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

Posted on November 18, 2015 | 7 comments

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 6th 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 16th 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_kiosk

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

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Doing Business with Supermarkets in Uganda

Posted on October 20, 2015 | 1 comment

Following my expose of Uchumi’s rundown business operations, I was awed by the inquiries that flooded my inbox regarding doing business with Supermarkets. The Baganda say, “Omulya Mamba ab’omu n’avumaganya ekyika” meaning “One bad Apple spoils a bunch”

The neanderthal business management approach exhibited by Uchumi Supermarket in East Africa doesn’t necessarily mean that all Supermarkets are evil. It simply serves as a guide on how NOT to run a supermarket business. If what I wrote appalled you, then I wonder how you would react had I revealed the murkier dirt of how managers and low level employees connive(d) to defraud their employer, suppliers and customers.

Are Supermarkets a necessary partner for small business owners? Yes, depending on what you supply, how and the market you want to reach out to.

If you;

  • Have a product that targets individual consumers like processed and unprocessed food, clothing, stationery, hygiene products, cosmetics among others.

  • Have a product that targets the mass market.

  • Want to reach out to the elite market.

  • Want to have a higher inventory turnover with less overheads i.e. you don’t need to have your own employees selling your products all over the place since with a supermarket, their shelves, branding and attendants do that work for you.

  • Have the ability to produce for a market wider than you can directly supply.

  • Have the ambition to grow your brand and achieve greater visibility.

  • Want to rate your performance against the competition.

  • Can afford to offer credit sales.

Then, the Supermarket distribution channel is ideal for you.

Supermarkets have the ability to amplify your market reach beyond your current product marketing resource capacity. All this by merely placing your products on their shelves and ensuring you register presence in their various branches.

Most Supermarkets tend to locate their stores in easy to access locations especially targeting residential suburbs. This is a good omen for anyone targeting the mass market. We have been able to sell our products in towns like Gulu and Mbarara without setting physical foot there.

Supermarkets have the ability to drive up your sales if your products gain customer appeal. In our business we experience a 30% year on year annual growth in sales with one of the leading supermarket chains.

So, here are some of the yardsticks you can use to determine which supermarket to deal with?

  • Ease of Access: Entry requirements into supermarkets varies. For some it’s as simple as appearing with a product and they avail you shelf space while for others, one has to follow an application process. The small, suburb neighbourhood supermarket tends to easily take in products usually on trial basis and once they are found to appeal to customers, larger orders are made. Big Supermarkets (usually chains) have a more complex application procedure that involves a time consuming process of submitting product samples for review after which a decision is made on your application.

  • Payment Terms: Supermarkets have different approaches towards payment.

    • Consignment Basis i.e. Make a supply and once it’s sold out, you are paid.

    • Cash on Delivery i.e. Upon delivery of the product, you sign for your payment.

    • Credit Sales (For lack of a better term). In this case, you supply the supermarket with products and invoices are cleared at specified intervals e.g. every 14/30/45 or 60 days.

  • Market Segment: Different supermarkets have different target markets. The kind of shoppers you will find in Kawempe and Bwaise for example are likely to have different consumption characteristics from those in Naalya and Namugongo. These consumption characteristics affect aspects like package weight (do they prefer to buy smaller or bigger weights?), package quality (are they willing to pay extra for well packaged products or are they content with just the basics?), purchase volumes among others. If you have a good understanding of your products, then it becomes a lot easier to know which Supermarkets to target. Ariel Washing Powder is a good example where the much smaller 45grams packaging is strictly sold in relatively low income neighborhoods as opposed to the larger 500g and 1000g packaging that is prevalent in the upscale supermarkets.

  • Credibility: Many Supermarkets suffer a credibility problem. This is a problem that affects both small and big players alike. Payless Supermarket and Super Supermarket that had over two branches in upscale Kampala suburbs closed without a trace leaving many suppliers in tears. I have seen many small (usually Asian owned) supermarkets change ownership overnight and on pursuing one’s arrears, you’re told that the previous supermarket is no more. This is the modern day thuggery that is being perpetrated by some of these ‘investors’ and small businesses desperate for exposure and market are the biggest victims. I however have found a good number of locally owned suburb based supermarkets to be very credible especially when run by the actual owner.

  • Business Culture: While there do exist guidelines on how businesses are supposed to be professionally run, many entities take on a business culture that rubs off the principles and values of their proprietors. There are supermarkets you will find with very good and efficient systems in place to manage suppliers and customers (they usually aren’t necessarily the big supermarkets). Others have a laissez faire approach towards suppliers mainly with a tendency to treat them as beggars or street urchins whom they are helping to access the market. This latter category tends to present lots of problems when it comes to paying for products supplied.

  • Consult: If you are serious about making this move, talk to people who are already supplying Supermarkets with products. They will freely give you a rundown of which ones are good or not. The information gained is likely to save you from an early business demise.

On the whole, I can confirm that if you are the type with a day time job but trying to make ends meet by selling some products here and there, then using the Supermarkets as an outlet channel is likely to be the most convenient for you.

Silver Fish Powder being packed ready for Supermarket supply.

Silver Fish Powder being packed ready for Supermarket supply.

Small businesses that want to concentrate on production as opposed to sales and distribution can also take advantage of the supermarket networks already in place. This augurs well for specialisation that brings with it certain benefits.

Love them, hate them, but Supermarkets are here with us due to their key advantage over the local duuka (shop) of being a centralised shopping centre for the increasingly time constrained working class urban dweller. You had better consider this sales channel.

Twitter: @wirejames

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