses for making money in tough times.
Uganda’s stock exchange has only seven locally listed companies, with only three commercial banks on that list. Of Uganda’s over 20 commercial banks only Bank of Baroda (BOBU), Stanbic Bank (SBU) and DFCU are the locally listed on the Ugandan Stock Exchange. The other two banks, Kenya Commercial Bank (KCB) and Equity Bank (EBL) are cross listed from the Nairobi Stock Exchange. With banks continuing to increase their revenues in the toughest of times, then it is about time they also support other aspects of the economy.
Going public would mean that the stock exchange would be more vibrant because at the moment, brokers are often active for the first 5 minutes of the 2hours of daily trading. With Uganda planning pension reforms to break up the monopoly of NSSF, then it would be better in fund managers also invested in Ugandan banks which continue to be profitable. This would work as a major boost for local shareholders instead of having most of the profits repatriated to the foreign shareholders if they are not retained. Even the cross listed banks like KCB and Equity Bank can list locally since they have operations in Uganda.
April 30, 2012 Leave a comment
Inspire or Uninspired Africa?
“There were two ways to be happy: improve your reality, or lower your expectations”
? Jodi Picoult
Nelson Tugume is a 28year old who came up with an idea (Inspire Africa) not is uniquely new since its similar to the Apprentice. The gentleman whose background is pasted all over the Youtube has been a subject of critism since the grand finale of Inspire Africa on Sunday night in Kigali. From the moment the show started, there were some flaws with the sound, lighting, the dominance of the CEO (Tugume) and long scenes in the Boardroom. On Sunday night, he delivered what some thought was wrong decision to select Clarisse Iribagiza (@Claryce) as the winner of the ultimate prize ahead of Dr. Davis (@Davisthedoc). Davis was viewed as the strongest candidate with enthusiastic and often energy filled presentations. As for Claryce, she was to the point, subtle and often delivered simple but basic answers. Manuella who was the third finalist was a survivor, hustler and very aggressive.
Picture from Inspire Africa Facebook page
The debate though has been that the result was “fixed” and referred to as “a sham”. The reason: Because #Rwanda was hosting the final, RDB offered so much support and RwandaAir was the official carrier of the contestants. Well, the conspiracy theories can’t fail to surface as long as a section of people believe the “best” candidate did not win. Watching the finale and the live debate here in Kampala, Graham Power (South African entrepreneur) suggested that all the finalists deserved the grand prize. Warid, Mirinda and NTV were also sponsors from Uganda.
Dr. Davis (Picture from Inspire Africa FB page)
The plus for Davis
Davis did so well. He seemed to bamboozle through all the tasks often winning some offers after completion of an activity. He oratory skills are cannot be denied as he often proved that he was not only a medical doctor, but a thinker and often critical of other contestants. He undeniably delivered an impressive ”speech” at the Live Debate in Kampala especially with the fine analogy at the beginning. That aside, he seemed adversely and widely informed about the marketing, advertising and various tasks given by the CEO.
the -ve attributes
However, there were issues that came up, that even if I were a CEO, it would be rather tough working with him. In one of the episodes (The Rwanda Air Task) he bullied a contestant from Kenya in the boardroom while they were in the hot seat. He set himself at the fore front, making it clear he was in charge. While being aggressive is required of a businessman/entrepreneur, his choice of words in this case seemed to want to rubbish some of the contestants. Often, he rarely delivered a straight answer, often taking the long route without exactly making a point fast enough. Of course at the end of the show, was the reaction and suggestion in some of his tweets that the result was fixed even after winning $50,000 from Warid.
Clarisse (Picture from Inspire Africa FB page)
Clarisse, the +ves
Clarisse is one contestant who appeared laid back in the early stages of the show. Her character was often intriguing but she always seemed to end on the right side delivering the much needed results. She never sailed through especially on Task no 5 about KCB which was a KCB business where she survived by a whisker. Often, she never appeared that aggressive but always gave clear and to the point answers. She appeared to have leadership skills of being able to delegate and listened to what other contestants in her group were saying. This widely earned her respect among her fellow contestants. She has further proven herself that is a tech entrepreneur in a country where technology is booming.
Her shortfalls
The challenge for Clarisse was whether she can assert her authority. She often didn’t appear “high” on confidence during the show and often the thinking was that she could not make it passed the next level. The limited aggressiveness by some, was one she needed to work on as the environment out their seems harsh.
