Growth That Causes A Transformation

Hi, I'm Natalie Bittere, and welcome back to Uncommon Perspectives, our podcast. I'm here with my father, Patrick Bitter, and today we're talking about growth and what it takes to grow a nation. So what does that mean? How are we going to lead and be part of a huge, wonderful, diverse workforce?

Growth is an interesting word. It applies in so many ways and it gets me thinking. But today we're going to focus on growth, mainly of human capital, and focus on Africa, the continent of Africa, the great continent of Africa. And why are we growing so slowly? Growth. What causes growth? Energy. The biggest source of energy, the sun. That energy is transformed. It's never destroyed. It just changes from one form to another. So it's transformed largely by plants. And that process of converting energy through plants into chemical energy or carbohydrate or nutrients is normally called photosynthesis. So photosynthesis happens where there is some green. That green of a plant is what is normally used to transform this magical process of converting that energy into a different form of energy. Which energy? Either animals eat the plants, or human beings eat the plants, or human beings eat the animals that have eaten the plant. So all of this is energy. Energy causes growth. Now, that's one type of growth. That's why it's important that we preserve our environment so that that process of growth always happens. And in Africa, vast continent, so much growth is happening all the time, but not the kind that transforms us. We need to look at the growth that transforms our human capital. Now, primarily, you'd say that is education. But we need to have an education system that is designed for its environment, it's appropriate for the environment. And I find that today's education system is largely a cake. It's not in touch with the realities. It was a cut and paste from the European system and put here. It was adapted mainly for the industrial age, when the industries, the captains of industries, the bourgeoisie of France and Germany, when they realized that they could harness the power of electricity and build these huge factories, they needed people to work in the factories. So they recruited people and they were recruiting them fast and building money. And they were making a lot of money because the machines were working. But they need people to work in the factories, to process the machines. So they lobbied the governments and they started this free education for everybody. It began in Europe and it spread. Eventually it has come to Africa and we are now thumping our chest. We've got free education for our children. But what type of education, the quality, is it the kind that trains people to think critically Is it the kind that causes people to think about the problems in their society? And how can we find solutions to our problems? Basic solutions, like water. It rains too much water floods, and then it dries and then we go into a dry period. We can't harness the environment in which we live. We can't harness the products that we produce. We have so much produce and then it ripens or goes bad before we sell it. And we've lost. We don't have fridges, we don't have capacity. Whereas the first world developed their cold chain because they didn't have a choice out of necessity. Living with winter, you have to grow the food in summer and protect, preserve it to take you through the winter period. We didn't have any of those challenges, so we were disadvantaged by our advantage. And so we've been left behind. Now we need growth to transform us. When I just look at the period of COVID the last two years, between 2019 and 2022, some businesses grew. When I say grew, they grew phenomenally. There was growth, especially the high tech companies. Think of Facebook, think of Amazon, Apple, Netflix, Google, Microsoft, Tesla. Just take a look at those seven companies. See how much growth they achieved in the last two years. In a period of crisis, in a period of a pandemic. The richest people, the 1%, grew by $3.9 trillion trillion. Not 3.9 billion, but $3.9 trillion. A handful of people, they got all the growth. The rest of the world suffered by almost an equivalent amount. The world wiped off values. People's wealth dissipated because of that. So some people grow others. Energy has transformed them. They put their resources in certain places and they had an advantage. Now Africa does not have an advantage in many of these areas. And they have played that advantage that they've had to be ahead of us, against us. But we can't keep complaining forever. We've been independent for over 50 years. We've now got to play our cards and we've got to reorganize ourselves and see where we have a comparative advantage and see what we can do and harness our resources, especially our human capital. Most countries said, no, you can't do human capital before you do infrastructure. You have professors walking around, but there are no roads, there's no electricity. So you have to put things in order of priority. Infrastructure first. Even if it takes you 10 years, 15 years, put your infrastructure in place. Then you put your human resource, develop your human capital, better healthcare, better education, solving the problems, not just for yourself, but for your neighbors. Then there's got to be trade. It's impossible to grow without trade. Now these seven companies I talked about, they were selling, that's what caused the growth. Tesla projections huge. Went through the roof. Their share price went through the roof. All these companies I'm talking about, nearly all of them are billion dollar companies because they are selling. If you're not selling and not just yourselves to as many people as possible, you just can't grow in this day and age. That's why now that we've got the Internet, we've got to harness it. We've got to train our young people to produce a good or a service. Buy it or sell it. Amazon doesn't produce any of the goods he sells and he's the richest man in the world today, Jeff Bezos, just because he created an e commerce platform. So I'm saying Ugandans have got to wake up and start selling first to one another in Uganda, then selling to East Africa, then selling to greater East Africa which includes Ethiopia and DRC. And those are 550 million people. That's a captive market. Don't go into West Africa. It's very hard to run a race against those guys. Let them build their own market. They also have another 500 million people there. We capture these 550 million people and interact and trade. That alone will keep us growing. And then we can start exporting to China and to India. Remember, they are trying to get us to be their market too. So we're in a competitive space and we need to grow. Keyword is growth in the right direction. Over to you.

