Uganda Report

InterviewsJanuary 13, 2020

Uganda: Exclusive Interview with Businessman and Entrepreneur Patrick Bitature of Simba Group

Patrick Bitature, Chairman of Simba Group

: Written by Sandra Francisco; Published: January 13, 2020

Interview with Patrick Bitature, Chairman of Simba Group

What are the main challenges that Uganda faces to develop? How can these challenges be solved?

Uganda has come from a very checkered background. No one can deny that we went through a very hard time. From the days of Idi Amin, then Obote, we had several changes of government. About five leaders came and went. So, we had no stability. The key thing, which is not just for Uganda but any country in the world, but more so in Africa, is peace and security. Without peace and security, whatever business you try to do is a waste of time. Establishing peace and security took a long time. So many people had guns, the place was divided, there were small warlords, everyone thought they could rule this country. It took President Museveni more than 10 years to pacify the entire country, bring democracy, establish rule of law, and make sure there was peace and security for everyone. I grew up scared of anybody in a military uniform. Our biggest threat was to put the military where they belong which is under the control of the civilians. They need to be answerable to us and accountable to us. They should wear that uniform on our behalf. They should be there to protect us. That was a complete mindset change. Museveni did that but it took 10 years to put those people back, to bring discipline and order, to establish rule of law, strengthen the judiciary and the legislature, and try to have some independence. But to do that, he had to first consolidate power in his office. The Executive had to be strong, to think things through. Everybody had an idea. So, it took a long time to lay that foundation. Once that foundation was laid, all the other things fell into place. He started building institutions. The military was the first institution and most vulnerable. Then the police, the tax collection authority, then all the other government agencies had to fall in line after that. He had to do this in order because he had limited resources. Having done so, he started dealing with the major things like the hardware for the country because it had become dilapidated. We had no roads, no electricity. Basic infrastructure, schools, hospitals, everything had collapsed. These things take time. We are very aware that he has been in office for a very long time but it was incumbent on having continuity. Unfortunately, in African countries, when a new leader comes to power, often everything the last leader did was “wrong” and you go back to zero. Since WWII, leaders in Europe have built on what the person before them did. So, Museveni had this long period to rule and give stability. Now, we need change because he is not giving us more. His period of longevity is not a problem to us. His period of performance has been excellent which is what justifies his longevity in office. Now that we have the good infrastructure in place, there are good roads to any part of this country. Within two hours you can be at any border because the tarmac roads are very good. He has done his best on that. This is one of the fastest growing populations in the world at 3.3%. When Museveni came into power 30 years ago, we had 14 million people. Today, we have 44 million people. The average family size is still more than six. That will not just come down by telling people to stop having children. That will come down as a function of education, income, and security. You do not need to feel like you need to have so many children like a lottery in case some of them die. The numbers will come down when everyone feels comfortable and they have a reasonable income and they can plan better. These are some of the challenges that we began with as a country. With that in order, now he is pushing to get that thrust for takeoff. We are ready for lift off. The private sector should be the engine of growth. He is opening up opportunities, reducing the cost of doing business. The biggest bottleneck has been electricity. It was not available or affordable. Now it is available and he is working on bringing the tariffs down. Then, infrastructure which has now been addressed. The next was the cost of finance. The cost of finance is like the blood in any organism. You need money moving and not just in the upper end of the pyramid. There needs to be money trickling down to the bottom of the pyramid, too. Everybody should be in the money economy. Too many people were dependent on subsistence agriculture, over 85%. We are pushing that number back now trying to get to 50%. We are trying to get more people into manufacturing, industry, and services. They should have sustainable jobs that give them dignity. That will help the country. It is not easy to see these things happen overnight. He pushes and has the policies in place, but it cannot be done just by the government. That is why you need a vibrant private sector that is fully aware and is walking the corridors of government every day to know what they are trying to do and gauging how to go about it so that we can work together. That is what the Private Sector Foundation has been about. There are other bodies like the Chamber of Commerce that try to represent the businesses, but the overarching institution is the Private Sector Foundation. We have ten different sectors. They have members of the Board coming from each of these sectors to represent their sector whether it is agriculture, ICT, tourism, so that we can focus on how to get the private sector moving properly in the long term and sustainably. It has taken a bit of time, but we have come a long way and the country is poised for growth beyond 8% GDP if we can sustain this growth.

Where will this growth come from? What are the major factors?