Verdict: Both deserved the final $50,000, so any CEO might have found it challenging to pick a winner. However the CEO should have been specific on whether the money is for a new business idea or for one that is already operational and needs financing. Looking at the two business ideas,
Davis: Concierge Medicine (new untapped idea) and Clarisse: an ICT incubator for the business she already runs. Picking the latter wouldn’t be a hard decision to make because it somewhat appears less risky.
The show
Season 1 should have been a lesson for organisers. The script needs to limit the number of words and minutes the CEO has to say and use. Season 2 will also need to stand out in making sure that most of the time is spent showing the viewers the task and only 10-15minutes in the boardroom, this ultimately might increase their ratings. To drive the numbers and give the show credibility, Tugume will need to have a panel of only two CREDIBLE judges that can task contestants to answer various questions. To sustain such a show where viewership is critical to attracting sponsors, then the team at Inspire Africa have got a lot of work to do. This not-withstanding, empowering young entrepreneurs is definitely a brilliant idea if Africa is to move forward.
April 2, 2012 Leave a comment
An “autopsy” on the #StopKony2012 “marketing”
Most important to any fake story is a plausible, realistic edge with a satirical twist that is topical.
Joey Skaggs
The Boardroom
In any big business there are two people apart from the CEO or Managing Director responsible for directing the strategy of a business. There is the marketing manager and brand manager. The brand is Invisible Children and they are marketing a product called #stopkony2012. In the strategy meeting, a decision has been reached that they should reach out about to half a million people but in just a week. As they roll out the product, they get over 20+million people who have been “thrilled” by #stopkony2012.
The brand is “stronger” (visibility) and the product is viral. In any business, this is considered a winner worth chest thumping about. Effectively the target has been hit so its time to share a bonus. Marketing the product less is much less easier as advertising becomes useless. Almost all over international news organisations, American TV, Newspapers, Twitter, Facebook, Youtube….etc this #stopkony2012 is being talked about.
In #Uganda
However in #Uganda where the “raw material” is from it is welcomed with mixed reactions. The devastating nature of the #Kony (The raw material) is one that superimposes a thick, choking dark cloud on Northern Uganda. However the people have almost moved on and are rebuilding their lives. No one in the world seemed to care when people were killed, abducted, families destroyed and fear prevailed.
The critics of this product argue that it’s opportunistic to start such a campaign without telling the whole story. In any business once again, often adverts are coined to entice the viewer into purchasing a product or get to know about it. The advert is structured in a way where the real truth about the product is hidden. The adverts are usually simple, subtle and enticing to be able to create a knee jerk reaction. We are subjected to ad campaigns by Telecoms, Banks, Beer companies and other manufacturers of things like soap and toothpaste. Do they tell the whole story? No? But they deliver a message and get people talking.
Often, people will react differently to the adverts. Some will criticize them and other will rush to get their hands on this product. The critiques of the message will engage on what the message should have talked and effectively raise awareness. Almost every “ex-p-ert” on the history of Uganda’s war has weighed in on the issue and raise fundamental flaws with the Invisible Children video.
Not new to Africa
Invisible Children may have misrepresented the current situation in Northern Uganda, which is now in recovery and dealing with post conflict challenges. There are still challenges of resettlement, maternal health issues, education, employment and poverty among others. The blogs and tweets critiquing #StopKony2012 have raised some awareness on what #Uganda is going through. And on the other side of this discourse, some people got to know that Joseph Kony exists and is a threat. He may not be a threat to Uganda by now but some the UPDF are still engaged in his hunt. Kony has been a threat to the people in DRC, South Sudan and Central African Republic.
This has opened a window for #Ugandans to own the story and take it to the next level. #Ugandans can effectively take the initiative to drive this story forward. Tell positive stories of the Northern Uganda is making progress and also address the pertinent issues that affect the plight of these people. The question though is that a country that is shrouded in so much corruption and apathy by citizens, negative news headlines and disappointment in the government to deliver services, how can this positive message be delivered effectively? On social media, negative tweets about #Uganda by #Ugandans are not new. Maybe #Stopkony2012 is a wake up call for #Uganda and #Africa to own the story, get it right and let the rest of the world know.
Delivering a positive message about #Uganda to the “west” can be very hard to sale but conflict and suffering always finds away to make it to news headlines. Its a dilemma that has existed for years but if #Uganda can capitalize on the publicity to market the good things this country has to offer i.e the tourism then the world would know the truth.