No, I really agree this time. Wow, it's interesting. And I think it has to start from every individual. That's the challenge we have because if we're waiting for the whole education system to change, it might take us another 10, 20, 30 years. And when you say infrastructure first before education and healthcare, did we get stuck on infrastructure? Has it really taken us 50 years to get roads and this electricity that we have most of the time in most places now.

Drip feeding the first world. Remember our colonial masters, they keep you on drip. They drip feed you so you don't die, but they'll never give you enough. We knew we didn't have electricity. We knew we didn't have the roads but they chose not to help us in that area. You're going to have too much debt. Keep the debt down. Nowadays we are panicking or you've got too much debt. We had 50%, nearly 50%. They've got 800% and they're managing so who put all these barriers? Why can't you allow us to grow and put our house in order and then contribute meaningfully? After all, you've exploited us for so long. Give us a break.

But you see, this is my problem. Why must we be allowed to do things? Why can't we do them?

Because we are trading with their currency. We are playing by their rules. All these rules that are put in place are supposed to be equitable. But are they truly equitable today? You see, we are on the verge of a war with Ukraine and Russia. And nobody could believe Russia would call its bluff and move into Ukraine. We are waiting to see what happens. At times it takes something like this to cause the difference that is required. I used to call it, to break the plate. Like when you're having corruption in a country and you keep washing the plate and using the same plate. No, drop it. Break the plate. Let it break. That smash changes everything. That's why countries where there's their dog with insecurity and what have you, a coup happens that's breaking the plate. A revolution happens that breaks the plate. And then you start afresh. Unfortunately, at times it's a very high price to pay. I hate to use the example of Rwanda, where there was a genocide. They had to break the plate. What had been happening was crippling them. But they've had a fresh start. And see the trajectory in which they are on now. Sudan, South Sudan, they had to break the plate. South Sudan broke away from Sudan. But then now within South Sudan, they've got to break another plate. Because they've been fighting these two leaders about how they should run this little country. And they've held everybody at ransom. So at times, maybe you have to break a plate and then start afresh. This is the ideology, I'm saying, of breaking a plate. Where there's a complete new start.

Are we ready to break the plate?

Which plate?

Our plate of Uganda.

I don't know. When something is not broken, why do you have to fix it?

You just said, we can't just keep wiping the same plate.

