Henry 1

Business Development in
Uganda: The Birth of
Entrepreneurial Success

By: Tameisha Henry

University Honors in Business Administration

Specialization: International Business

Dr. Richard Linowes, Capstone Advisor

Spring, 2008
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Table of Contents

Executive Summary----------------------------------------------------------------- 3

Background-------------------------------------------------------------------------- 3

Why Uganda?----------------------------------------------------------------------- 7

Supportive Indicators-------------------------------------------------------------- 10

Economic Support----------------------------------------------------------------- 15

Risks--------------------------------------------------------------------------------- 17

The Big Picture--------------------------------------------------------------------- 20

Appendix---------------------------------------------------------------------------- 23

Original Memorandum---------------------------------------------------- 24

BPL Balance Sheet--------------------------------------------------------- 30

BPL Cash-Flow Statement------------------------------------------------ 31

BPL Income Statement---------------------------------------------------- 32

BPL Statement of Recognized Income & Expense-------------------- 32

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Executive Summary

Business Partners Ltd. was established as the Small Business Development

Corporation in 1981 and re-launched as Business Partners after a change in strategic

direction in 1998. It was the first company in South Africa whose mission was centered

on providing entrepreneurial assistance, financial and otherwise, to the small business

owners of the country. The corporation was a result of collaboration between the big

business of South Africa and the government, who both recognized that in order to

develop a thriving middle class, Small and Medium Enterprises (SME’s) must be

supported. After seeing much success and growth in South Africa, Business Partners

Limited should begin exploring expansion to other countries and Uganda, a country with

a vibrant, underserved and underdeveloped entrepreneurial spirit, especially among the

female population, is an excellent prospect.

Background

Business Partners Limited is South Africa’s leading specialist investment

company for small and medium enterprises. It provides a full-service offering for

entrepreneurs, which includes customized debt and equity investment solutions, property

broking, property management, technical assistance, mentorship, consulting and ongoing

business support through industry-specific units. Integrated business solutions are

individually structured to meet the specific needs of a wide range of entrepreneurs, from

single-owner private practices to multi-owner management buy-outs or buy-ins.1

The company is also heavily vested in South Africa and has allotted specific

funds to benefit the people in the country who are undervalued and underrepresented.

1
http://www.businesspartners.co.za/
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There are funds for eliciting youth interest in business, empowerment, women, tourism,

as well as microfinance loans through partnership with Khula Enterprise Finance, Ltd., a

South African firm established to facilitate access to finance for small- and medium-sized

businesses.2

Business Partners Limited (BPL) is not exposed to much competition in South

Africa, particularly because of the governmental support. As with many African nations,

corruption is a way of life in South Africa and having the support of the one entity that

can ruin even the best laid plans is a large advantage. There are many other firms that

provide many of the same services BPL does but, because of the economies of scale

associated with over 20 years of existence, they have a hard time competing with the

resources available to BPL.

Entrepreneurship, though a scary prospect for many, is oftentimes the only option

for lots of people. Many South Africans depend on others, or government, to create jobs

for them and they go to school to ensure they have the required skills for placement in

these jobs. However, the job market is presently unable to accommodate the number of

graduates that most South African educational institutions produce per year and

entrepreneurship becomes the best possible option.3 The South African government allots

20% of the national budget expenditures to education and values the importance of

having a literate, educated population. However, it relies on companies like BPL to

provide job creation, skills development and inner-city regeneration to lower the

unemployment rate which stands at 23%.4 As a result of companies like BPL female

unemployment dropped 4% in 2007 and the unemployment rate dropped 2.5% from the
2
http://www.khula.org.za/
3
http://www.gradx.net/article/articleview/293/1/101
4
http://www.southafrica.info/business/economy/development/lfs-280308.htm
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previous year. It is easy to see the impact BPL and similar companies have on the

economic condition in South Africa and it is easy to see why sharing this winning

formula with other African nations is the socially responsible thing to do.

The South African labor force has dwindled over the past few years, probably

because of the high HIV/AIDS rates that leave many children orphans and significantly

lowers their life expectancies. 71% of deaths among those aged between 15 and 49, are

caused by AIDS.5 The implications of this on the labor force of South Africa is

frightening and if BPL wants to be on the forefront of a sustained business model, it

should begin to consider other prime markets for this entrepreneurial explosion. Though I

do not believe BPL is in any danger of losing its place as an industry leader in the

entrepreneurial services arena, I do believe that the labor and employment crises facing

South Africa warrant an expansion of the scope of BPL’s focus.

BPL has begun to recognize the profit-making potential of broadening its business

horizons through expansion. Over the past financial year, BPL has undertaken the roll-out

of its internationally-recognized investment model into Africa through wholly-owned

subsidiary, Business Partners International (Pty) Limited.6 With BPL in the business of

people, and Africa being a continent suffering from underemployment and

unemployment, there are many outlets for increasing the competitive advantage by

adopting first-mover advantages in other African nations.