March 9, 2012 Leave a comment
#Bigbrother wants to watch. Get your sim card registered
The rhetoric is over. At least that is the impression you get when telecom company adverts are aggressively on a drive to convince Ugandans to register their Sim Cards. Uganda Communication Commission together with telecom companies have made the decision to finally go ahead with this process. A much publicized law passed by parliament (The regulation of interception of communications Act, 2010) seems to have set the stage for Uganda to finally go ahead with this registration. The pronging eyes of the state: oh no I meant the pronging eyes of the telecoms will now be watching, tracking and analysing all your movements. This means you will have a #bigbrother. So why is this registration necessary? Here are the words of Uganda’s state security minister Hon Muruli Mukasa.
“The registration of Sim Cards in Uganda is an important exercise for the security and safety of Ugandans.”
But Mr Minister, isn’t this just throwing around clichés.
“Not only will the exercise enable us to update our national data bank, but also improve our vigilance against cyber crime, especially those perpetrated by fraudsters, terrorists and other criminals.”
Some crimes committed in the country have been aided by mobile phones. When criminals are caught in this case, the telecoms will have to provide the police with phone records including correspondence. But for what? To begin with, the police will have to ask a magistrate to write to the operators ordering them to provide the phone records of three months. The police will use the information solely to carry out investigations. Whether the police can be trusted with this information is a story for another day. How safe are journalists’ sources? Are they safe? Won’t the state or large corporate companies limit the accessibility to sources that can leak information or speak off the record? It’s certainly very hard to TRUST any of these at the moment so the process should expect some apathy.
The consistent reminder mentioned made to justify the requirement for #bigbrother to have all your information is the July 11 2010 World Cup bombings at the Kyadondo Rugby Club where over 70 innocent lives were lost. Over to you Mr State Minister;
“This law, therefore, is a big boost to the police and other security agencies in Uganda that are resolute in rooting cybercrime and other criminal acts in this country”
“Other security agencies” is a very subjective term and raises fears whether the correct process will followed for information to be gathered on “suspected” criminals. What level do the police stop? The magistrate should issue a court order only when it is necessary to access the phone records.
The Uganda Communication Commission (UCC) says the process will be carried out by all the telecom companies. For the registration to take place, one has to present two passport photographs and carry any of these;
A national ID (hahahahaha… Where? A Ugandan one? Yes, If you have it then go ahead), work ID, Passport, Letter from an LC1, Student ID, Certificate of Incorporation, Driving Permit, NSSF ID, Military ID, Financial Card and Voters Card.
The process would have been much easier and efficient if Ugandans had national IDs but it seems there is a deliberate policy not to have them. In 2010 people’s information was captured as part of the process of registering them for the 2011 National elections and apparently for National IDs. However only less than 1,000 National IDs have been made considering the Ugandan population is well over 30million tick tock……
All these requirements especially passport photographs are just going to increase ones carbon footprint. What happened to digital cameras and electronic registration? In this era of technology, the demand for passport photographs is unnecessary.
Then there is Nasser Road. Forgery of IDs is not a problem for this “industrial” part of Kampala. This is one inherent challenge that the process might face. The process aimed at curbing fraud may also be defrauded by the some elements whose information may not be captured. The UCC also has its work cut out in sending out the message to Ugandan’s so that they embrace this process. They have given a deadline of March 1st 2013 for all the 16million mobile phone subscribers to have registered.
Godfrey Mutabazi, the Executive Director emphases that “Sim cards not registered by this deadline will be made inactive.” He also says Sim Cards sold on the streets are not active and can only be activated at a registration center.
Well we shall see Mr Director because you have so much work to do for this registration to be completed. Remember what happened in Ghana? The telecom companies were not specific on how they would rollout registration in various rural parts of the country.
That said, #bigbrother is here to stay, with the possibility he will never leave. Twitter recently sold or is to sale the tweets archive (that is #twitville information). Facebook is also prying on you and then there is Google which knows how to perform a masterstroke of data gathering on users. So since your information is somewhere in the clouds then registering a Sim Card is necessary just to emphasise the horrors of the information and technology age. The Telecom companies say the information will be confidential but there are doubts about privacy protection.
On a lighter note though there could be hope that Ugandans can buy handsets on contract to allow instalments. Over to you MTN and Orange…………………….