It's taken us so long. Like I talked, I said earlier, many countries were at zero. Uganda came from minus 15. It was an exceptional country. We had been planted so badly after Milton Obote won the military coups we had with IDI Amin and destroying the very fabric of society. So building it has had to take a long time. Where is the country going? Is this country on the right trajectory? Economically, socially, politically? Now you choose your priorities. To me, politically, doesn't really matter that much. So long as there's good leadership up there, people can vote. Every five years people have freedom to speak, security of their property and themselves. That is reasonable for my demands on, on security. Where are we falling behind social inclusion? Too many people are still very poor. We've got to find a formula to bring more people to have inclusive growth. Because the GDP of Uganda has been growing for the last 40 years. But so many people don't feel that growth, growth I talked about earlier is so important. How do we bring growth to them? Most people say it's capital. They don't have capital now. I think tomorrow, the day after tomorrow, the government is going to launch what they call the parish development model where they're going to pour buckets of money to the grassroots to try and put money in people's pockets to help if it can jump start the system so that people can learn the essence of money, the language of money, to trade, to buy and sell, to organize themselves in groups. So that might be the right thing. But it couldn't have happened before there was infrastructure. Otherwise how they take their goods to market couldn't have happened before there was electricity. How do they do value addition? How do they build storage capacity warehouses? So the government had a host of things to deal with and is trying to put them in order of priority. And it's not like me running my little business. Running a country is a very, very hard task. You have a few managers running your businesses and they are answerable to you and you can fire them at will. Whereas when you're running a country there are systems, especially the public service system, where people are permanent and pensionable and they are very hard to move and they're so bureaucratic. So it's like turning a ship. It turns very slowly, a very big ship. The bigger the ship, the harder it is to turn. So it's turning, I think in the right direction, albeit other countries are also turning, they're also moving. So we've got to realise we're in a race. You've got to move quickly and see that you can catch up to have an advantage.

I like the example that you give of Rwanda and I agree that you have to organize your own priorities because everyone has different resources. The budget you're working with, the amount of people, the land, wherever you're located. But the. But you see what's interesting with Rwanda is that they modeled Singapore long ago and then they adjusted their plan and now they're executing it right. And they are very good at execution.

In Rwanda Singapore modeled from Uganda long ago. They came to see how Uganda, this tiny little country, we had formed the East African Community. They came to see what was happening here in 1960. Yes, unfortunately, leadership, leadership. Now, Rwanda did so well because Singapore did so well because the leader there, Lee Kuan Yew, stayed in office for a long time, was autocratic in his style, but he moved his country, he moved the needle from zero to this. Now, that's what we are trying to do here, where you have a strong leader who will move. But he's not as autocratic what he says. He has to bring the parliament on board, the judiciary on board. He has to persuade the people. There's so many things he could have done in his own style, but he has to be democratic in this day and age. And so we have lost a lot of peace. If we had a complete autocratic leader, then wouldn't be having these problems of building roads and having to wait to compensate people building the pipeline. We have to compensate people building power lines. You're held back all the time.

So my whole point is, what is Uganda trying to be? If we're trying to throw some money in infrastructure, some in healthcare, some in education or this COVID 19 but we also need to do this. There's so many different projects and things happening all at the same time, yet we have such limited resources and such a huge population that has this huge demand. What are we trying to be? Because surely our education, the training, the mindset, the shift has to be directed so that we're moving towards something and I just don't see what is that something. We're trying to be. What can Uganda do? We're landlocked. So we're not trying to be the biggest port. We're too big to be like Rwanda, Singapore kind of country. We what can we do that's strategic, that's inclusive, that makes the most of our advantages and that can employ or create work for all these young people who are ready to give their energy to the growth of the country.

