This is session number 6, which is called supportive laws and policies for enterprises. I come to you from the Lake city of Kivu- Kivu city of Goma, the province of North Kivu, where we have been since June 3rd after our first leg of our business trip to Kinshasa.
In our work to promote enterprise for young people, we have found ourselves scouting regional markets to find space for both our products and, services and, capital for Ugandan business. Trade is two-way - we strengthen each other when we exchange products of our labor. Our companies cannot compete if we don't innovate or shape the nature of laws and policies that promote trade.
Many of you might know I come from a liberal, yet pan-African background, and I, therefore, go for promotion and less regulation. Regulating businesses is good – yes – if you are protecting markets. But the real deal is to promote what we produce in other markets so that there are more revenues coming into our businesses and into the country. So how do laws emerge, laws and policies, there I will speak about, quickly, three sources.
First, when you have strong trade associations in your country that drive volumes of trade that build in-house standards say for dairy products, beef, sugar, for cement, and many other products. They initiate laws that a state should use to protect them, to protect those businesses. Let me give you an example when Capt. Lugard came to Uganda after he sojourned in Nyasaland- Nyasaland is the old name for Malawi in 1889. He said, and I paraphrase, -
“Britain has no textile of her own. They all come from India. Britain has no tea of her own for we do not have the climate to grow the tea. It all comes from China and India. What can we, therefore, do to grow her Majesty’s coffers” –Her Majesty Queen Victoria at the time. “We must take out all raw materials in this area called Uganda, which is copper, cotton, tea and we must process this at our home base in England, and we must force these new markets which we are ‘protecting’ that we have found. They must take our wares.”
This policy was what was called at the time, the mercantilism-the process of using your force of the state to break open markets and dump your wares and these markets supply you nothing of processed value, but you give them shirts, finished shirts, and you take out their cotton. Cotton, as some of you may know has 100 different products.
You take those products and you bring finished goods, you take the raw material that gives you 100 products and brings finished products. You process it raw at base.
Now when you have strong base associations as I mentioned, you could fight Lugard at the time, or you could fight the Lugards of today. In 1985, I was giving here an example at the conference, President Reagan of the US wanted to force Brazil to open its nascent computer industry to US manufacturers who were strong. The frustrated nationalist movement in Brazil at the time was called Technicos. They banded together and refused the pressure, they instead grew the computer industry by initiating industrial policy to support local production of computers until Brazil was strong enough to export her own computers. Brazil, today manufactures not just computers but also aircraft and the very computers that those aircraft run on. It is because they passed policies as trade associations to protect the industry at the end of the 1980s and the beginning of the 1990s. Therefore, young people listening to me, trade associations can initiate policy even if it is in the selfish national or regional interest of those trade associations. Trades are more reliable in proposing and implementing policy. So the question is, where do you belong? As a young person in business, in these associations, how strong is your association influencing government policy? So that was the number one, source of laws and policy to protect trade for the country.
When you have a smart national conscious public service that has a strong national cadre-ship in terms of interest for the country. You will initiate policies that protect the country. My favorite public sector servants are the Japanese, the Koreans, and the Singaporeans, these three countries I have mentioned. Policies in the promotion of heavy chemical industries, vehicle manufacturing, electronics, transport, and finance, all these sectors. It is the public sector officials that led the way, not the businesses. The Japanese promotion of electronics as their core proposition to the world at the end of the 1970s and the beginning of the 1980s meant that computing -which they would later lead- chemicals, assembly, and manufacturing-it meant that all these businesses using these policies scaled and made Japan easier to compete with the west in new markets in developing countries. The initiators of this policy were purely public servants. In Japan, actually, at the start of the 80s and 90s, they used to say,
“We don't mind who leads us politically, we don’t care how intelligent or unintelligent they are but if you choose to join our public service you better be careful to do the right thing for Japan. If you don't, you harm all of us Japanese and we will hang you before you commit suicide.”
So the question is, how good is our public service at initiating and executing policies that promote and protect businesses. I leave that question to you!
I think the third and most ignored source of good policy-because in politics, it is ignored-is a matter of strong, well-organized political parties. A political party whether it is in government or opposition can really be a boon for good businesses if it is nationally conscious. Parties that seek quality leaders among their ranks from the bottom-up are often the parties with good economic and social research that initiates new horizons for the country’s enterprises. So for me, it still strikes me as odd that any failing entity in our country, whether the entity is failing on account of poor management or economic conditions, that entity has nowhere to go counseling, for retooling, and for relaunching its products and services differently. Businesses failing and we look the other way is often a function of our political and service institutions, their weaknesses, and their disjointed nature by which they look at entrepreneurship and enterprises. Any business failure is our collective failure because it disincentivizes young people from taking risks. So how do you de-risk businesses entering a new market with good ideas? By having institutions that are sensitive to business, that initiate and sustain debate on enterprise creation and sustenance, that initiate trade policy.
Have a good weekend!