Why Ugandan businesses fail
Despite being ranked one of the world’s most entrepreneurial countries in the recent years, few Ugandan businesses take off. Uganda is said to be among African countries with the leading business failure rate along with Malawi, Angola, Zambia, Botswana, Ghana and Nigeria.
Over the years, we have seen a big number of Ugandan businesses that achieved vast success (especially in the early years) and then collapse over failure to sustain it. You may consider entities like Zzimwe Construction, Mukalazi Technical Services, WBS TV, Sembuule Steel Mills and Property Masters.
On the other hand, there are some notable Ugandan enterprises that have defied the odds and made the leap from average results to great results and sustained those results over the years.
Some of these entities have been in existence for more than 50 years. Examples include Walusimbi Garage (92 years), Bugisu Cooperative Union (65 years), Express Football Club (62 years), Uganda Batteries (52 years), MTK Uganda (52 years) and Katende, Sempebwa Advocates (50 years).
There are a multiple essential and distinguishing factors that cause the difference between enduring successful businesses and the failed ones. In this article, I will share a few of those I believe to be critical.
Leadership
The business takes its cue from the person on top. The leader sets the tone and should help overcome the four key organisational hurdles including; the resources hurdle, motivational hurdle, cognitive hurdle and the political hurdle.
It is surprising that successful companies do not rely on high-profile or charismatic leaders. They have superb individuals at the top, but those people are often down-to-earth, reserved, and modest.
The late James Mulwana, who built a chain of successful businesses, is a perfect example. He was often described as a unique and exceptional Ugandan. Mulwana stood out for his extreme humility and accompanying modesty in spite of his fortune and great personal success.
Leaders like Mulwana are described as “level 5” leaders by Jim Collins in his book, Good to Great. Collins remarks, “Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company. It is not that level 5 leaders have no ego or self-interest. Indeed, they are incredibly ambitious but their ambition is first and foremost for the institution, not themselves.”
The people (staff)
One of the biggest hurdles and the most important of any business is the management of its people. However, the old adage which states that “people are your most important assets” is not very accurate. The right people are!
Jack Welch, who is believed by many to be the greatest CEO of all time, said in his book, Jack: Straight from the Gut that, “Getting the right people in the right jobs is a lot more important than developing a strategy. You can have the greatest strategies in the world but without the right people developing and owning them, they just remain good-looking presentations.”
Many of the failed Uganda businesses have applied a “genius with a thousand helpers” model. In this model, the leader is the company’s only towering genius and the primary driving force in its success with no great teams built.
Strategy and competitiveness
Jim Collins says, “Every company would like to be the best at something, but few actually understand – with piercing insight and egoless clarity what they actually have the potential to be the best at and, just as important, what they cannot be the best at. And this distinction stands as one of the primary contrasts between great companies and the failed ones.”
Focusing on your best areas is key for business success. During his 20-year tenure as the chairman and CEO of General Electric (GE) in the US, Jack Welch grew the company from a market capitalisation of $27b to $140b, making it the largest and most valuable company in the world.
As soon as he took over, Welch insisted that GE had to be either number one or number two in every business they were in or else get out. By number one or number two, he meant GE to be the leanest, lowest cost, worldwide producer of quality goods and services.
The writer is country director, Every Child Ministries Uganda.
[email protected]