We cannot be driven just by profit. Much as we are coming from a very low base, the earlier we start recognizing the role of doing things in a sustainable way and being conscious of the environment the better. We must send that message across the board and lead by example.

Uganda has grown for the last 25 years at an average of 6% almost unchecked. We had the global crisis a year or two and we dropped to 4%. But we have quickly gone back to about 6% without oil. If we get oil, two or three years after first oil, we should go to double digit growth because the underlying fundamentals are good. We have been growing in agriculture, tourism, services, ICT. That has led growth, so it is not artificial. Our mineral exports are growing organically. The exports have gone up to 500 million dollars per annum. We can continue doing that because we have not yet scratched the surface. This country is blessed with so much opportunity, but we have never actually told our story. We have never told the story of our tourism. Kenya, Botswana, South Africa have all been telling their story for so long. Yesterday, I was in Kidepo National Park and there were almost 1,000 elephants. We have had the Big 5 here. The rhino is almost extinct all over the world, but there are a few left in Uganda. In that National Park alone we had the Big 4. We have all the big cats. It is amazing to find these animals in an environment that is natural to them, cheetahs, leopards, lions, all in one conservatory. The world should know that Uganda is a jewel. It is really the Pearl of Africa. So many flights are going into Botswana and South Africa in spite of restrictions on visas, but Uganda has been quiet. The herd size has grown. We suffered a lot during Idi Amin’s time and many of the animals were shot so tourism had dropped. But now, there is peace and security, much more than any of the neighboring countries. Our problems today are too many people on the road, too much traffic, too many kids, but it is a safe country and a good country to do business in. Because the population is growing and the income is beginning to grow, this market is ready. We are importing a lot of goods, mainly from the Far East. Those factories are going to come to Africa, to Uganda, because that is where the captive market is. East Africa alone will have 182 million people and it is set to double in the next 50 years. That is a market that is hard to ignore. It would be a good opportunity for our traditional partners from Europe and America to come and invest in this country and see how we can do business because this is the last frontier. It is very hard to penetrate these other frontiers now and there is not much growth, especially in incomes and population. The inequalities are widening. Here, we have inequalities but the gaps are not so wide and the money is trickling down. Here, people need to spend on the basics. People who are manufacturing cooking oil are doing very well. School books, pencils, pens, we are still importing nearly all these things, the most basic fast-moving consumer goods. Industrialization must happen. It could not have happened earlier because we did not have affordable electricity. Now we do. We have plenty of electricity, the roads are good, and the market is there. We have reached a critical tipping point and the country can now take off. Oil will just be a bonus. Oil should come to strengthen our activities in agriculture, manufacturing, and construction. It will sharpen our skills, have the right tools in place, do smart things like using ICT, and be an enabler for all the other areas. We are very endowed, especially in agriculture. Uganda should be a food basket. Our mangoes are a world apart. Nowhere else in the world can compare to our pineapples. I am not saying this just because I am Ugandan. I have travelled quite a bit and you will not find pineapples with such low acidity as those from Uganda. These are some of the things that we can export regionally and further. People who are discerning will want to come and see what Uganda is about. We have a unique position. Within East Africa we have the biggest chunk of arable land. We have not used fertilizers in the last 400 years. We could not afford them. Nearly everything is organic. We grow so many bananas. We are the second biggest producer in the world only after India. We consume most of those bananas. It is a very healthy food, rich in Vitamin K. Avocado grows organically nearly everywhere here. All those things we just have to scale up and increase our production and our productivity and become more effective as a country to export rather than just import.

What are the key competitive advantages you have compared to other large groups here? How do you distinguish yourself and what do you bring to the market? How would you like to develop yourself?