BPL is in a financially stable situation, with 664 investments to the value of

R876.6 million (US $115.81 M) approved in the past financial year. This is an

5
Centre for Actuarial Research, South African Medical Research Council and Actuarial
Society of South Africa (2006, November), ‘The Demographic Impact of HIV/AIDS in South
Africa - National and Provincial Indicators for 2006’ [PDF]
6
http://www.businesspartners.co.za/
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improvement of 18.5% over the 2006 numbers which were 633 investments to the value

of R740 million (US $97.76 M). 44.6% of these investments were approved for black

entrepreneurs, 37.2% were approved for businesses owned and run by women, 8.7% were

approved on behalf of the UYF Business Partners Franchise Fund, launched in 2003 as

fund for investment in historically-disadvantaged youth in the franchising sector, and

7.2% were approved on behalf of the Business Partners-Khula Start-up Fund, launched in

2006 as a fund for investment in start-up businesses by historically disadvantaged

individuals.7

Also, BPL’s financial indices have been extremely strong with:

• Net profit for the year is R160.8 million (US $21.25 M), an increase of 23.3%

from R130.4 million (US $17.23 M) reported in March 2006

• Earnings per share increased by 22.8% from 81 cents (US 11 cents) per share to

99.5 cents (US 13 cents) per share

• Dividends per share increased by 11.1% to 20 cents (less than a US penny) per

share

• Profit per employee improved by 21.7% to R536 100 (US $70 849) per employee

The key factors in BPL’s investment model that make it transferable to other

nations are the industries that the company specializes in providing services to help. BPL

invests in entrepreneurs across all of the major economic sectors, with six accounting for

the greatest portion of investment exposure.8 These are:

7
http://www.businesspartners.co.za/
8
http://www.businesspartners.co.za/
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• Manufacturing

• Travel and Tourism

• Franchising and Retailing

• Leisure

• Professional and personal services

• Marine Fishing

Already having the knowledge of industries that can be found in most, if not all, African

nations BPL reduces its learning curve upon expansion and is better able to meet the

unique market demands of the country.

Why Uganda?

Uganda, a former British colony that was granted Independence in 1962, is in the

early stages of developing its business sector. As a result of colonial rule, Uganda had a

plethora of State-owned Enterprises that are now being replaced by Individual and

Corporate capitalism. Entrepreneurship is extremely important to Uganda because the

colonial governments and Multi-National Corporations were infamous for their capital-

intensive companies but, in post-colonial times, labor-intensive work is the only feasible

and affordable employment alternative. All these aspiring Ugandans need is a plot of land

and demand for their product and they are happy to provide the goods at reasonable

prices. However, agriculture is not the only industry in the country and a company like

BPL would be extremely useful in opening the eyes of the people to other sector

opportunities.
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According to Malcolm Harper, there are many reasons why entrepreneurship is

expected to play a bigger role in developing countries, like Uganda, than it plays in

developed countries like those in the West and, to some extent, South Africa.9 He

suggests that during colonial times (which existed as recently as the 1980s in some

African nations) the government was responsible for all economic activities. When the

colonial ties were broken, entrepreneurship was a system that was opposite to the State-

owned enterprises and the independence gained from the ability to determine self-destiny

is irresistible to these newly-liberated countries. Also, with the state enterprises that

remain failing miserably, someone must step up to fill the gaps in goods, services and

jobs left by the termination of these business operations. Entrepreneurs are the ones that

step up and fill these gaps. Thirdly, as stated earlier, the abandon of capital-intensive

operations and the embrace of labor-intensive technologies for local entrepreneurs is vital

to the future of the economies of many African nations because, with the government

disposing of their state-owned businesses, no solitary person will be able to financially

maintain these operations. Finally, there are many areas in Africa where access to

resources is extremely difficult, if not impossible. It is in these areas that subsistence

providing is integral for existence. These people are the ones that are entrepreneurs and

contribute a nation-building role to the economy.10

The civil wars that erupted in Uganda devastated the economy tremendously. The

wars destroyed the state enterprises, as well as the subsistence farming, forcing people to

flee the country and populate the urban areas. Almost unique to Uganda’s history was the

9
Harper, Malcolm. (1991). “Enterprise Development in Poorer Nations.” Entrepreneurship
Theory and Practice, 15, 4, 7-11
10
Bewayo, Edward. (1995). “Uganda Entrepreneurs: Why Are They in Business?” Montclair
State University 07043
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fact that the civil wars forced a large-scale exodus of the Asian population of Uganda.

From early in colonial times, these Asians were the backbone of the trading sector in

Uganda and, in their absence, new entrepreneurs had no choice but to fill the gaps in

order to maintain the distribution of products and services that the Ugandan people were

accustomed to. In 1972, when 60, 000 Ugandan Asians were given 90 days, by former

dictator Ida Amin, to leave this was indeed a pivotal initial step in Uganda’s tendency

towards entrepreneurship.11 Business and self-employment was reserved for this

population of people because they had the business acumen and capital.