March 5, 2012 1 Comment
My Nokia E63 “dies”: End of an Era?
“Connecting People.” Yes, my Nokia E63 has been connecting the world before it completely turned to junk status. Fake phone? No. It has been three fine years with this phone (I got it after it had been used for a year so that makes it four years). The E63 was one of the “it” phones to have in the E series family. Compared to the other E’s it probably had a better housing than any of them. Over to you SleekandWild? Didn’t you own one? Tell them how good it was? No, not in the comments section? Say it on Monday Morning Massacres? Do it now.
Okay the E63 is the first mobile device I started tweeting with (yeah my twitter handle is @mumakeith). This gadget was the only mobile tweeting device I owned and now it is gone. It died (backspace the word “died” and replace it with “has outlived its use”). It has outlived its use and last week marked the last time it had the ability for its battery to be charged. It was getting to a point of overheating (even after I performed a software update). Its battery life never seemed to last.
So yes, it is gone. And I got myself this other gadget.
The Nokia C2-00 dual Sim.
I do not think this phone is meant for me though because I struggle to tweet, check mail and read links from various formats. Nothing has really happened with this phone. Can’t read PDFs and what happens to opening links in a new tab? Nothing. It is one of Nokia’s latest low cost gadgets aimed at regaining the market that has been eaten into by Chinese brands like Techno and some other many brands. Even Samsung has eaten into Nokia’s low cost segment. The C2-00 is worth buying if you are not an internet junkie.
Is it the end of an era?
Some will say yes, others will say no. Well, Nokia has been overtaken at the bottom (by cheap phones) and at the top by you know who. The “¾” Apple and Samsung have taken the high-end market leaving other brands to huff and puff. Could this be the end of Nokia? Well, that I doubt but market leadership is probably out of the way since just like Research in Motion, they have been slow to react.
Nokia has been trying to resurrect the glory that is almost as good as gone. Here are some of the new gadgets being talked about:
The Lumia Family
The new Nokia Lumia 610 aimed at a younger audience and is has some web and entertainment experience of Windows Phone to look forward to.
Another stament from Nokia reads “the Lumia 900 brings high speed connectivity and a superior content experience.”
Asha family
Then there is the phone that looks like its targeting the low end market or the middle class. The Nokia Asha 202, Asha 203 and Asha 302 are in this category. Will they excite the market? This remains to be seen as rarely does one find a database showing how many phones (brands) were sold.
Asha 202
The future
And well for the future, Nokia wants to stay in this era. The Nokia 808 PureView has been dubbed as the first smartphone to feature exclusive Nokia PureView “imaging technologies that will enable a range of high-end imaging experiences into Nokia products over the coming years.” It apparently has high-resolution 41-megapixel sensor.”
Nokia 808 Pureview
But then Nokia will have to take note that the giants are not sleeping with research and development taking place on a daily basis. Nokia is on a low, recovery is possible and that is what we are waiting for.
March 5, 2012 2 Comments
Gulf Air Explains #Uganda Exit
After operating in Uganda for less than three months, the Gulf Air comeback was dealt a significant blow. The Airline suspended flights to between Entebbe and Bahrain’s capital Manama after operating flying the route between December 5th 2011 and 21st February 2012. After suspending flights I was able to talk to the management of Gulf Air in order to get a clear explanation of why they had to suspend the flights. You can also read an interview I did with the Gulf Air CEO when the Airline relaunched flights to Uganda.
1. Why couldn’t Gulf Air at least leave one flight a week instead of suspending all flights?
Regretfully, Gulf Air suspended flights to Entebbe effective February 21st 2012, the last Gulf Air flight operated on 20th February 2012. This suspension has been put into effect for commercial reasons and for the same reasons it would not have been viable for the airline to offer only one flight a week.
The decision to suspend flights has been taken in line with our company’s business strategy to continuously review our existing route network and fleet. The Entebbe route suspension will give Gulf Air additional aircraft capacity to deploy in other demand-driven routes and free up resources to explore new opportunities for passengers.
2. Was Entebbe performing that poorly that all flights had to be suspended?
The Entebbe route was characterised by low yield transit traffic and was running at a loss. As mentioned earlier theroute suspension will give Gulf Air additional aircraft capacity to deploy in other demand-driven routes and free up resources to explore new opportunities for passengers. This process is aimed at securing Gulf Air’s long-term sustainability.
