Nov 26, 2013

Dear Hon. Tumwebaze, thank you for showing us how "things" can be done

"It is a melancholy object to those who walk through this great town, or travel in the country, when they see the streets, the roads, and cabin-doors crowded with beggars of the female sex, followed by three, four, or six children, all in rags, ad importuning every passenger for an alms," Jonathan Swift, A Modest Proposal

Dear Hon. Frank Tumwebaze, 

I would first of all like to thank you for keeping time, at least for once. Last month, we had to wait for an event to kick-off because the minister had delayed by over an hour. He offered no apologies. Instead the emcee would go on to say that they thank the minister for sparing sometime in his busy schedule to come and grace the event. Guess what Hon Tumwebaze, we also had a busy schedule but made it on time to the event. And that minister is not you, it someone else I do not want to mention. So now you understand why I appreciate that you kept time. I just hope we keep up the spirit, maybe that way, this country can move forward.

There is this councillor who was bungled out of City Hall. Did you see that? I mean, there are video clips of “Omussajja wa Bwino” being lifted out of City Hall. Meanwhile while you were busy conducting your role as minister, the police also treated a lawyer like a rag-tag, a nobody, a thug and a goon. The video clips make for some absurd viewing from my point of view. Of course as always, your defense on such matters is always rather interesting to read. It is from this point that I request that since you rub shoulders with the President, maybe we should treat people who steal public funds the same way. Remember the billions that went missing from our coffers and donors decided to pull the plugs? I wonder why we don’t adopt such an approach for them.

I understand that currently most of the culprits including Mr Kazinda himself are “facing the full force of the law,” a phrase that you really like to use most of the time. Our very own courts are doing their jobs, despite the sluggish progress. These courts are constitutional, aren’t they?  You know what though? the KCCA Act that you quote supersedes the constitution. Not so? Please help me understand your emphasis on two-thirds majority in the act yet we’ve a constitution? So I also think considering that a small matter of a court order or even lack of presence of the defense team in City Hall, the best way to deliver a sucker-punch to people in-the-wrong should be so blanket. Let’s crucify them. Not so? 

I know you have a rather assertive way of speaking and sometimes heckling tendencies [refer to The Fourth Estate on NTV] and of course you can always plead plausible deniability; that you had no idea there was a court order. Indeed, how could you have known? In fact I think whoever steals public resources should not be allowed a defense at all. We should lock their lawyers out of the courtroom and use our starved police officers to keep them out. I also want a ministry of rape and defilement to be formed so we can have cases expedited since our courts are wasting their time. Don’t you agree with that?

In 1701, Jonathan Swift in A Mediation Upon a Broomstick wrote, "But a broomstick, perhaps you will say, is an emblem of a tree standing on its head; and pray what is man, but a topsy-turvy creature, his animal faculties perpetually mounted on his rational, his head where his heels should be, grovelling on the earth! and yet, with all his faults, he sets up to be a universal reformer and corrector of abuses, a remover of grievances, rakes into every slut's corner of nature, bringing hidden corruption to the light, and raises a mighty dust where there was none before, sharing deeply all the while in the very same pollutions he pretends to sweep away."

Before you interrupt me on this point, please note that the short story is a satirical piece, so in case you haven’t read it, please do read between the lines.

I hope you understand my point Hon. Minister. Meanwhile we all understand Kampala can be a filthy city and well, Jenifer has done a fine job. You know I'm business reporter, right? Even when a CEO is doing a fine job, she/he is answerable to a board. That board must consist of non-executive members to play that oversight role to keep the CEO in check. Oh, well, there is parliament and councillors, they can always keep her in check. What is interesting though, is the Lord Mayor and the Executive Director never appeared to agree on anything but we still got things done. Didn’t we? Maybe, whoever we disagree with in our places of work, we should push them out. Kick them out in fact. Blackmail them into making a mistake, and then let them fall “into the cups” – like we say.  Do you know those wonderful "middle sectors" we have on Jinja Road? We beautified them but now they have partly been destroyed due to reconstruction of a 6lane road. Was this part of the broader plan for KCCA? I do not know. 

You know Hon Minister, when a company has built a good brand, is making money and shareholders are happy, rarely does the head of the board chairman be offered for chopping. If he is incompetent, then he’ll be kicked out. Like many of us will be if we under perform at work.  Well, Hon Minister, KCCA is a better organization than ever and what I’ve been wondering is that for all those under performing ministries, why don’t have the PS’s moved or sacked the same way. I mean why not? Did you read the latest Auditor Generals report? Oh dear, oh dear, Statutory bodies are losing tax payers money, but surprise, surprise, we still have the bosses seated at the top comfortably. Why not adopt the same moves you used to remove these people?

Let me conclude my letter by saying, I appreciate the work you are doing; I mean who knew an elected leader would be impeached? Maybe it is about time we also impeach under performing public officials. You have orchestrated a political and legal masterstroke and now, Lukwago & co will spend hours, days and months on a legal wild goose chase as you make amendments to the KCCA Act. In the meantime, "they" could gain political capital and sympathy.

Thank you for your time Hon. Minister.

Yours Sincerely,

NB: Some say they are tired of sausages. I think they should be specific and tell us whether they don't like the Fresh Cut ones - because of the advert - or Sausage King. 