Following the dictatorial regime of Ida Amin of the 1970s, and the

destructiveness and human rights abuses of Milton Obote of the early 1980s, the relative

stability, economic and civil, that the country is experiencing under the rule of President

Lt. Gen. Yoweri Kaguta Museveni helps foster the explosion of enterprising initiatives

that will further stabilize the country. According to Museveni, modernization of

agriculture will help both smallholders and commercial farmers get information and

access to broader markets.12 As proof of his efforts, Uganda has made large strides in

privatization, liberalization of the foreign exchange market, industrialization,

modernization of agriculture, and the eradication of poverty.

The environment prevalent in many African nations in the late 1990s was

characterized by:

• Government hostility to private enterprise

• Stifling Bureaucracy

11
http://www.bbc.co.uk/coventry/features/stories/2002/08/ugandan-asian-anniversary-
feature.shtml
12
Yoweri Museveni. (2000). “What is Africa's Problem?” Minneapolis: Minnesota University
Press. Pp. 296.
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• Insecurity of persons and lack or property rights

• Crumbling infrastructure

• Rampant corruption among officials

• Lack of economic freedom

• Unstable environment

• Elite mentality about wealth creation13

However, with democratic leaders like Museveni, who has a broad historical

understanding and an intimate knowledge of the problems facing his country, there has

been much emphasis placed on correcting each of the societal ills on Ayyitey’s list and

Uganda, in particular, is an excellent example of a government committed to

development and progress.

Supportive Indicators

Under Museveni’s rule and with the support of foreign countries and international

agencies, Uganda’s economy was rehabilitated and stabilized and initiatives like currency

reform, raising producer prices on export crops, increasing prices of petroleum products,

and improving civil service wages have been successfully undertaken. Museveni and his

dedicated officials appear determined to bring Uganda out of the rut so familiar to

African nations and are willing to support initiatives that promote their cause.

Agriculture, the main industry in Uganda employing 82 % of the workforce and

contributing 30.2% to the nation’s GDP, is avidly supported by the government.14 The

growth potential in this industry is large but funding to facilitate this growth is not readily

13
Ayittey, George. (1998). “Africa in Chaos.” New York: St. Martin’s Press.
14
https://www.cia.gov/library/publications/the-world-factbook/geos/ug.html
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available. There is still an air of mistrust between the government and the people that is

rooted in the country’s colonial and dictatorial ties. Accepting business help from the

government, in many people’s eyes, is tantamount to relinquishing self-ownership and

independence and many Ugandans are not prepared to do this. There is a learning and

communication gap between the government and the people that must be filled. Business

Partners Limited could feasibly alleviate this issue and really help Uganda’s agricultural

industry to the next level.

BPL’s role would be that of a buffer company. Though its support and backing is

governmental in nature, the people that are provided assistance are not readily aware of

this fact and, thus, are more trusting of the company. Also, the capitalistic views of the

large businesses that also support BPL would be hidden from consumers behind the

name, reputation, and experience of BPL. In this manner, communication and education

is delivered without skepticism, hesitation or confusion.

There are many transparency issues that are supportive of Museveni’s regime

changes and are hoping to see Uganda emerge victorious after decades of oppression. The

presence of these agencies in Uganda provides a premise for the BPL business plan and

paves the way for BPL’s entrance to the market. The government and large businesses in

Uganda are already educated. These agencies have shown the government the importance

of empowering the lower classes in order to see real economic growth. All BPL would

have to do in Uganda is show how their strategy, a proven and winning one, can provide

the lower classes and small business with the fuel they need to take the nation to the next

level.
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The United Nations Industrial Development Organization (UNIDO) is supportive

of entrepreneurial growth in Uganda and has worked with the Educational sector of the

government to implement the teaching of an entrepreneurship curriculum at secondary

and vocational schools. The objective of the entrepreneurship curriculum is to enable

youths to develop a positive attitude towards entrepreneurship, business and self-

employment and to acquire entrepreneurial skills so that they can take up successful

careers, of their choice, in business at the end of their course. This was a large move in

the right direction for the country because, prior to this, any education on

entrepreneurship was minor and was irrelevant to those that live in the rural areas. The

ironic thing was that most of the Ugandan population lives in a rural area. Also, any

education on life after school in the ‘real world’ was designed to benefit the government

and employers instead of fostering an affinity for job creation and independence.

Education is the prime component of Uganda’s poverty eradication strategy and,

as with many former colonies, it is believed that through education, human capital is

developed which, in turn, empowers the poor people to participate in the national growth

process.15 Part of BPL’s formula is mentorship and education and this would be crucial to

the company’s success. Ugandans are skilled in their businesses, but need education on

how to translate their skills into a profitable and sustainable business.