My business is a conglomerate of businesses that focuses firstly on people. People come in different categories: the customers, then my staff, then all the other stakeholders. I listen to customers and I give them what they require. When I began the telecom business, I listened clearly to the customers. What did they want? What handset did they want? When Nokia was the biggest handset in the market, that is what I supplied and I was the biggest distributor for Nokia. When the market moved on, I listened to the customers again. Even though I was a dealer for Nokia, I could no longer exclusively sell Nokia. Surprisingly, today, it is not Apple or Samsung, but in Uganda, it is Tecno. It is priced right and gives the qualities consumers want. You must always listen to your customer and keep giving them the service. Then, you need to look out for your people, your staff. When I went into the hotel business, that was the major thing that differentiated us. We needed to make them feel like they were a family. So, I began working with people, I learned customer service from telecom, I took it to the hotel industry, tourism, and travel business. It was easy to get in because you make people relate to each other. You give people jobs and make them feel dignified. I realized that creating jobs for people is so important. It makes them feel that they are useful citizens in the country. It makes them feel that they are useful to their society and to their family. People not having a job for three or four years is debilitating. Because we are churning out so many young people from our schools, my focus moved from making profit to creating jobs. In the process, you will make a profit. If you employ these people gainfully, they will contribute. It looks like you are doing them a favor because you are recruiting so many people, but it is like building an army to take you up to the top of the hill. I reversed my priorities. It became people first and then profit. Now, it is people, planet, profit. Now, we are becoming more conscious of the environment. There are certain things that we cannot just keep doing. We cannot be driven just by profit. Much as we are coming from a very low base, the earlier we start recognizing the role of doing things in a sustainable way and being conscious of the environment the better. We must send that message across the board and lead by example. Shareholders normally are driven by profit. But many of ours are differentiated. They do not want just profit. They look at the triple bottom line and make sure you tick all the boxes on social impact. I got into electricity because no one locally was doing it. It was left for only the big foreign investors. I wanted to play in that space. What is magical about electricity? Electricity has been around for over 150 years, but in so many parts of our country we do not have electricity. So, I am involved in selling solar. I have a solar farm of 10 megawatts. I probably sell more home solars than anybody else. In one shop alone, I do 1,000 home solars per month. I am connecting people on solar. I am also the Chairman of the electricity company that distributes power on the grid. I give oversight and make sure that it is a privately listed company, the government is not involved, and it is not subsidized. The price of electricity in Uganda is cost reflective, unlike many other African countries and many countries outside Africa where the government has to subsidize electricity. We are a leading example on the continent. Our electricity is run by a private company and I have been at the helm for the last 8 years. We are profitable to our shareholders and we are doing things in a sustainable way. Indeed, we have challenges. We are not able to involve much capex. Now, we are going to the market to raise about 1 billion dollars. If we bring that money in all at one go and hit it and put on the tariff, the tariff may go through the roof. So, we must have proper planning. We look for skills from all over the world to help us with the planning and execution but it is a company that is 99.4% local. We have built skills within the country and the company is driven by Ugandans doing things to protect their country. It gives me pride that we have made strides, but I also know that there is a lot more for us to do to get where we are going.

What are the challenges?

The biggest challenge is in the cost of doing business. It is still expensive to do business in Uganda, partly because we are small and we are coming from a very low base. There are things like corruption that people do not want to talk about. We must deal with it. It takes two to tango. You cannot say it is the public sector that is corrupt because it takes the private sector, too. We try to sensitize our people to the fact that everybody loses when there is corruption. We have to fight corruption. It is a very smart disease. It keeps evolving, but we are trying to deal with it. Head on, the government has done what it can by putting institutions in place and it must use the rule of law. But we must use softer skills. People must have moral ethics. We need leaders that are ethical, enlightened, and patriotic and that can be held accountable to the people who they represent. Uganda’s corruption can be checked. The few bad elements we have are blown out of proportion because we have opened up our media and it is so liberalized. The slightest thing, even before it is proven in court, has already been splashed all over the world. Somebody has taken $10,000 or $150,000 and it looks like the country is falling apart, whereas these things happen all over the world. Because we are so liberalized and we are at the pointed end of media here, we are very cynical about it which is actually a good thing and might keep it in check. On top of that is the bureaucracy. We have always had bureaucracy and it is very hard to remove. It is something we inherited from our colonial masters. The amount of paperwork, whether it is to register a company or get a land title, there are so many steps and procedures. For many people, it was ingrained in them that the process is more important than the output. The process must be followed. We are trying to see how we can reduce these bureaucratic steps without destroying the outcome. We are engaging the government and they are listening. We are hoping that we can be innovative and use technology wherever we can to leapfrog some of these stages. It is a matter of time. We are not in a race with any of the neighboring countries. We shall get there eventually.

What is your focus for the political future here? What will happen in the next two or three years after the next election? Will there be more difficulties?