3. Are the current political conditions in Bahrain partly responsible for this suspension of flight?
Gulf Air has, recently, been affected by an unprecedented set of regional and economic factors that include:
- High fuel prices
- Closure of destinations
- Low passenger numbers
- Low yield
- Wider regional unrest
As a result a number of tough decisions have to be taken:
§ Closing commercially unviable routes
§ Concentrate on high-demand and high-yield routes
§ Concentrate on our core customer base – the Kingdom of Saudi Arabia and the Kingdom of Bahrain
4. The Airline business is supposed to operate in the long term, why would Gulf Air pull out after less than three months after starting operations in Uganda? Qatar Airways another new Airline doesn’t even achieve 80% passenger numbers on a flight but its operating
You cannot compare different airlines, which have different cost structures and markets. However, Gulf Air’s 2009 strategy – which had delivered real progress – had been significantly undermined by an unprecedented set of regional and economic factors:
- High price of fuel
- Low passenger numbers
- Suspension of a number of key destinations.
These all led to the recent decisions being made.
5. The marketing of Gulf Air was never that effective compared to its competition. Could this have explained the few passenger numbers?
When Gulf Air re-entered the Ugandan market in December of last year the airline was familiar with the market, having established contacts already. We spent accordingly, as per our evaluation of the market needs and customer expectations. The amount we spent on marketing cannot be solely judged in comparison to other airlines. Our spending should, in fact, be considered in light of the situation and existing ties and relationships between Uganda and Bahrain. We devoted the bulk of our efforts into reviving and restoring longstanding relationships in the market because it was a re-entry and much of the groundwork had already been done.
6. When Entebbe is referred to as Under-performing, what exactly does it mean?
This means that the Gulf Air Entebbe route was running at a loss and was characterized by low yield transit traffic. We are focusing on higher yield point-to-point traffic and strengthening our MENA focus. While deeply regretful for all members of the Gulf Air family we hope that this decision will ultimately support the Bahrain economy and help ensure a viable and profitable airline that can support Bahrain’s future growth.
February 24, 2012 Leave a comment
The interview with Gulf Air CEO that was never published
Effective February 21st 2012 Gulf Air will not be flying the Entebbe route since it has been considered as “under performing” after only just more than 2months.
“The move comes as the airline seeks to address the economic challenges faced in recent times; in particular, the local and regional political situation, the high price of fuel and low passenger numbers,” Read a statement from the Airline.
Below is the interview I did with the Gulf Air CEO when they launched their flights to Uganda on December 5th. The interview was not published by the magazine I work for because a source had informed us that the Airline was already struggling.
Q&A with CEO: for the CEO magazine, Uganda (Mark Keith Muhumuza) 13 Dec, 2011
Gulf Air CEO Samer Majali
I. What triggered Gulf Air’s withdrawal from the Ugandan market in 2000?
We suspended flights to Entebbe due to the overall economic downturn in Africa which affected the feasibility of our service. However, recently the economy has bounced back significantly and we see the potential in business and tourism. We currently operate in 4 African cities (CAI, KRT, NBO and ADD) and we are pleased and honoured to add Entebbe to our expanding list.
II. Now that you have returned to Uganda, what prompted this decision? How would you assure the market that there is no potential pullout this time?
Gulf Air’s interest in Uganda is a longstanding one, dating back to the 1990s. Our return/re-launch of service to Entebbe however is a reflection of the positive change in market conditions in Uganda and Africa in general.
Uganda has emerged from difficult times to become a role model for other developing African nations. Its economy has grown from strength to strength particularly following the discovery of crude oil and natural gas in 2002. Kampala is the largest city in Uganda and the commercial focal point of the country to where Gulf Air used to fly. With the Entebbe service, Gulf Air will be re-connecting greater Uganda markets to the Middle East via Bahrain with its vast MENA network.
Importantly, our move to return to Uganda has been prompted by positive steps taken by the government of Uganda who have put together a long term development plan for the country. We are also aware of a recent United Nations report reflecting upon the positive growth of the African economy in general.
It is all of the above factors that prompted our decision to reconnect Bahrain and Uganda and that give us hope in an enduring and mutually beneficial relationship going forward. We believe there is huge potential in this market, as evidenced by the success of our inaugural flights (with seat factor of over 70%).
III. How is Gulf Air strategically streamlined to handle the current competition of airlines using Entebbe Airport noting that it remains a small hub with the high operational costs?