Another transparency agency that is vested in Uganda’s Success is the World

Bank (WB). WB is recognizing the contribution of female entrepreneurs in Uganda and,

in partnership with a commercial bank in Uganda, Nigeria and Tanzania, is helping local

women leverage the potential of their businesses. According to the Kampala branch of

15
Namuli-Tamale, Sarah. (2002) “A Presentation on Entrepreneurship Education and
Training in Uganda.”
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the East African Business Week newspaper, “These funds secured from WB's private

sector arm, the International Finance Corporation (IFC), are being availed to women

entrepreneurs in the small and medium scale enterprises at standing market interest

rates.”16 What’s more, BPL is also committed to this cause with their established

Women’s Fund that allocates small business help, monetary and otherwise, to businesses

owned and operated by women. The similarities between Uganda’s economic needs and

BPL’s business operations truly are harmonious and BPL would be remiss in not

exploring this extremely plausible option.

Women produce 50% of Uganda’s GDP, own 40% of the country’s private

enterprises, but only represent 9% of clientele that access credit services.17 This largely

untapped resource is a potentially large target market and represents an excellent

commodity for Business Partners Limited to capitalize on upon entry to the industry.

Historically, women were the leading business owners in Uganda because they sold

excess products or good that were made at home. However, their contribution has been

socially undervalued and, as a result, these home businesses have not been given the

supported needed for them to transition to become economically viable and sustainable

enterprises. With BPL’s support of women’s empowerment and the promotion of

entrepreneurship I am certain that we will see the ‘mom and pop shops’ move from that

of mere convenience to a neighborhood staple.

The founder of Business Partners Limited (BPL), Dr. Anthony Edward ‘Anton’

Rupert, was committed to, and passionate about, assisting entrepreneurial development in

developing economies. As the founder of the Rembrandt Group, he understood the

16
www.allafrica.com
17
www.allafrica.com
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intricacies of entrepreneurship and wanted to share his passions with others. As a young

man who was forced to drop out of medical school due to a lack of funds, Rupert was

committed to ensuring others didn’t have to suffer for lack of opportunity. It is only

fitting to see his dream continues across country borders, to Uganda, and continues to

translate his passion into economic growth.

According to the Uganda Bureau of Statistics, Uganda’s largest export market is

the European Union, the Netherlands to be exact. Uganda has significantly increased its

exports over the past years, with growth predicted to continue. With the EU’s collective

economic state improving, Uganda could benefit from continued focus on this market.

Museveni and his officials have proven their dedication to opening new and broader

markets for local demand. He recognizes the potential economic gains associated with

providing financial outlets for all classes in Uganda and how a small effort on the part of

his government could mean significant change for the standard of living across the

country.

Economic Support

Uganda has a relatively stable, steadily growing economy with a Gross Domestic

Product (PPP) of $31.47 billion, growing at a rate of 6%.18 The literacy rate of the

population is 67%, with a labor force of 14.05 million people. With 35% of the

population below the poverty level, there is a definite need for employment opportunities
18
https://www.cia.gov/library/publications/the-world-factbook/geos/ug.html
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that pay equitably, and allow employees to adequately provide for their families. BPL has

proven its commitment to the lower-income people of South Africa with its numerous

funds, in particular the partnership with Khula. These funds, exclusively distributed on a

need basis, rather than the thoroughness of a business proposition, will undoubtedly

provide added value to South Africa’s lower classes and, after the expansion, Uganda’s.

As with most developing countries, there is a need for improving income distribution and

entrepreneurship is one such way that affords people control of creating their own wealth.

It is this wealth creation that is so attractive to Ugandans, particularly because it is a

luxury that was not afforded them until recently. Capitalizing on this nationwide interest

would be a fortuitous plan of BPL’s and would also provide the nationals with a benefit.

Small business entrepreneurs face the unique disadvantage of being unable to

expand their companies because of a lack of available financing. Commercial lenders are

hesitant to finance these loans because of the high transaction costs associated with

comparably small loans, and governmental aid is largely a stopgap measure as opposed to

a sustainable, reliable source. The pinnacle of the problems lies in the lack of education

these people have on how to sustain the success of their businesses and commercial

lenders are not interested in supporting business ideas that they feel are not adequately

thought through. It would be the job, and the current skill set, of BPL to ensure that these

aspiring entrepreneurs are given every advantage possible to take their businesses to the

next level, including mentorship, business plan assistance, professional skills

development, as well as any other applicable proficiencies. This, coupled with interest

from transparency agencies, Business Partners Limited would be entering Uganda at a

time when entrepreneurship is a noticeably valued and rewarded commodity and, with its
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track record and experience in South Africa, BPL is more than capable of leading the

corporate industry in providing these services.

