Business | The Wire Perspective

Ugandans have been known as an entrepreneurial lot and over the last five years it was common news seeing Uganda listed among the top entrepreneurial nations in the world. Buoyed by the high unemployment rate and lately the zeal to innovate, many Ugandans are coming up with initiatives that are changing the way we do business.

It is also a known fact that big business tends to prey on small start-up entrepreneurs either by suffocating them into oblivion or ‘stealing’ their ideas. In 2003, a pioneer IT Software Development company, Digital Solutions developed an Airtime Sharing solution that they dubbed Me2U and proceeded to interest MTN Uganda. After some back and forth communication, they got a chance to present the product to MTN and eventually were requested to deploy a laptop on the MTN network in order to test the service for two weeks. After the testing period, MTN expressed lack of interest in this service but turned around later in 2004 to launch a similar service. Digital Solutions dragged MTN to court and battled with the giant until an out of court settlement was made. During all this time, no media house had the guts to publicise the case save for one article I came across written by the Observer Newspaper.

Ten years later, Ezee Money a multi-national company offering mobile financial services to individuals and businesses dragged MTN Uganda to court. For What?

The issues at hand were;

Whether MTN breached statutory duties owed to Ezee Money under the Communications Act 2013
Whether the exclusivity agreements between MTN and Mobile money agents were lawful
Whether MTN committed unlawful torts (A civil wrong which can be redressed by awarding damages) of causing loss by unlawful means and unlawful interference with contractual relations
Whether Ezee Money is entitled to the remedies it seeks

This case has been on since 2013 and was eventually decided on the 6^th of November 2015 in favour of Ezee Money. This is exactly twelve (12) days ago from the writing of this post. There-in lies the problem I want to tackle.

During the reading of the Judge’s ruling, many media houses were present and their reporters were seen keenly taking notes as expected. However, it surprised me when I learnt that none of the media houses went ahead to report to the public what had transpired. They all kept silent and internet searches that I have done on this case show the absence of any information on this ruling until the 16^th of November when Ezee Money paid for advertising space in the New Vision newspaper to make public this information. It is even more disturbing that online media outlets like Chimp Reports, The Investigator, Big Eye among others that have established a brand for fearlessly publishing information took a step back and conveniently ignored this ruling. A quick visit to their websites in a way confirmed to me why they could have decided so.

Why was this a land mark case in Uganda?

MTN Agent Kiosk

By ruling that the exclusivity agreements between MTN Uganda and it’s agents infringe Section 53(1)(b) of the Communications Act 2013, hence are illegal, many dealers whose ability to generate additional revenue had been stifled by an unfair dominant partner have been liberated. Imagine having a self funded outlet and you are restricted to dealing in services of only one operator. The over 15,000 MTN Agents and those of other Mobile Telecom companies have been landed an opportunity to diversify their business operations.
By further preventing MTN Uganda from inducing any third parties (In this case Yo Uganda) to breach their contract with Ezee Money, the impunity with which large market players have been acting to frustrate new businesses has been arrested. More details on this shall be shared in a subsequent article that will show how MTN Uganda orchestrated the plot to frustrate Ezee Money.

Now to the tough question, why was the media silent about all this?

Apart from a single article that I came across online published by the Daily Monitor, in 2013 when the case was unfolding, nothing much has been served to the public in this regard. I have always heard media practitioners share their experiences about how money rules their industry and that those with deep advertising budgets can always have the leverage to determine what is published about them. When MTN Uganda was fined by the Uganda Communications Commission in March 2015, what was expected to be headline news remained buried in inner pages.

Peter Osborne the former Chief Political commentator of the Telegraph resigned after realising the double standards the newspaper had regarding reporting about some organisations. Articles on HSBC Bank couldn’t be published for fear of losing advertising revenue and in a scathing article, Why I have resigned from the Telegraph he stated, “… HSBC, as one former Telegraph executive told me, is “the advertiser you literally cannot afford to offend.”” Are we in a similar situation already? Are there advertisers that just cant be irked? One of the leading business moguls in the country is known for using his influence to determine what gets reported about him hence helping keep undercover most of the slippery deals he’s involved in.

Jonathan Cook, a British journalist in his article Corporate Media and the Intellectual Cleansing of Journalists, states “… We understood, and our profession’s own mythologising encouraged such an understanding, that investigative reporting was the purest form of the journalist’s craft. In many ways it was the ideal. The investigative reporter is the exception in journalism rather than the model. He or she is the loose cannon whose reports can bring the paper great acclaim but only if the reporter is kept on a tight leash. The honour they bring the paper can equally turn disastrous if the wrong subjects are pursued or the story leads in unpredictable directions that threaten powerful interests.” Are there powerful interests that are No-Go for our media today?

Selective coverage of issues pertaining ‘powerful interests‘ is another form of fraud on us the readers. The duty of a media house is to bring the news to its readers, how then can corporate or political interests be placed at the fore? “A free press is essential to a healthy democracy. There is a purpose to journalism, and it is not just to entertain. It is not to pander to political power, big corporations and rich men. Newspapers have what amounts in the end to a constitutional duty to tell their readers the truth.” Says Peter Osborne.

