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How to deal with a Windfall of Money


A middle aged gentleman received his biggest ever pay out in life that saw him get UGX 200 Million in cash. All of a sudden, he is struggling to figure out what business to invest it in. With too many ideas, his brain cells are exploding like popcorn.

His experience is no different from what you too may have gone through in the past, managing windfall money. I heard of some children who casually ate through UGX 2 Billion that their late father had left for them. They bought all the nice toys like cars, phones etc and upgraded their hangouts. Before they knew it, they were back, penniless in less than two years.

Back to the middle aged gentleman. He has this money, he’s very excited and willing to invest. He has no experience in running a serious business but believes money talks. I am sure numerous hangers on are now giving him all sorts of advice. Ideas like; building rentals, setting up a hardware shop, starting a farm, opening a restaurant, importing second hand cars and so on and so forth.

While I appreciate his desire to put this money to productive use as soon as possible, his lack of business experience is a handicap he has to carefully deal with. I recall in the 1990s when a number of top level officials were relieved of their duties by the Bank of Uganda. One of the victims was a neighbour of ours and his retirement package was in figures that sounded astronomical. He then begun dabbling in all sorts of businesses basing on ideas being fed to him by hangers on. Within three years, he was flat broke and five years later, we buried him.

My advice to this brother of the 200M jackpot is that he needs to first sober up. Doing things with a lot of excitement will make him a target in this city of Kampala that has lots of conmen who can smell money from afar.

How can he sober up? Let him get UGX 190 Million of that payout and place it in time bound Treasury Bills from Bank of Uganda for one year or even less. The purpose here is to put his money away in a place he can’t easily get access to. However, it also earns him some interest implying that he shall turn a profit through this action. I have shared extensively on this previously in another article. During the time that the money is out of reach, he can take time to soberly evaluate the various investment ideas that he either already has or those being brought before him. I am certain that by the time 12 months elapse, he shall be more prepared to take on the business world in a much better way.

Remember the UGX 10 Million that I left out? I do advise that he uses that to satisfy his cravings. Let him have all the fun he has ever wanted to have so that he “washes away the thirst.” Satisfying himself of these cravings is key to his ability to retain sanity in future as his business grows and he becomes richer.

Are you expecting a windfall one of these days? Are your parents retiring hence getting a payout? My core advice is that you do not rush to spend that money. Maintain the same lifestyle you always have had, detach yourself physically from the money and embark on the planning process. You’ll be very happy with your results eventually.

James Wire is a Small Business and Technology Consultant based in Kampala, Uganda.

Follow him @wirejames on Twitter

Email – lunghabo [at] gmail [dot] com

Namugongo Martyrs Day, a haven for Micro Businesses


Driving through Kyaliwajjala, Namugongo, Ssonde all the way to Seeta three days before the Martyrs’ day, I couldn’t help but notice the number of zealous pilgrims that were trekking from all corners of the country as well as outside Uganda. Elderly people of 80 years had trekked over 300Km to make this annual pilgrimage. To the un-initiated, Martyrs day is a celebration of the Christians who were killed between 1885 and 1887 under the orders of King Mwanga of the Buganda Kingdom. On 3rd June 1886 is when the largest number of martyrs, 26 in number were burnt to death at Namugongo.

Something else that caught my eye was the bee hive of business activity going on already. Along the roadside outside the venue, there were definitely over 2,000 traders displaying their goods for the pilgrims to purchase. Inside the venue, those selling food related products featured prominently too.

namugongo

Road side traders at the Namugongo shrines

While watching UBC news, a reporter indicated that over 3.5 million pilgrims had officially registered by the evening of 2nd June 2019 which is the eve of Martyrs day. From a business sense, this is such a big opportunity. I was further overjoyed upon realising that most of the business operators at the Namugongo shrines were Micro business owners.

According to the Uganda Investment Authority, a Micro business is one that employs upto four people with an annual revenue of less than UGX 10 Million. Who are these micro business owners and how do they operate?

For the uninitiated, these are the traders you find in the local markets either with a stall or displaying their products on the ground at market entrances or alongside the road where cars park.

Others are mobile traders who move from market to market. If you have lived in the countryside, you know too well that there is usually one official market day in a week for the gazetted markets all over the district. This implies that most traders will follow the action and sell their products where the market day is. In Mukono for example, the open market day for Seeta Market is Monday and that of Mukono Municipality is Tuesday. It is the reason you are likely to find a lot of traffic jam around those areas on those specific days.

Another category of micro businesses are the opportunity seekers. These aren’t usually into full time business engagement but when an opportunity presents itself, they quickly marshal the required resources and make a quick buck.

The fact that the large more organised corporate business operations are a no show is a good thing because I doubt they would understand how to effectively deal with these pilgrims better than the micro business traders.

Let’s look at the figures. With at least 3.5 million pilgrims, some spending three nights while others one night only, we can assume that each pilgrim has to eat food, at the bare minimum. Budgeting two meals per pilgrim at UGX 2000/- each meal works out to a possible UGX 14 Billion spent on feeding alone. Then you have the assorted wares like shoes, clothes, plates, cups, memorabilia all being sold to the pilgrims. I can say with certainty that over UGX 25 Billion is transacted during this event. For most of this money to be earned by Micro businesses is an even better sign because it allows wealth to percolate to the bottom of the pyramid. I just hope that the authorities at the Shrines do not succumb to the temptation of big business and throw out these micro businesses.

The Ministry of Trade Industry and Cooperatives has simply fluffed around with the issue of micro and small businesses. They have for long only set their sights on foreigners even when all they are doing is come to Uganda and set up barber shops. I am highly suspicious about the ability of the technocrats in that ministry to comprehend the micro business segment. Recently they came up with an SME policy that looks all too flowery and promising but take it from me, the biggest achievement it had was the public launch. It shall be a miracle to see anything beyond that unless a donor comes with millions of dollars.

Until we understand how these micro businesses operate and facilitate them in an enabling manner, we shall not realistically grow this economy in an equitable manner. Factories in Kampala should not be used as a sign of overall national development. We need all Ugandans of working age to have an opportunity to earn, only then shall we all have belief in the growth of the economy.

James Wire is a Business and Technology Consultant based in Kampala

Follow him @wirejames on Twitter

Email – lunghabo [at] gmail [dot] com