In the same manner that BPL was the product of the private and public sectors

combining in South Africa, this pattern can, and should, be reproduced in Uganda with a

similar positive effect. The current trend in Uganda is that governmental support is aimed

at companies assisting in developing the lower and middle classes and companies, like

Access Bank Plc that is working with the World Bank, are also invested in seeing the

growth of this population segment and would make excellent additions to the financiers

of BPI. It might seem strange that companies are willing to sacrifice of their own

resources, monetary and otherwise, to help a potential competitor but there is mutual gain

embedded in this business strategy. Currently, the large businesses can only derive their

customers from the middle and upper classes. Although this represents a significant

portion of the Ugandan economy, it is clear that the majority of nationals reside in rural,

poorer areas. If these companies empower these lower classes and equip them with the

tools they need to be successful and profitable in business the result is an increase in

disposable income that can be spent in their companies. Also, the resultant increased

standard of living experienced by this surge in business profits could potentially allow

these businesses to raise their prices and, with everyone’s improved financial condition,

this capitalistic behavior would not be prohibitive.

With the growing number of entrepreneurs, and the inclusion of entrepreneurial

skills in school curriculums, it is inevitable that the coming generation will have an

interest in the independence associated with free enterprise and, after watching their

parents and inheriting these companies, these up-and-coming entrepreneurs will

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definitely be well-prepared to take their family businesses to the next level competitively.

The trickle-down effect of the education provided in schools, which is only theoretical in

nature, coupled with the practical education and skills received through BPL’s

mentorship and training will be a phenomenon to monitor. The definition of progress is

the development towards a better, more complete, or more modern condition.19 Raising

the bar of expectation from one generation to another; from one gender to another; is how

countries pull themselves out of precarious positions and it is with initiatives like BPL’s

business plan that provide the momentum for this change and development.

Risks

As with many African nations, there is an inherent risk associated with

undertaking business ventures. There are many cases where there is the assumption of

corruption when big firms work with smaller firms, and in many cases there are no

avenues to explore retribution for losses incurred. It would be presumptuous and

negligent for BPL, or any company, to enter an African nation and expect that the best

laid plans can circumvent the reality of corruption. The fact remains that there will be a

certain level of corrupt behavior included in this venture and, to continue in business,

BPL would have to chalk it up to the cost of doing business on the continent. However,

there are some precautions BPL could and should take to minimize exposure to this. BPL

would have to be extremely selective in choosing the partnering investing companies to

ensure that, in addition to monetary contributions, the companies don’t contribute their

negative reputations for negligent or unprofessional business practices. Prior to signing

up with any company, BPL should do its own on-site research on these companies and

19
http://www.askoxford.com/concise_oed/progress?view=get
 Henry 18

their executives to ensure there is synchrony in business ethics, and to ensure that Dr.

Rupert would be pleased with the venture.

Also, with a country like Uganda whose democracy is just over 20 years old, there

are many political risks involved. As we have always learned in our academic lives,

political issues are the number one business risk in developing countries. In recent years

we have seen Hugo Chavez nationalize many of Venezuela’s major industries and, with

reason, many companies fear the same elsewhere. However, the onus is on BPL’s senior

teams to trust the current regime and the positive changes they have incited over the past

years. Though it is true that many of the supporters of dictatorship are still alive and, in

some cases, represent influential people in society, credit must be given to Museveni’s

proven ability to run a tight, and progressive, ship. Tied to dictatorship is the inference of

negligence towards human rights and any tendency towards this system of government

could be detrimental to the future of Uganda and its entrepreneurs of Uganda. I think it is

safe to say that, with the government’s partnership with BPL, we can assume limited

exposure, or tolerance, to governmental or corporate corruption.

Uganda’s primary export is coffee and with the fluctuations we see in the trading

price of coffee we have to note that this affects the volatility of the currency. Coffee

represents 20% of all income associated with exports from Uganda. Though Uganda’s

currency has been stable in recent history it would be remiss of BPI to fail to consider

this situation. It is dangerous for any country to depend on a single industry for economic

profitability. However, coffee is the only export that Ugandans can rely on its demand.

With the government’s new emphasis on finding new markets and demand for Ugandan
 Henry 19

business people I am confident that, in some years, we will be able to diversify the

industry mix in the country.

Focusing on exploiting women and their predominance in and contribution to the

Ugandan economy is risky. As in the corporate world, there are risks associated with

women running businesses, including pregnancy and motherhood. In Uganda, this risk is

doubled because of the traditional roles women occupy in many African nations and the

pride these women feel to fill these roles. In funding female-owned enterprises, BPI

would have to take into consideration the fact that time schedules must be flexible to

accommodate the dynamism of rearing a family. However, we do have a precedent on

women’s commitment to entrepreneurship and business operations. For years women

have been running small business out of their homes, selling the excess of any clothing or

food they made. These women were able to do this, even in the last stages of pregnancy,

because they have been able to work on their own schedules. They also engaged their

daughters and other family members in their businesses, not realizing that this is how the

spirit of entrepreneurship is passed down. I do not believe that BPL is at significant risk

by investing in women empowerment, particularly since the model has been successful in

South Africa.

