Pensions are somewhat less developed in Uganda compared to neighbouring countries, but that is all about to change, says RisCura's Andrew Slater.
Six months ago I had seen Jezza, the Hamster and Captain Slow lark around in Uganda on their search to find the true source of the Nile, or at least a puddle. Now I was flying to Kampala myself, and I re-watched their Top Gear Africa Special on the plane. It turned out to be true to reality with one exception: the scene with the day-long traffic jam. I only had one traffic jam and that delayed me only a few minutes. In fact the opposite, on the way back to Entebbe airport my driver was pulled over by a policeman, radar gun in hand, for speeding (which he was)! I have my suspicions that the Top Gear scene was a bit of staged theatre to position Jeremy Clarkson – aka the orangutan – struggling with a large plate of bananas for comic effect!
Kampala is wonderful city built on seven hills which is built-up, but not excessively, with maintained open spaces and a nice balance between the old and the new. You get a great mixture of modern big city, which maintains a real African flavour, all against a background of much greenery and intense red soil. Typical for the east Africa region, a lot of development has happened in last five years, for example new shopping malls with South Africa supermarkets Shoprite or Game as anchor tenant. I stopped by one of the Game stores to take a look and, if I took away the African character of the shoppers, I could have been in a small branch of Walmart or Target in the US. I tried the local beer but I was not brave enough to try another local speciality, the boda-boda. This is a motorbike taxi, usually of Indian make, used by everyone, for transporting everything. A cushion is provided for the passenger (or often, passengers) on which to sit behind the driver, but no helmet.
Pensions are somewhat less developed in Uganda compared to neighbouring countries, being little more than two funded state schemes, one for civil servants and one for everyone else in formal employment - the latter with 500,000 members. But that is all about to change. In the next 6-12 months a "pension liberalisation" bill will come into effect. The market will be opened up to licenced retirement benefits schemes, which can accept mandatory contributions from employers. But employees have the choice of which retirement benefit scheme, so there will be competition and it will be interesting to see who the new players will be.
Whether it is Kampala (Uganda) or Balcombe (West Sussex), new deposits of oil and gas are being found. Right now there is uncertainty about how much there is that can be profitably extracted in Uganda. But the growth in Uganda has been without oil and gas, and will continue without it, because the key driver is consumer-led growth through an expanding middle class with discretionary income. It will just be at an even faster pace with the benefit of oil and gas - not just the direct impact for businesses related to these, but the "multiplier effect" from the government investing its windfall proceeds in infrastructure.
If you visit Kampala you cannot fail to notice the Marabou Stork flying overhead. A handful of these large storks hovered outside my hotel window (I was on the 8th floor) riding the thermals for a minute, so I was able to get a close look. Shall we just say they are not the prettiest birds, and not one with which you would want to pick a fight. The obvious comparison is with vultures circling overheard: Africa as the "hopeless continent" as The Economist once put (over ten years ago) on its front cover. But it would be wrong - times have changed and the storks are feeding off growth not decay. My final meeting was with the boss of an East African private equity firm. We talked about the discovery of oil and gas and about how things have changed in the last five years. He said: "If you think the growth over the last five years is good, you ain't seen nothing yet!"
Written by Andrew Slater, managing director, RisCura
aslater@uk.riscura.com