While we are aware of the distinct characteristics of each country and city that Gulf Air services, the multi-faceted operations of our airline allow us to leverage local conditions and adapt easily and with flexibility to all situations. Importantly, over 40% of our fleet is new, making it one of the youngest fleets in the region with an average fleet age of 5.7 years. A young fleet translates into lower maintenance costs, operational optimization, greater fuel efficiency, value for money and environmentally friendly operations – all catered towards ensuring the least possible impact on the environments in which we operate.
We are also operating the appropriate and best-suited fleet composition tailored to suit the market. We select the most fitting aircraft size for each of Gulf Air’s destinations – factoring in passenger numbers and the distance travelled – optimizing our offering to our passenger needs.
Furthermore, as Bahrain’s “flying ambassador,” Gulf Air consistently represents innovation and legendary Arabian hospitality. We offer a differentiated airline and innovative product with a longstanding aim is to become a carrier of choice, offering value-for-money & seamless connections to all. One of the key components of the Gulf Air strategy is to identify and connect underserved and niche markets and, as such, we operate according to a distinctive business model to our regional counterpart. Our target, following positive market performance is to double daily flights and thus serve same day regional travellers.
Opening/exploring routes such as Uganda is a continuation of the airline’s legendary role as airline leaders and pioneers.
IV Why would Bahrain be a strategic choice for connecting flights and destination compared to places like Doha, Istanbul and Dubai among others?
Gulf Air operates the largest network of flights in the Middle East with nearly 700 flights within 3 hours range via Bahrain, the efficient and convenient transit hub. This is one of the key value propositions that we bring to the Ugandan market.
Besides, Gulf Air offers excellent seamless onward connectivity to Europe, Indian sub-continent and the Far East with convenient flight schedule. We offer the Ugandan market strategic benefits from Bahrain’s positioning and role as a key hub for both the Middle East and Asia.
Furthermore, Bahrain has a geographic advantage in its location – connecting east and west. Bahrain’s strategic position at the gateway to Saudi Arabia- the region’s biggest market – is another advantage. Thus Gulf Air opens up vast markets for Uganda’s commerce and trade. Besides, Bahrain’s business friendly environment and tax free regime makes it easier for Uganda’s businesses to set up their Middle East hub in Bahrain.
V. From our media in Uganda, it has been observed in the market that your competitors have taken on a very aggressive communication campaign (advertising) unlike Gulf Air. How will Gulf Air sustainably attract customers if the marketing and communication is less aggressive?
We know the market and spent accordingly as per our evaluation of the market needs and customer expectations. The amount we spent cannot be solely judged in comparison to other airlines. Our spending should, in fact, be considered in light of the situation and existing ties and relationships between Uganda and Bahrain. We devoted the bulk of our efforts into reviving and restoring longstanding relationships in the market because it is a re-entry and much of the groundwork had already been done.
While other airlines might newly enter Uganda we are pioneers in the region with a well-established brand in the Middle East and North African market.
VI. After what period has Gulf Air placed itself to break-even? How commercially realistic is it for Uganda to make money for Gulf Air and after what period?
We are on the right track and our business strategy is effective and reaping positive results. However, due to recent developments in the region we were not able to reach certain targets as originally planned. Nonetheless, we hope to attain those goals by 2013 and see the huge potential market in the Ugandan market as a contributing factor to our success.
VII. You placed Uganda as a potential growth market for Gulf Air. What are your projections in terms of growth numbers for Uganda going forward?
Since we began operations on 5th December 2011 there have been many promising growth indications from the market with all indications of solid business for the future.
Our strategy is always to cater to demand and passenger numbers. Gulf Air remains flexible and recognizes and hopes to repeat the same experience of some of our newly opened routes such as Addis Ababa (increased from 4 to 6 flights per week), Colombo (increased from 4 to 9 flights per week) and Milan (increased from 4 to 6 flights per week). These are all reflections of positive experiences in the region and beyond.
Africa’s economy, in general, is growing rapidly particularly countries like Uganda, Kenya and South Sudan where we see huge potential for increased commercial opportunities. The launch of Gulf Air services to Uganda demonstrates Gulf Air’s long-term strategy to connect new and unexplored markets having sound business potential with Bahrain and the region.
We believe there is huge business potential in African markets; we have been flying to Khartoum for several years now; our Addis Ababa service launched in January this year and Nairobi service launched in July this year have proved to be great success with seat factor exceeding 75%.
