Mulwana, wheeler-dealer rich men and the economy

In other words, Mulwana, who died last week, contributed far much more to the economy than many of the wheeler-dealers we tend to admire.

It was Steve Jobs, the genius behind Apple and its many fantastic apps, who said: “Being the richest man in the cemetery doesn’t matter to me…. Going to bed at night saying we’ve done something wonderful….that’s what matters to me.”

We often look at Kampala’s changing skyline of new buildings, the quality of vehicles on the road, and number of rich folk, and we pat ourselves on the back in bouts of self-congratulation that we are developing. But scratch a little deeper and the reality, certainly the statistics, says something different. One worrying characteristic is the lopsidedness of the economy – a lot of the supposed development is actually consumerism, as exemplified by shopping malls, vehicles, clothing, and vibrant night life. There is no firm base – it is consumerism that is not backed by productivity.

An alarming level of what we consume is imported, and we do not export enough. Actually Uganda’s import bill is twice its export earnings (last financial year we imported goods and merchandise worth US $5.3billion against exports of US $2.5billion); an unhealthy state. That would be like a family income, from Dad and Mum’s salaries and the family shop, of Shs 3million, and a monthly expenditure – in food, rent, school fees, and car maintenance – of Shs 6million. It is called living beyond one’s means, the consequences of which are well known.

The economy’s lopsidedness is mainly due to low productivity, principally coming out of very little manufacturing. Manufacturing is just 8 per cent of the economy (GDP), compared to 16 per cent in Kenya, and 15-20 per cent in South Africa.

Enter James Mulwana. He was not just another rich man in town; he was an industrialist. To appreciate his contribution to Uganda’s economy, just do a game of substitution. If you took his batteries away, what would Uganda do? Import batteries. If you took his plastics – pens, toothbrushes, basins, plates – away, what would Uganda do? Import plastics. If you took his yoghurt away, what would Uganda do? Import more dairy from South Africa and Kenya.

Conversely, take the business interests of other Ugandan rich men: If you took X’s supermarkets away, what would we do? Y would set up a chain. If you took M’s phone imports away, what would we do? N would import phones. If an earth tremor brought down B’s shopping mall, what would we do? K would build another. If J’s haulage transport business collapsed, what would we do? P would quickly fill the gap.

In other words, Mulwana, who died last week, contributed far much more to the economy than many of the wheeler-dealers we tend to admire. In other words, his life endeavours made Uganda that little bit less reliant on imports. His investments were painstakingly built, and in areas that truly matter in the economy (Nice pens and toothbrushes were there in the 1970s and 80s when I was in school; car batteries were there in the 60s when my dad was still young).

Old school economics used to call it import-substitution, a very important ingredient in turning economies around. One economist in Kampala reckons that Mulwana’s manufactures account for more than 30 per cent of Uganda’s manufacturing – that maybe an over-estimate, but there is not much more large scale manufacturing beyond Mukwano, Bidco, Tororo Cement, Jireh, Dairy Corp, Hima Cement, Roofings, sugar, and brewing.

It is very important that policy makers, and actual policy on the ground, realises that it will take a lot of big time manufacturing to turn the economy around, and therefore put investments and systems in place. It is important for policy makers to appreciate that the huge, young unemployed population can only be gainfully employed in manufacturing – it is manufacturing that can instantly create thousands of jobs.

Uganda was able to generally withstand the world economic slowdown of the late 2000s because, while trade with the wider global economy went down, our regional export trade in Eastern Africa grew most especially in what economists call Emerging Champion products – cements, dairy, plastics, soap, iron & steel, and processed food. Mulwana was a manufacturer of some of these.

His transformative effect is most evident in this chain: primary agriculture --> processing --> exports, exemplified by the Jesa Farm that produced milk from cows he herded, the factory that processed it, and the world-class yoghurts that are served on international airlines.

Mulwana inherently understood Roderick Hausmann’s theory of transformation of economies which, essentially, says that countries and firms should build capabilities of moving from one product to another related product while adding value (Hausmann lectured in Kampala recently). This is why it is important that an oil refinery be built here – Mulwana would use some petrochemical industry by-products in his plastics business, and we should consequently stop importing Chinese plastic toys and parts.

That is why Steve Jobs’ words would, ironically, be a fitting epitaph on James Mulwana’s tomb.
dsseppuuya@yahoo.com