Uganda doesn't have to be a Uganda, Singapore or Uganda, China or Uganda, America. Uganda is Uganda. Uganda. You must be proud that we are Uganda. We are who we are. And we are at the center, the heart of Africa. We are surrounded by people. We may not have a coastline, but we are surrounded by people. And all we have to do is tap the human resource here so that it is useful, it is productive, it is an asset, not a liability. Having young people so many young people is not a liability. Turn them all onto becoming an asset. China's got a billion people and they are the factory of the world. They turned their disadvantage because they were one of the poorest countries because there were so many people and they were impoverished 30, 40 years ago. All of a sudden they're so powerful. So it's okay in good time. It's a process. It won't happen overnight. But I think we're on the right track as a country where we are educating our people, we are retooling them, retraining them, reskilling them, because we don't want them all to go for that dogmatic degree. And that's where the problem was. The mindset was everybody wanted a degree for a white collar job. There just aren't enough white collar jobs. Germany was transformed by having people doing skills, blue collar jobs. They are very good at whatever they do and they do it very well. They are thorough and that they carved out a niche market for themselves. The best cars in the world, the best machinery in the world, best equipment in the world. They focus on being the best in Germany and they charge a premium. That's what Japan decided to do, Korea decided to do. They were all looking to countries like Germany. So I'd rather Uganda looks to a country like Germany to do things well, excellence. And that's what we're trying to do now. But we're coming from a very low base. But those who will succeed will appreciate it's about being excellent at what you do. You can be good traders, you can be good at manufacturing. You've got a captive market around you. If you build and focus on customer service, people keep coming back to you. Because we have an advantage over our neighbors especially. And the fact that we are being good people, genuinely good people, that makes a difference. Why do I say we're genuinely good people? Not that other people are bad, but which other country in the world has said if you've got a problem where our door is open? The number of refugees we have in this country only second to second or third in the world. Because we allow anybody to come and you've got a problem, you're welcome and we won't keep you in a camp. Kenya's got huge camps. We don't keep people in camps. We give you land, we give you the hoe, give you water, get on with life. It's a shame what has happened in your country. Whether it's political or economic, you're welcome. Settle down now. That shows we are genuinely good people. And I can compare us. Not even Europe will behave like that America will behave like that. Japan, where they say, you're all welcome, just mingle, go ahead. As long as you've got your registration, we know who you are. When we want, you can find you go ahead and work. They're competing with us. So Ugandans are basically intrinsically good people. We have the resources. There's a lot of pressure now on our resources, but also the methods we're using to harness these resources is still very primitive. We cannot be using the hoe. We need to be using machinery, tractors, even if they're handheld tractors, we need to move in that direction. If we're going to see agriculture, we need to get a big chunk of our population out of agriculture. Because almost 70% are directly or indirectly involved in agriculture. We need to reduce that number to about 20%. So where do these 50% go? Industry, service, ICT, get them doing the right thing. That's putting a round peg in a round hole. Right now we've got a round peg, we're putting in a square hole and it's just not working. So we're fine tuning the square, the holes to make sure it's round so that the peg comes and it sits in there. That's what we're trying to do to get people doing the right thing. It takes time. We've got to be a bit patient. Now, the growth we've had was at the upper end of the pyramid, a little bit in the middle, not enough, and hardly any movement at the bottom of the pyramid. And that's why the government, in its wisdom, has decided now to go for the parish development model. We've got to focus on the majority of people where they are. We've got to make sure the money is not, because it's not trickling down fast enough. The gold that's at the bottom of the pyramid has got to be harnessed. If the activity, economic activity, is growing there, the bottom of the pyramid is active. It will grow into the middle class. The middle class will benefit. The upper end is happening because all the infrastructure benefit was going through the top end and most of the money comes in and goes out and was not reaching the bottom. So we need to fix this whole pyramid. We need to have inclusive growth and then the country will be zooming. Now, when you compare to a tiny country that's got 10 million people, 7 million people, it's not fair. Uganda, when you look at electricity, only country ahead of us in education or as a model that's been doing well is maybe Seychelles, but they've got less than A million people. So it's hard to compare oranges with oranges. A country with a size of 45 million people should be compared with countries of 45 or 70 million people and see how we're making progress. Compare us with South Africa, compare us with Nigeria, countries that have got 200 million people and see where is the advantage. Of course, when Uganda at its peak will be producing oil, at our best we shall be producing 230,000 barrels per day. Nigeria today produces 2 million barrels per day and has been doing so for the last 50 years. They are trying to get to 3 million barrels per day. How do you run a race against those guys? They're just using their oil resources. And today the price of a barrel of oil is back to $100 plus. So there are certain advantages certain people will have just by geographical location. But we have to tap what we have and make the best of it. And don't always think that the grass is greener elsewhere.

