By Denis Jjuuko
I recently listened to a clip of a speech by one of Kampala’s billionaires at the official launch of a new line of his wheat factory. He spent much of the time thanking the bank that had extended him the loan to expand as well as castigating the government for the very high interest rates. He was also very excited about what the factory will enable him to achieve.
He has been working for the best part of his life having grown from a small shop in the 1970s to an industrialist and real estate owner in many parts of the city. His wheat factories and other businesses have enabled him the luxuries of life to the extent that he lives in a house the size of a shopping mall!
Anyway, as I was listening to the clip, which is about a year old, I came across an advert in one of the newspapers. Cipla Quality Chemicals was advertising its Initial Public Offer (IPO) that will enable it start trading on the stock exchange.
However, I was excited that they issued an offer because I hope that other Ugandan businesspeople like the wheat factory guy will learn thing or two from Emmanuel Katongole — the company’s long serving Executive Chairman and his partners. I am not sure of what Cipla Quality Chemicals wants to achieve (I must confess I haven’t yet read the prospectus fully) but if its expansion, at least they won’t have to go to the bank to beg in order to borrow money at a very high rate. The IPO and eventual trading of shares on the stock exchange will give them the money they need to do business.
If the owners want to get their money out and enjoy their life by selling a few shares, that is also perfect because as they advance in age, they wouldn’t have to worry so much about renegotiating loans or receiving a phone call from a bank official who has no idea about the state of the economy.
Ugandan businessmen must start emulating Katongole and his colleagues by listing their businesses on the securities exchange. It will give them access to cheap capital and there is a higher chance that their business will survive long after they are dead. This is because to list on a stock exchange, you must meet certain standards. Your company must be properly run with sound corporate governance policies that conform to internationally acceptable standards.
This means that if your wife is to be the Chief Financial Officer, she must be qualified to do so. If your kid is to be the CEO, he too must be qualified to hold that position. And then you must have a competent board so that other people don’t lose their money.
Although a certain amount of control will go when you list your company, it may also make you achieve your dreams faster. You won’t own 100% of your company but it may give you a percentage that makes you more money than when you wholly owned the business. A small percentage of something so huge is sometimes more profitable than a big percentage of something so small. And you can always buy your shares back since they are tradable and take it private again if you wish. The idea is that the stock exchange is a source of cheap capital to expand or go do something else. It may also take away your stress and live a much more fulfilling life than the hustle that is usually the case with Ugandan businesspeople.
However, most of our wealthy entrepreneurs have no clue of the stock exchange. Those who have heard of it fear it. The issue is lack of understanding of how the stock market works. That is why Cipla Quality Chemicals’ launch is so important because its founders are people who are well known in the business community.
This means that there is much more work the Uganda Securities Exchange and indeed the Capital Markets Authority need to do in sensitizing people about the opportunities available in listing their companies. This is for both business owners and those who may want to invest. Uganda isn’t short of cheep capital because once a guy with a mobile app shows up and promises you USD200 every week if you invest USD1,000, there will be millions of people deposing their money. Those are the people that must be converted into the stock market investors as a sustainable plan to encourage Ugandan businesses to open themselves up.
Since Cipla Quality Chemicals was started by Ugandans before Cipla of India bought a stake which led to the change of name, Katongole and his partners are here in Uganda most of the time and I believe most businesspeople know his telephone number or they wouldn’t fail to get it if they tried. They need to benchmark him and learn from him regardless of the outcome of his IPO. This is important because it is one of the ways we can build sustainable businesses that outlive their founders and see more people get involved in long term investments.
The author is a communication and visibility consultant. email@example.com