As you read this article, an entrepreneur can’t help but shed tears because they relate with the kind of treachery that has been exposed by the Ezee Money experience with MTN Uganda. MTN isn’t the only culprit in all this. I am sure there exist many similar stories across various sectors of the business landscape in Uganda. Many are not only cheated but also being manipulated into settling for less at the expense of perpetuating a very unhealthy business co-existence with larger industry players. Their only hope would be the media which if it genuinely stood for the truth could have helped expose their circumstances. It takes deep pockets as exhibited by Ezee Money and Digital Solutions to confront a heavyweight player. Pursuing a court case for three years is no mean feat and when faced with the choice of survival and an unending court case, the latter pales in significance.

Whenever they are faced with State inspired muzzling, the media is so quick to remind us about it’s independence and how it’s the Fourth Estate. However, what happens to the same independence when the very media is faced with wads of Dollars in potential advertising revenue?

It’s time to think hard, really hard.

Twitter: @wirejames

Follow this Blog by submitting your email address in the top left corner of this page.

The craze in the Ugandan Retail Sector now is Supermarkets. Duukas are being converted into mini-supermarkets while any fairly large space with shelves is being regarded as a Supermarket. However, the rate at which they open up is similar to the rate at which they close.

Why is a Supermarket business attractive? Simply because it is the easiest business venture to setup. You don’t need to spend much money purchasing stock since most suppliers are likely to offer you their products on credit. Your initial investment is likely to focus on rent, fittings (like shelves), a till, basic branding and workers. Once you have these in place, you could very easily hold stock worth Hundreds of Millions without paying for it upfront as well as enjoy the added advantage of returning damaged or expired goods.

Why then do they fail?

Supermarket failure in Uganda stems from a multiplicity of factors. Some of those that I have observed over the last ten years are;

Shrinkage: In Supermarket terms, this is the loss of products between the point of purchase from a supplier to the point of sale. In otherwords, a Supermarket will receive say 500 bars of soap but end up selling 485 bars with the 15 bars remaining unaccounted for and yet having to pay the supplier for them. Globally, the allowance for shrinkage averages 3% of the inventory and this is usually reflected in the pricing. However, once this is exceeded, then the bleeding begins and further price increases to protect the supermarket could lead to uncompetitiveness. Most Ugandan supermarkets don’t even know about this shrinkage due to the poor systems in place that can’t allow them track operations in detail.
Suppliers: These are very integral towards the survival of a supermarket. The quality of products they avail, their longevity (expiry period), timely delivery among others all combine to give the consumer a great experience at your supermarket. There is a need to monitor these suppliers very well as well as have quality control mechanisms in place. Capital Shoppers Ntinda had a rough time when a customer bought expired margarine and her complaint was handled poorly. Failure in monitoring suppliers could lead to a steady migration of customers to rival supermarkets that guarantee quality product availability.
Systems: Any business needs to have systems in place in order to run. Whether they are formally set up or not, systems do exist. Within a Supermarket, you need to have systems that will manage supplier orders, receiving of goods, Inventory Handling, Stores, Product Display, Expiry, Point of Sale, Suppliers’ Payment/Reconciliation among others. These systems determine the level of exposure to shrinkage and pilferage. They are potentially subject to abuse by the staff and hence need to be monitored closely. I have found small but well organised supermarkets operating much better than their larger counterparts including registering higher profit margins.
Staffing: This happens to be one of the most crucial aspects. It could prove to be a lethal injection or a recipe for success. Supermarket staff tend to determine how suppliers and customers view the supermarket. I’ll divide this into Lower level and Management Staff.
- Lower Level Staff: Some supermarkets have very rude staff who tend to underlook suppliers giving the impression that they are doing them a favour to sell their products. They’ll waste time in chit chat preferring to gossip about the Premiership matches or political events taking place oblivious of the supplier’s need for attention. The language they use to address suppliers sometimes can be derogatory. The other scenario is one of collusion where staff form an internal thieving network that starts with the way orders are made. One of the international Supermarkets suffered this kind of fraud when those ordering for products connived with the Stores and Receiving agents. They would initiate an order say of 30 cartons for Supplier X. Supplier X arrives with the cargo and is told to offload 15 cartons only, after which they proceed to approve receipt of all 30. The remaining 15 cartons are then redirected to a shop they were colluding with. End result? Supermarket pays for more products than it actually sold.
- Managerial Staff: These usually determine the culture of the workplace. It is their tempo that dictates how the lower level staff operate. Passive managers who have a laissez faire approach give room for sharp lower level staff to defraud the business. In some cases, the managers collude with the lower level staff to defraud the employer. This is one of the reasons that led to the closure of one of the big supermarkets in Uganda. Managers used to collude with till operators to defraud the business while others would collude with the receiving staff. This naturally led to less revenue generation and also opened floodgates for other lower level workers to steal as much as they wanted.
Customer Care: Most supermarkets tend not to have clearly established customer care skills among their staff. They simply recruit any idle young man or woman for as long as they can speak, read and write. This is a no-winner. While the kind of jobs most of the attendants are likely to undertake do not require advanced studies, it is crucial that they be trained on how to interface with customers. This is what happened with Capital Shoppers Ntinda when a situation that could have been resolved amicably turned into a battle of egos.

Twitter: @wirejames

Follow this Blog by submitting your email address in the top left corner of this page.

Category Archives: Business

When Money Muzzles the Media. Ezee Money Vs MTN Uganda.

Five Reasons why Supermarkets fail in Uganda

Follow The Wire Perspective via Email

Search The Wire Perspective

Posts Categories

Recent Posts