Nov 14, 2013

Forget the cross-listing pomp, it is but just that

Coffee!! At best, it is Nescafe, not Good African Coffee or Star Café. A tale of Ugandan Hotels. A tale for another day.


Here is the context. The Uganda Securities Exchange is vibrant, well, sometimes: Only on days when a company lists – locally – or cross-lists. The pomp there after glides away with limited activity except for companies like Umeme and Stanbic Bank. Uganda Clays used to be in that category, but it’s been unimpressive over the years for the reasons that are mostly copy and paste each year. Debt and low sales. This week, Uchumi one of the largest Supermarket chains in East Africa was cross-listed on the USE after the doing the same on Rwanda Securities Exchange (RSE). This is a "big company," currently valued at US$70m. For the USE – without a CEO & acting CEO – this is much welcome boost, considering this will be one of its best performing year if numbers are anything to go by. Its market capitalization – in simpler terms, the value – will increase and the white boards will have one more ticker symbol: UCHM.

A cross listed company is ideally having a company floated on another stock market that is not its primary listing. The NSE – an exciting market & largest in EA – is Uchumi’s primary listing, and now the USE – located in an arcade along Kampala road – is its secondary listing. Ideally, this listing is a good move. On the first day, 9,000 shares are traded creating a turnover of Shs5.2m. If the momentum remained the same, then the USE would be an exciting place to hang-out. Well, this is not the case. Like they say – I do not remember who came up with the phrase – “numbers don’t lie” but sometimes can also be deceptive.

The USE has a total 8 cross-listed companies including Kenya Airways, Jubilee Insurance, Centum Investments – I believe one of EA’s best Investment companies -, EABL – I wonder why UBL, their subsidiary is not listed locally -, Equity Bank, KCB and now Uchumi. In the history of the USE, the highest or best trading year – 2010 - for cross-listed equities was when shares worth Shs4.6bn were traded. This was for EABL. EABL has also recorded the highest turnover of any cross-listed company. In 2011, Centum traded at least Shs3.6bn worth of shares, but it was in that same year that it cross-listed. Institutional investors gobbled up the shares. 

Picture from Daily Monitor 

UMEME is the only cross-listed company from Uganda on the NSE and it has only traded once – only 1,000 shares back in September. It made headlines, we were happy. I wrote this, “The challenge for Umeme now will be having enough liquidity to satisfy the demand in Nairobi – if they do get overwhelming demand.” These numbers are not the deceptive ones. Cross-listing simply doesn’t make sense, at face value so they will say. Again they will add, I am being too simplistic. "What does an award-less journalist know?" First, in my simplicity, why would I buy shares for a company listed in Kenya, yet I could just make a call to my Nairobi broker to get me some shares? Of course considering that brokerage firms here in Uganda are huffing and buffing, sometimes due to declining business. So just to support my Ugandans in order for them to earn commission of trades, I’d buy the shares. But “meh,” it is my money not theirs. 

The second issue is that cross-listed companies will come on day one and allocate shares to Ugandans. In fact Uchumi has lined up at least 265.4million shares for the USE but will there be demand? The boards will indicate blues and reds on the white board. I know, yes we still use these.  The blue marker is for bids and offers, whereas the red is mainly to indicate a done deal. After this “event” we’ll have some snacks, chat about the market and we’ll write all the lovely stories. The next few days, the counter name will fade or gather dust. Uchumi makes the claim that cross-listing will allow it raise money to expand. I laugh. Ideally cross-listing helps raise money. Investopedia reads: “Some of the advantages to cross-listing include having shares trade in multiple time zones and in multiple currencies. This gives issuing companies more liquidity and a greater ability to raise capital.” Our markets are not well developed. It is not our fault. People don’t understand.

Uchumi is planning a rights issue – shares given at a discount price to share holders in order to raise money. Did they need to cross-list to raise the money? Yes & No!!! Some Ugandan shareholders already owned part of the company after they used the NSE. Only demand will tell. But history tells us, the shares might not be gobbled up. 

Third is the small matter – read big matter – of transfer of shares through an electronic system. It worked for UMEME, then the USE CEO left, and now there’s information asymmetry. If the system worked, transfer of shares would be rapid, but if it doesn't  then buying a cross-listed company from this market would be “erm” a nonstarter - again. 

But why do companies do it? Visibility is one. Uchumi, already a known company is not only a supermarket chain but is now listed in Kenya, Uganda and Rwanda. Investor confidence is up ahead of raising capital for expansion. And yes we are East Africa, a Community. Who wouldn't want to be part of this? Since Uchumi is part of the USE, any developments make the headlines. Investors are happy. Money will be raised.
They will say this is simplistic, but that it what it is. I’m a journalist. I walk to the USE. The brokers will say, “owolugabo” has come. Cross-listing is an event. It should be more than just that but that is only if our markets become more integrated. Kenya, Rwanda and Uganda are not Tanzania. 


I like tea. Anytime is tea time. I sniff the leaves. The plantations have some great aroma. Kericho Gold – Kenyan made tea – is what I like. We have Ugandan tea. Its packaging is poor. It is ordinary.