February 15, 2012 1 Comment
Shs103m; I would accept the money
“Politics have no relation to morals”
- Niccolo Machiavelli
It has been a story on the lips of Ugandans On local radio, Television, social media like facebook and twitter and even the international media have picked this story. Each of the Ugandan MPs are said to have received part payment of Ushs103m (USD42,000) to buy cars last week. For most including myself, there has been outrage . On paper I openly criticized the MPs for taking this money considering the economic conditions that our country is facing. Do they actually need these cars? Aren’t their cheap options? Is this a priority area? These are some of questions that needed answers. Constant reference to the MPs is that they are “greedy” and “thieves.”
A closer look at the number, I asked myself whether I would take this money. Yes I would. This may outrage many but Shs103m is quite an amount that I would find resistible to refuse. Here is why.
Society is under pressure. Some may deny that there is no pressure for one to own a house or start up small business or even buy a car. In this case, I may be the exception because I believe I have succumbed to the pressure. If this money has been dangled in my face, then I would take it and put it to good use. Yes the society is braced with inequality, hospitals have no medicine and teachers are underpaid, but this does not take the human nature out of me. Have I become selfish and greedy? Maybe I have. Do I have a conscience? well I think I have but it has seen the reality and has learnt to adapt. To satisfy my desires, this money would come in handy to help reduce on the “desires burden”.
The pressure society has exerted on us has trickled down to every societal level. The dependency on handouts exists in society including what maybe the strongest pillar, the church or even mosque. Each time an MP goes to the village, a swarm of people often visit with the aim of getting some money. Its almost the same thing when it is time for Christmas when one travels to the village. People will always show up with all sorts of problems that they want you to solve with some cash.
The church has a role to play in this also, because when the politicians visit, they tend to give them front row seats and then they will seem to be the ones to solve church needs. Some of the foundations of the church have been built by the same of the so called corrupt and greedy politicians or even profiteering businessmen. The society including religion is under the pressure to accumulate property and this they will deny but its what I have observed. So then I would rightly take that money, appease some of my constituents and then move on to fulfilling my desires.
As an MP, yes I would doing a service to the country but also need to get paid. The MPs are apparently entitled to a car and well, they also determine how much they are paid. If we had agreement that I get money for a car, then I think its logical for the terms to be honored. So this is what I would use to justify why I would have taken the money and turned a blind eye on anyone trying to talk about morality.
Henrik Ibsen in his 1882 play An Enemy of the People the protagonist Dr. Thomas Stockmann tries to go against what most of the society is seeing as progress. Its from the play that the statement;
“The strongest man is one who stand alone”
In the ideal world that is what we all want to see. Standing up for the right thing. I would have turned down the money down but in this real world, the money would be taken. Some may consider this as elitist and consider me as a human being being with no disregard for the underprivileged and poor. Well this may be partly true but it is what we have become. Say what you might say but am only saying if you the desires of the world have not got to you then please stay away from them. If you don’t then it is very easy for that bit of your conscience to go and selflessness would most definitely be the least of your virtues.
February 10, 2012 2 Comments
Beauty products; Pz Cussons makes move
PZ Cussons East Africa aims at making inroads in the region by growing their Venus brand. PZ Cussons PLC posted a growth of 10% in the year that ended November 2011. Their profit before tax on the other dropped by 11.4% from £44.5m in November 2010 to £39.3m at the end of November 2011. In Africa, the Nigerian market has been the most impressive compared to the East African market.
Uganda in particular has become ever more competitive with cheaper locally produced hair products. Despite the presence of the Venus brand on the Ugandan Market for some good years, they need to stay relevant in the market. To keep up with the current trends it has introduced a new product called the Venus Conditioning Crème Super Relaxer with Shea Butter.
Ms Julia Kamotho the Brand Manager who was in Uganda to unveil this product to traders and hairdressers said that PZ Cussons would continue to provide beauty care products that combine innovation with active ingredients, created to deliver advanced performance for the African beauty needs.
January 31, 2012 1 Comment
The electricity subsidy; economics & realism
The only reason for a government service is precisely to provide financial support for an operation that is otherwise unsustainable, or else there would be no point in the government’s involvement at all. – Lew Rockwell
Economists and various newspaper editorials suggest that Uganda’s electricity subsidy as an unnecessary evil that the country must let go. I agree with it because other sectors of the economy like Education and Health need the funding. We also need to fund productive sectors of the economy. Uganda’s subsidy to the electricity sub-sector has totaled to about $500m since 2005 according to the Energy Minister Irene Muloni. The subsidy alone can be used to finance other energy projects that can help deal with the current deficit of about 190MW.
