Monday December 28 2015

A strong chamber of commerce leads to a strong economy

By Andrew Rugasira

Inscribed on Karl Marx’s grave in London in 1883, are these words: “The philosophers have only interpreted the world, in various ways. The point, however, is to change it.”
Many are engaged in interpretation, but it is the private sector that is always focused on bringing about value and change in an economy and it does this by harnessing available resources, deploying intellectual and financial capital, and taking risks.

In most countries, only 4 per cent of the population are entrepreneurs, 16 per cent imitators and 80 per cent employed. It is critical, then, to encourage the 4 per cent to create job opportunities for the 80 per cent and inspire the 16 per cent. This is how the private sector becomes the engine for growth- creating jobs, paying taxes and unlocking opportunities and the prosperity of a nation.

According to the B2B marketplace approved Index (2015), Uganda is the most entrepreneurial nation on earth. This is measured by the number of adults (28 per cent) that have started their own businesses. Uganda was 12 percentage points ahead of the runner-up, Thailand.
Yet, despite this huge potential, there remain many structural bottlenecks. Take, for example, the limited private sector credit (13 per cent of GDP, compared to Kenya which is 32 per cent of GDP), low private sector investment rates (18.5 per cent), high youth unemployment and a dismal ‘Doing Business’ rating by the World Bank of 132 out of 189 countries.

Compounding poor access to credit and the need to collateralise loans, is the issue of land. Only 20 per cent of Uganda’s land is formally registered, 37 per cent of land cannot be sold, 34 per cent cannot be rented, and 44 per cent cannot be used as security for a loan. This is exactly what Peruvian economist Hernando De Soto termed ‘Dead Capital’. In Rwanda, more than 60 per cent of land was titled over a period of five years. Land reforms in China nearly tripled the rate of growth of the agriculture sector.

Every prosperous country in the world has got there on the back of good government policies and a vibrant and thriving private sector. The private sector is characterised by highly efficient and competent chambers of commerce together with other business associations; these mobilise business membership, offer valuable member services like mentoring, skilling, exposing and developing the younger generation of entrepreneurs, promoting investments, strong business advocacy and building strong countrywide chamber structures.

The South African Chamber of Commerce and Industry membership, for example, comprises approximately 20,000 small, medium and large enterprises across the breadth of the nation and across all economic sectors. Kenya has a resurgent chamber aggressively driving opportunities for Kenyan business in a fast-paced regional and global economy.
The Uganda National Chamber of Commerce (the Chamber) is the oldest private sector association in the country. It was set up in 1933, as an umbrella organisation to bring businesses and entrepreneurs together, promote trade and investment, enhance business networking and partnerships and advocate for business-friendly policies.

Yet, today, the Chamber has failed to deliver on its potential and the expectations of its members and stakeholders. Dwindling membership, high staff turnover and poor morale, revolt and resignations of board members, apathy and disgruntlement at the district levels, mismanagement of company assets and a general failure to meet the objectives of the Chamber, are all problems that are undeniable and unsustainable.
The time has come for Uganda to have a strong Chamber of Commerce to better meet the challenges of tomorrow in partnership with our government and stakeholders; because to be fair, government cannot do everything; the private sector must play its patriotic and partnership role.

A resurgent Chamber can contribute to building a knowledge-based economy and engage in the robust advocacy for pro-business policies. When a Chamber has competent and dedicated leadership, it unlocks the entrepreneurial potential of the next generation. The private sector has an important role to play in addressing our many challenges and for this to happen, it has to be well organised, well networked, well represented, well-funded and well respected.
In this regard, several initiatives will have to be undertaken:
l The Chamber leadership, secretariat and district structures need to be strengthened to create an efficient, professional, engaged and respected organisation.

l The Chamber membership needs to be grown from its current low paid-up members. Membership associations draw their legitimacy from their members.
l The Chamber needs to initiate member programmes, including but not limited to: monthly business networking events; mentoring and skilling initiatives; trade and investment missions; advisory services; consultancy services for members.

l The Chamber needs to strengthen linkages and partnerships with government agencies, other private sector associations by closer sharing of market information, and well-documented empirical data from member experiences.
l The Chamber needs to support government in the development of long-term business investments and trade promotion.

l The Chamber need to focus on our biggest current and future challenge- youth unemployment- by developing the talents of our next generation, through skills development, youth placement schemes and mentoring support programmes.
l The Chamber needs to rebuild a brand through strategic engagements and collaborations with a wide community of businesses, NGOs, government agencies and international and local organisations.
l And ultimately, the Chamber needs to develop a financially sustainable business-operating model.

We can realise the ambition of our lofty goals. But to do this, we will need to embrace a mindset change to better mobilise a new generation of private sector players to push for a convergence of what is right and what is being done.
We cannot do the same things over and over and expect a different result.

Mr Rugasira is the chairman, Good African Coffee LTD and member, Uganda National Chamber of Commerce & Industry