It has long been established that the motivation behind many African

entrepreneurial enterprises is not the attainment of wealth, but rather the ability to provide

for family. Of course, with the global market we live in, it is inevitable that capitalist

motivations have seeped into the Ugandan culture. In lesser-developed areas, there is still

a subsistence attitude associated with business ownership but, understandably, everyone

is in business to make a profit. With the education the younger generation is receiving
 Henry 20

there will be a clear trend towards Western capitalist attitudes but in the immediate future

BPL would have to educate these entrepreneurs on the benefits of surplus production and

the profitability of exporting. For BPL introducing the ‘Riches to Rags’ mentality, to a

developing country like Uganda, could be a beneficial move.

The Big Picture

Business Partners International should expand its operations from Johannesburg,

South Africa, to Kampala, Uganda. In a capital minimizing endeavor, BPI should mimic

the strategy it used to enter the South African market, by partnering with local

governments and big businesses. This is also a trust and faith-building option because it

lowers the learning curve that would otherwise be experienced by doing business in a

new country, with an unfamiliar business model.

The anticipated costs of this expansion include the cost of renting a location,

employing entrepreneur specialists, and any administrative costs associated with

licensing and initial business operations. These costs are what BPL, South Africa is

expected to cover for its Uganda sister entity. Of course there will be some expectation

on the part of BPL to follow national convention and pay remittances to some people to

push business forward but, since this is not an American company, there is no law tied to

this. There will also be some costs associated with marketing this new business model

and initiative. This would be a new venture for Ugandans and the onus is on BPL to

ensure that they market to their audience by educating them on the need this business

would fill for them.

As with the South African model, financing the loan requests and training our

specialists in Uganda will be covered by investments and subsidies from the government
 Henry 21

and these big businesses. It is beneficial to all parties involved to develop the lower and

middle classes, making them financially contributing members of society. The

government is sure to be a willing participant in this venture, especially after the success

in South Africa is noted, and especially with the interest and support of international

organizations like the World Bank and its International Finance Corporation. Also, the

government has expressed an interest in any proposals that would develop the highly

disadvantaged lower classes. It is this segment of the population that suffers the most, but

is least able to pay for the help they need. They are also not trusting of the government

and are hesitant to accept help, citing historical abuse and corruption.

Raising the standard of living of the Ugandan people is a direct benefit to the big

business of Uganda, including the tourism, farming, production and manufacturing

companies. In these industries, the nationals are the main resource and their contribution

to the future successes of these industries cannot be undervalued. Turning these

subsistence people into surplus customers provides these big businesses with a new

consumer base.

In order to ensure that the underserved female population is able to receive credit

services, BPI should transpose its Women’s Fund in South Africa to Uganda. This

specialized fund is gender-sensitive and BPL’s due diligence in providing a relevant

financing model for this population segment is thorough, tried and tested.

With BPL’s available cash at year end remaining consistently high over the past 5 years,

the company is in a stable enough position to consider undertaking and funding an

expansion. Also, with the decrease in BPL’s borrowings from 2006 to 2007 it is easy to

see that the company is not cash-strapped (See Appendix).

 Henry 22

The financial counselors that will consult with the small business entrepreneurs

will be carefully selected from among the contributing companies. These people will

have a vested interest in the success of the program and, with BPL’s standard of training,

will prove to be an invaluable asset to these entrepreneurs. In addition, BPL would be

looking for qualities similar to those looked for in South Africa, including previous

teaching experience and a track record of successful leadership.

The learning curve on this expansion is short. With the support of the government

and the large corporations, BPL is sure to find a willing market for entry. Since part of

BPL’s role is to match small businesses with contracts, these connections with the

government and established businesses will be valuable. With a Board comprised of all

the companies vested in BPL, Uganda’s success, selected by the Executive Management

team, it is highly probable that we will achieve victory. With the proven success of this

business model and the environmental appropriateness of Uganda for this expansion, we

are positive that we can see these plans into fruition and profitability for Business

Partners Limited.
 Henry 23

APPENDIX

Memo
To: Mr. Mark Paper, Chief Operating Officer, Business Partners International
From: Ms. Tameisha Henry
CC: Dr. Richard Linowes
 Henry 24

Date: 11/21/2014
Re: Providing Entrepreneurial Services to Uganda’s Small Businesses

Summary
Business Partners International, formerly Small Business Development
Corporation, was the first company in South Africa whose mission was
centered on providing entrepreneurial assistance, financial and otherwise, to
the small business owners of the country. The corporation was a result of
collaboration between the big business of South Africa and the government,
who both recognized that in order to develop a thriving middle class, Small
and Medium Enterprises (SME’s) must be supported. After seeing much
success in South Africa, Business Partners International should begin
exploring expansion to other countries and Uganda, a country with a vibrant,
underserved and underdeveloped entrepreneurial spirit, especially among
the female population, is an excellent prospect.