Andrew M. Mwenda, a celebrated veteran journalist who has vast knowledge on the socio-economic and political aspects of Uganda in particular and the world in general wrote a riveting piece the East African on that got me thinking. I agree with his finely researched and analytical piece but I have a few reality checks for the piece. Any economist would also agree that the Subsidy should go but there some fundamental flaws in the system that need be sorted.
To begin with, Uganda is facing economic shocks that have battered businesses and ordinary people. Fuel costs are still up, inflation is double digit and interest rates are high. Ideally the scrapping of the subsidy is a good idea but considering these conditions, then the wrong card was played. The decision to remove this subsidies has been on-going however the choice to make such a pronouncement with the prevailing market condition in my opinion is suspect. Why not wait for the financial year?
There is a power deficit of about 190MW right now, businesses are struggling with load-shedding that led to some protests just along Nasser Road. Bujagali’s 250MW has delayed and pushed to June. UMEME, the power distributor has to keep adjusting load shedding from 24hours to 12hours and vice versa. The subsidy for now is some sort of compensation for the fluctuating power (although some cronies use it to their advantage) until at least Bujagali comes on board.
In the article Mwenda says;
Today, only 12 per cent of Ugandans are hooked into the national grid. The other 88 per cent rely on kerosene for lighting and firewood for cooking. So what gives this tiny minority such political weight?
This is true, BUT how much does the 12% contribute to the GDP of this country? If traders in Kampala alone can close for for 4days, and URA says it lost Shs40bn in revenues then that means the 12% is partly productive. Is it because of the subsidy that the government has failed to provide services to the 88%? I doubt that.
I agree with pinning the big companies like Coca-Cola, Stanbic Bank and Standard Chartered as they would still remain profitable with the scrapping of the subsidy. If the figures are to believed then these companies could agree to take a haircut or just pass on the costs to the consumer.
Within the category of “domestic consumers,” most electricity is consumed by the rich who have refrigerators, televisions, freezers plus security and garden lighting. Indeed, of the 360,000 connections categorised as “domestic,” only 100,000 pay less than Ush25,000 ($10) per month.
In the category of 100,000 who pay less than $10 a month, are university graduates who are earning about Shs100,000 a month, he has to pay rent, transport and find a decent meal. Still of the less than $10 a month are some of the urban poor who probably the electricity to charge their phone, watch some TV and maybe Iron a few clothes. A sudden increment of 36% would affect them. There should have been gradual removal of the subsidy. For instance a cut of 10% every financial year or 6months so that change doesn’t hurt so much considering the current economic situation.
Mwenda’s article is loaded with numbers, well explained and articulated. It also raises some alternatives that the subsidy money should have been invested.
For example, over the past few years, Uganda has paid Ush2.0 trillion ($809 million) in these subsidies — enough to resurface 1,500 kilometres of tarmac roads in a country collapsing under the weight of potholes. Assuming it costs about Ush50 million ($20,000) to build a classroom, the subsidies would have build 50,000 classrooms for our students who study under mango trees.The same money would have trained 50,000 doctors or 300,000 nurses. All these alternative investments have a rate of return far above what the country is getting from the electricity subsidies.
But then I notice there is no mention of the fact that corruption reigns, public funds have been siphoned and now they will have access to more money (unless there is proper oversight). Why would one believe that if this money is set aside, it will most likely be put to good use? Ideally this is what should happen but the reality is different. Our Ministers did not specifically indicate any clear strategy on where and how exactly such money would be invested.
15th January 2012 is when the new rates were supposed to take effect. How would this new rate fit into an electricity since the new rates come in the middle of the month? Why were they not announced at the beginning of the month (either January or February)? The financial year? Why didn’t the government/ERA go ahead let people know that the tariffs would be hiked in a certain month, explain the reasons for the hike so that electricity users prepare for the new rates?
It is a fundamental policy flaw to subsidize a sub-sector like electricity where 88% are not on the grid. I am no economist but maybe a realist. The government is right to remove the subsidy but are other factors constant? Is the timing right? Could they have waited? Can they be trusted to put the money to good use? Will load shedding come to a mere 1hour or less?
January 17, 2012 2 Comments