I agree. Start with what you have, make the most of it. Do what you can.

We've got to go into services. When I say services, I mean tourism, I mean hotels, I mean banking, I mean technology, it, telecom, all those are services. That's where the growth is. That's where the jobs will be. That's where value shall be created. Then I talk about ICT on its own because there's a certain proportion that has gone into Bitcoin, into the fintech, new technologies, Fintech and those kind of services. A lot of value is created there. So we've got to focus on that. And of course industrialization. You can't come from agrarian and go to the deep end of it and a knowledge industry. We need industry to grow. And the government is trying to build national many parks around the country so that people don't move from where they are. If you're in Lira or Ngulu or in Koboko or in Soroti, Masaka industries should be there. Kasese Kisoro. Create industrial parks. Let the jobs be created there. Then these people are absorbed. Because we're not going to slow down our population growth, not easily. So if you can create those jobs there, then a country has meaningful progress, meaningful growth.

But you think that job creation can only come from the government? Or it also has to come from the people at the top of the.

Pyramid, not from the government at all. Very few jobs in the government. The government maximum is half a million jobs in this country. They don't need more. And that includes the army and the police. Half a Million. So the jobs have got to be created by the private sector. What the government does is provide an enabling environment. When we talk about an industrial park, what makes an industrial park? Land is set aside, incentives are put in place and whoever invests in that area you get certain benefits. Whether it's cheap electricity, free land, water, sewage, good roads and you're allowed to export your goods tax free. Even when you make a profit. No tax for 10 years. Those are the incentives the government puts in place so that it attracts people, the private sector to go there. So it's the private sector that will create these jobs. Now too many people feel it's the foreign director investors that are getting all the benefits. We need to mobilize our local people to tap those opportunities. The door is wide open. An investor has to come with about a million dollars to be recognized as an investor. A Ugandan has to come with $50,000 and you get all the benefits and tax holiday. So the threshold is very low for our local companies to get all these benefits. Whereas for foreigners they have to come in and show that they've got a lot more money because they can tap these investment opportunities.

Cuz when you say we have to harness the gold at the bottom of the pyramid, it also makes me think what the rest of the pyramid can do to help that process. So like when you're saying if it's $50,000, surely an investment club where you all have corporate jobs can raise that kind of money and start an industry or a factory or something like that. Because if we're always waiting for the government or a foreigner to come and create a business to create those jobs, it's going to take forever to move everyone up the pyramid. Don't you think?

Of course, of course. In Kenya they powered away because they formed so many circles. These circles we are trying to begin to talk about here. They are way ahead of us. When they began it it was like a cult following, like everybody's going to church. That's how everybody joined the circle. Nearly everybody was in a circle. They put together their savings. They understood that you cannot make an investment without a saving. So everyone was forced to save quickly. They owned their own taxes. So everybody. If you're coming from Barara, you only get on a taxi that you belong to where the benefit belongs to you. Here it belongs to somebody else. You're going to buy fuel, buy from a petrol station that you own or co own, listen to a radio that you co own. All these things are owned by the Saccos. The warehouse is owned by the circle we're all producers this is our warehouse we charge a rent we share the benefit that mentality that mindset change how had not yet come here here we are still looking at everything for himself every individual on their own we are very short sighted and that's where the problem is We've got to open up that space change our mindset and make sure that we're working we all benefit more when we work together so I hope there has been some benefit in listening to us talk about growth and the challenges that face us One of the things especially young people have got to appreciate appreciate is the value of time I think we should do a special episode where we emphasize the role of time in people's lives People just think that we can do something tomorrow another day another day no we've got to respect that if we can do that I'll be really happy all right thank you until next time Goodbye Sam.