Background
Business Partners Limited is South Africa’s leading specialist investment
company for small and medium enterprises. It provides a full-service offering
for entrepreneurs, which includes customized investment solutions, property
broking, property management, technical assistance, mentorship, consulting
and ongoing business support through industry-specific units. Integrated
business solutions are individually structured to meet the specific needs of a
wide range of entrepreneurs, from single-owner private practices to multi-
owner management buy-outs or buy-ins.20

Uganda, a former British colony that was granted Independence in 1962, is

in the early stages of developing its business sector. As a result of colonial
rule, Uganda had a plethora of State-owned Enterprises that are now being
replaced by Individual and Corporate capitalism. Entrepreneurship is
extremely important to Uganda because the colonial governments and Multi-
National Corporations were infamous for their capital-intensive companies
but, in post-colonial times, labor-intensive work is the only feasible and
affordable employment alternative.

The civil wars that erupted in Uganda devastated the economy. The wars
destroyed the state enterprises, as well as the subsistence farming, forcing
people to flee the country and populate the urban areas. Almost unique to
Uganda’s history was the fact that the civil wars forced a large-scale exodus
of the Asian population of Uganda. From early in colonial times, these Asians
were the backbone of the trading sector in Uganda and, in their absence,
new entrepreneurs had to fill the gaps.

20
http://www.businesspartners.co.za/
 Henry 25

Following the dictatorial regime of Ida Amin of the 1970s, and the
destructiveness and human rights abuses of Milton Obote of the early 1980s,
the relative stability, economic and civil, that the country is experiencing
under the rule of President Lt. Gen. Yoweri Kaguta Museveni helps foster the
explosion of enterprising initiatives that will further stabilize the country.

Supportive Indicators
Under Museveni’s rule and with the support of foreign countries and
international agencies, Uganda’s economy was rehabilitated and stabilized
and initiatives like currency reform, raising producer prices on export crops,
increasing prices of petroleum products, and improving civil service wages
have been successfully undertaken.

Agriculture, the main industry in Uganda employing 82 % of the workforce, is

avidly supported by the government. The growth potential in this industry is
large but funding to facilitate this growth is not readily available. Business
Partners International could feasibly alleviate this issue and really help
Uganda’s agricultural industry to the next level.

The United Nations Industrial Development Organization (UNIDO) is

supportive of entrepreneurial growth in Uganda and has worked with the
Educational sector of the government to implement the teaching of an
entrepreneurship curriculum at secondary and vocational schools. The
objective of the entrepreneurship curriculum is to enable youths to develop a
positive attitude towards entrepreneurship, business and self-employment
and to acquire entrepreneurial skills so that they can take up successful
careers, of their choice, in business at the end of their course.

The World Bank (WB) is recognizing the contribution of female

entrepreneurs in Uganda and, in partnership with a commercial bank in
Uganda, Nigeria and Tanzania, is helping local women leverage the potential
of their businesses. According to the Kampala branch of the East African
Business Week newspaper, “These funds secured from WB's private sector
arm, the International Finance Corporation (IFC) are being availed to women
entrepreneurs in the small and medium scale enterprises at standing market
interest rates.”

Women produce 50% of Uganda’s GDP, own 40% of the country’s private
enterprises, but only represent 9% of clientele that access credit services.
This largely untapped resource is a potentially large target market and
represents an excellent commodity for Business Partners International to
capitalize on upon entry to the industry.

The founder of Business Partners International (BPI), Dr. Anton Rupert, was
committed to, and passionate about, assisting entrepreneurial development
in developing economies. As the founder of the Rembrandt Group, he
understood the intricacies of entrepreneurship and wanted to share his
 Henry 26

passions with others. It is only fitting to see his dream continues across
country borders, to Uganda, and continues to translate his passion into
economic growth.

According to the Uganda Bureau of Statistics, Uganda’s largest export

market is the European Union, the Netherlands to be exact. Uganda has
significantly increased its exports over the past years, with growth predicted
to continue. With the EU’s collective economic state improving, Uganda
could benefit from continued focus on this market.

Economic Support
Uganda has a relatively stable, steadily growing economy with a Gross
Domestic Product (PPP) of $31,47 billion, growing at a rate of 6%. The
literacy rate of the population is 67%, with a labor force of 14.05 million
people. With 35% of the population below the poverty level, there is a
definite need for employment opportunities that pay equitably, and allow
employees to adequately provide for their families. As with most developing
countries, there is a need for improving income distribution and
entrepreneurship is one such way that affords people control of creating their
own wealth.

Small business entrepreneurs face the unique disadvantage of being unable

to expand their companies because of a lack of available financing.
Commercial lenders are hesitant to finance these loans because of the high
transaction costs associated with comparably small loans, and governmental
aid is largely a stopgap measure as opposed to a sustainable, reliable
source. Coupled with interest from transparency agencies, Business
Partners International would be entering Uganda at a time when
entrepreneurship is a noticeably valued and rewarded commodity and with
its track record and experience in South Africa, BPI is more than capable of
leading the corporate industry in providing these services.

