INTERVIEW: Sometimes we let down entrepreneurs by not giving them the right incentives – Ramathan Ggoobi

You may not be interested in government but be interested in where public resources are going.

The government of Uganda is making deliberate moves to empower entrepreneurs by providing the appropriate incentives for the country to establish a sustainable private sector.

In this interview, Charmar News Editor Baz Waiswa talks to Ramathan Ggoobi, the Permanent Secretary/Secretary to the Treasury (PSST) at the Ministry of Finance, Planning and Economic Development, about the state of entrepreneurship in Uganda and how government is helping.

As the PSST, you have a clear view of the country’s economy, what is it that CEOs, business leaders and entrepreneurs are not doing right to support government stabilize the economy?  

Number one, in my view, Ugandans are not very good at following the money that government plans and budgets to spend in the national budget. Private investors the world over tend to follow government money.

For example, the government is currently putting more investment in wealth creation funds like the Parish Development Model, Emyooga, and the Small Business Recovery Fund. You have the industrial parks where the government is putting in a substantial amount of money. I would like to see entrepreneurs targeting that. I receive more of what we call foreign investors sniffing this money.

You may not be interested in government but be interested in where public resources are going.

Number two, in my view, is the pace at which we are formalizing businesses. I think many of our entrepreneurs in Uganda have remained necessity entrepreneurs. They are not transforming fast into opportunity entrepreneurs.

Try as much as possible to formalize. Don’t hide away from the government. You will take advantage of the opportunities available. Only formal enterprises can take advantage of concessional funding and financing. They can borrow money. They are credit worth, at lower interest rates.

Because formal businesses are less risky, they are also quite cheaper to finance in terms of credit officers identifying them, monitoring them and also administering the credit to them. Government usually targets formal businesses because they are easy to identify. They have books of accounts.

By formalization, I mean you have books of accounts, you have all the records. You are registered with the Uganda Registration Services Bureau (URSB), you are registered with Uganda Revenue Authority (URA) and you are registered with say the City Council.

Some people think that by hiding away from those institutions, you are avoiding paying money, actually you are losing money.

The third thing is that entrepreneurs need to work on their corporate governance; separating ownership from control and ensuring that you manage the business professionally. It means you don’t mix family and friends with business.

With professionalism and the standardization of your operations, you are likely to attract equity investment. You are likely also to sustain business much more.

Lastly, it is the ability to follow trends in the consumption patterns in the country. When I used to teach business students and economists, I used to tell them that if you want to do business sustainably, you need to follow the trends out there.

For example, where do Ugandans spend their money? Do not just follow your passion. Your passion could be misplaced in areas where people are not spending money. Uganda Bureau of Statistics (UBOS) gives us this data every year and you will find those patterns are clear.

Don’t just do a business because your friend is doing it or your family did it in the past. If most Ugandans are spending on food, followed by housing, utilities and then clothing, you follow those patterns.

To help us as a government that is presiding over an emerging economy, we want very much to see that the economy expands. How do we make Ugandans make money in a much easier way and then expand this economy, I think we need to address a few things.

Yvonne Mpanga, the Executive Director and Founder of The Business Trendsetters forum with 2023 Focal Pace setter PSST Ramathan Ggoobi. Ggoobi will be the main discussant at the 4th Business Trendsetters Forum-2023 due August 31 at Sheraton.

You mentioned formulizing businesses but some people say the process is long, that the requirements are cumbersome and that this is a non-tariff barrier, how is the government facilitating entrepreneurs, and especially having them operate formally?  

A few years ago you could say that was a right assessment. Maybe the government was bureaucratic. We had so many steps and procedures of say registering a business, registering for utilities electricity and water, registering with URA, with the City Council, and with lands; you had to walk around and face a lot of bureaucracy.

I want to tell you that the situation has changed; we are working on one-stop centres in terms of the registration of businesses. You can now enter URSB at 9:00 AM and I guarantee you that if you know what you want and you are ready with your documents, by 9:30 AM you walk out with the company in your hands.

The process is improving. Of course, there are still issues but that mindset of thinking that if you want to do business easily avoid government is bad.

One tenet of a good entrepreneur does not attract government. Never attract government to yourself. The government is attracted by those who try to skirt it. You can’t hide away from the government. It is too amorphous. They will get you.

So you better get all of those things which government wants. URA will not tax you if you don’t make money and you have prepared your business returns very well, showing you are hiding nothing. But once you are hiding something URA will audit you and get you.

So let’s not run away from the government. The government has tried to make lives easier, with technology. Now with automation, you can easily, online, get any of those entities I have mentioned.

From your days as a lecturer at a university, what has been your experience with young people regarding their mindset and attitude towards entrepreneurship?

Younger people are enthusiastic about entrepreneurship, but you know, not everybody is an entrepreneur. We need to understand that. Research has found that of every 100 people in a country, only seven are entrepreneurs. The rest of us should be workers, people who offer our service and get paid and live a good life.

But because of the challenge of the jobs we have, and it’s something which we are working on, some people go into entrepreneurship.

We would like to see younger people getting factory jobs when they leave school. I’m very optimistic about young Ugandans; they are very enthusiastic about making money for themselves.

When I was teaching at Makerere University Business School (MUBS), I could see young people in the lecture room coming with hordes of handbags to sell to their fellow students. I remember vividly one younger lady, every time you come to lecture; you find her distributing sweets and chocolates to her fellow students to make some money. One time I engaged her and she said Sir, this is how I pay my fees. Others had dreams, big dreams of owning companies. Some have done so. I’ve taught several now young entrepreneurs I know in town.

I think, as a country, sometimes we let them down by not providing the infrastructure required to nurture their enterprising mind. We lack a Silicon Valley type of investment.

You know, there are those judgments people make that young people are lazy and don’t want to work. That they don’t want to go out there and try out business and so on. I’m an economist. I believe more in incentives. What incentives do we put in place to ensure that they encourage them to do that? That’s what we are trying to work on now.

NOTE: Ramathan Ggoobi will be the Focal Pace setter at the 4th Business Trendsetters Forum which will take place on 31st August 2023 at Sheraton Hotel Kampala. At the forum, CEOs, Business Leaders and Entrepreneurs will trigger trends, brainstorm and unwind under the Theme: MINDSET CHANGE ENABLING REINVENTION IN BUSINESS. Ggoobi will share more about how entrepreneurship can flourish with the current regulations, policies and other government interventions. #BTF2023

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