Today, one of the leading countries in the world, Britain, has lived with uncertainty over Brexit for the last four years. People had different views about what was happening in America when Trump was elected. A country like Uganda is very resilient. We survived eight years of Idi Amin. Museveni is here and he has shown excellent leadership. We have democracy and elections every five years. If he loses in the next election, there will be change. Of course, there will be a little disruption, maybe for a week, a month, or a year. But this country is resilient. The institutions that he has built will be tested, especially the military, because that is where the biggest problem is in Africa. There are military coups and fights. You can see this with our brothers in South Sudan where two factions tear apart the country. We have seen what is happening in the region and most of us are enlightened. We have good legislature where the rules of law are established. We have strong people in Parliament and a Speaker who is very respected regionally and globally. There will be law and order. We have a very good Chief Justice who is respected globally. People can respect the decisions that will come out of these institutions. The Executive is not a worry. Too many people blow this out of proportion wondering what will happen and what the succession plan is. Nobody gave Museveni power. He came and helped this country and pried the power from those in charge and he has held onto it to drive this country. He has won the elections five times. People say they might have been rigged, but even if that was true, it was not a fundamental difference that would have changed the numbers. He is popular. He is an old man, but he is a strong, hardworking man. To us, he is a safe pair of hands. We have trusted him for the last 30 years. He has given us space. That is all we ask for. We want space to grow and see the sun so plants will grow. People have grown. Children have gone to school. People have gone to healthcare. We have improved. We have come from hell to where we are today. He has been here for a long time and many of the young generation feel we just want change for the sake of it, but we must be careful in our choice of leaders. The young people are the majority. Our average age is 16. 75% are under 30 years old. They could choose tomorrow to appoint some loony into government. So be it. We will deal with the consequences because we are a robust country. We will not break like a dropped plate. Sudan is still surviving in spite of all those years of war. I am not worried. We shall invest, we shall protect our country. We have one country and this is our home. We are not going to go to arms and fight to destroy it. Order and common sense shall prevail and this country will pull through with or without Museveni. We owe a lot to him and his family and their sacrifices made over the years. Uganda is a great country poised for growth. It would be a shame to go backwards. No one should forget what we have been through.

How do you see Simba Group in two to three years’ time? What do you want to achieve?

I have reached an age where I am now trying to step back. Too many African businesses fail when the founder steps back. Succession planning, however much you try, does not seem to work. You must build a strong institution, bring in Executive Directors, build in the rules and regulations so that the institutions can live longer than us individuals when we pass on. That is what I want to do while I am still alive. I want to slowly start phasing out so that for the next five years I can let the company run on its own with professional managers and also my children who choose to work here and have earned their spot. That is how it should be. In another five years, I should be off the scene where I can do what I want to do. I want to spend my time talking to the youth. I want to write books. I want to read a lot of books, electronic or physical books, as I grow old. I want to spend time with my family and hopefully have grandchildren to look after. But I cannot be running after money all my life. The 30 years I have been running have been a hard run and even a marathon comes to an end. My marathon is about to end and I must plan what will happen after that. Who is going to take up the mantle? Will the businesses continue? My focus is creating jobs. We must create jobs for the young people, not just for Uganda, but for Kenya, Tanzania, Mozambique, Chad, Nigeria. Nigeria has a population explosion problem. Of course, this is fantastic labor if you use it well. Unless we get the capital, which is concentrated in the Western world, to come to us, these people will go to the West. They are dying crossing the Mediterranean or going to the Gulf doing menial jobs. It is a matter of time. They will keep coming and the numbers will keep swelling and the boundaries will not be enough. Brexit is largely because of immigration and the scale of all these people coming to their country and rightly so. But we have to bring the capital to the area where it is working and we will have a win-win, sustainable solution. Otherwise, these problems will keep happening and you cannot hide from them. We have to create meaningful jobs for our people here that will give them purpose and make them feel dignified. That is how we will change so they will have hope that tomorrow will be better than today. There is nothing like hope. But if they are feeling that whatever they do, there is no hope here, they will keep leaving. For us as business leaders, we have a responsibility. We need to create better jobs for these people. We need to get them into manufacturing and make agriculture fashionable using technology. We need to let them see the product and the benefits. We are already endowed with fantastic soil and weather. We sit right on the Equator with the best weather in the world at such a high altitude. We have to work just a little bit harder to cross this line. We can lead the way and show people that the best promise and potential is here in Africa. The country is vast and our population is big but we have plenty of land for everybody. When I see the fights going on in the Middle East - the West Bank, the Gaza Strip - they are tiny pieces of land where there is nothing there and people have been fighting for years in that area. Come and see the potential we have here. What we need is capital, skills, technology, and we can create so much here for everybody. I have no doubt.

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