In the same manner that BPI was the product of the private and public
sectors combining in South Africa, this pattern can, and should, be
reproduced in Uganda with a similar effect. Governmental support is aimed
at companies assisting in developing the lower and middle classes and
companies, like Access Bank Plc that is working with the World Bank, are
also invested in seeing the growth of this population segment and would
make excellent additions to the financiers of BPI.

With the growing number of entrepreneurs, and the inclusion of

entrepreneurial skills in school curriculums, it is inevitable that the coming
generation will have an interest in the independence associated with free
enterprise and, after watching their parents and inheriting these companies,
these up-and-coming entrepreneurs will definitely be well-prepared to take
their family businesses to the next level competitively.
 Henry 27

Risks
As with many African nations, there is an inherent risk associated with
undertaking business ventures. There are some cases where there is the
assumption of corruption when big firms work with smaller firms, and in many
cases there are no avenues to explore retribution for losses incurred. BPI
would have to be extremely selective in choosing the partnering investing
companies to ensure that, in addition to monetary contributions, the
companies don’t contribute their negative reputations.

Also, with a country like Uganda whose democracy is just over 20 years old,
there are political risks involved. Many of the supporters of dictatorship are
still alive and, in some cases, represent influential people in society. Tied to
dictatorship is the inference of negligence towards human rights and any
tendency towards this system of government could be detrimental to the
entrepreneurs of Uganda.

Uganda’s primary export is coffee and with the fluctuations we see in the
trading price of coffee we have to note that this affects the volatility of the
currency. Coffee represents 20% of all income associated with exports from
Uganda. Though Uganda’s currency has been stable in recent history it
would be remiss of BPI to fail to consider this situation.

Focusing on exploiting women and their predominance in and contribution

to the Ugandan economy is risky. As in the corporate world, there are risks
associated with women running businesses, including pregnancy and
motherhood. In Uganda, this risk is doubled because of the traditional roles
women occupy in many African nations and the pride these women feel to fill
these roles. In funding female-owned enterprises, BPI would have to take
into consideration the fact that time schedules must be flexible to
accommodate the dynamism of rearing a family.

It has long been established that the motivation behind many African
entrepreneurial enterprises is not the attainment of wealth, but rather the
ability to provide for family. In lesser-developed areas, there is still a
subsistence attitude associated with business ownership. With the education
the younger generation is receiving this attitude will soon be changed, but in
the immediate future BPI would have to educate these entrepreneurs on the
benefits of surplus production and the profitability of exporting. For BPI,
introducing the ‘Riches to Rags’ mentality to a developing country like
Uganda could be a beneficial move.

The Big Picture

Business Partners International should expand its operations from
Johannesburg, South Africa, to Kampala, Uganda. In a capital minimizing
endeavor, BPI should mimic the strategy it used to enter the South African
market, by partnering with local governments and big businesses.
 Henry 28

The anticipated costs of this expansion include the cost of renting a location,
employing entrepreneur specialists, and any administrative costs associated
with licensing and initial business operations. These costs are what BPI,
South Africa is expected to cover for its Uganda sister entity.

As with the South African model, financing the loan requests and training our
specialists will be covered by investments and subsidies from the
government and these big businesses. It is beneficial to all parties involved
to develop the lower and middle classes, making them financially
contributing members of society. The government is sure to be a willing
participant in this venture, especially after the success in South Africa is
noted, and especially with the interest and support of international
organizations like the World Bank and its International Finance Corporation.

Raising the standard of living of the Ugandan people is a direct benefit to the
big business of Uganda, including the tourism, farming, production and
manufacturing companies. Turning these subsistence people into surplus
customers provides these big businesses with a new consumer base.

In order to ensure that the underserved female population is able to receive

credit services, BPI should transpose its Women’s Fund in South Africa to
Uganda. This specialized fund is gender sensitive and BPI’s due diligence in
providing a relevant financing model for this population segment is thorough,
tried and tested.

With BPI’s available cash at year end remaining consistently high over the
past 5 years, the company is in a stable enough position to consider
undertaking an expansion. Also, with the decrease in BPI’s borrowings from
2006 to 2007 it is easy to see that the company is not cash-strapped.

The financial counselors that will consult with the small business
entrepreneurs will be carefully selected from among the contributing
companies. These people will have a vested interest in the success of the
program and, with BPI’s standard of training, will prove to be an invaluable
asset to these entrepreneurs.

The learning curve on this expansion is short. With the support of the
government and the large corporations, BPI is sure to find a willing market
for entry. Since part of BPI’s role is to match small businesses with contracts,
these connections will be valuable. With a Board comprised of all the
companies vested in BPI, Uganda’s success, selected by the Executive
Management team. With the proven success of this business model and the
environmental appropriateness of Uganda for this expansion, we are positive
that we can see these plans into fruition and profitability for Business
Partners International.
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