Well, as you are all aware that 14th February was Valentine’s day and this prompted a lot of men who do not care about this country to spend unnecessarily. It’s on the same day that the responsible members of SMAU held the Men’s conference to fix this nation by empowering members with tips on how to invest the money saved from not spending unnecessarily on the other gender.
These free tips are presented to you by our beloved member His Stingyness Ramathan Ggoobi.
Scope:
a) The financial dimension of our national tragedy
b) The economics of being stingy
c) Where to invest
d) The fundamentals of doing business
The financial dimension of our national tragedy
Our national tragedy is amplified by the following factors;
i) High level of consumerism (high MPC) – stimulating the process of debt creation and because of this, we are saving less .
ii) Poor individual/household financial decisions ( financial indiscipline )
iii) Self-centred banking policy – we possess ATM cards for our savings accounts!
iv). Failure to differentiate between income and wealth – Wealth is a “stock” variable, while Income is a “flow” variable .
v) “Baby boom” generation that heavily discounts the future.
vi) Excessive “talking and consuming
Uganda’s fastest growing businesses (pre-Covid) were those that facilitate our national hobbies of talking and consuming i.e. mobile telephony, FM radios, bars, supermarkets, and politics.
For example, 69% of mobile phone users make more “social” phone calls i.e. 7 in 10 Ugandans call just to “keep in touch” and to “chat” with friends and relatives!
Three things Determines HAPPINESS:
a) Freedom (of choice) – to acquire what one wants (not needs)
b) Self-esteem – being a ‘complete’ person, with a sense of respect, recognition & self confidence.
c) Income and wealth
- There is no escalator to wealth creation.
- Only one route: proper management of personal finances.
- Financial freedom ( an invaluable asset for man ) is built through saving; not working hard.
- Getting rich is NOT a function of saving & investing a lot of money; it is a result of saving & investing regularly for a long period of time.
- The key determinant for wealth accumulation is TIME.
The economics of being stingy
“The quickest way to double your money is to fold it over and
put it back in your pocket.” Will Rogers
You’re disciples of Neuro-economics;
- Neuroeconomists who use neuroscience to study human behaviour, and what is in individuals’ brains when they’re making economic choices, have found that certain individuals, when they receive exploitative offers, it stimulates the part of their brains associated with DISGUST.
- Neuroeconomists believe Stingy Men are a special breed because parts of their brains are always active when they look at “the other gender” and decide which faces are profligate or frugal.
- Ask yourself; if you’re a stingy man, are you wise with
economic decisions? - Informed decisions regarding your expenses don’t only put you in a stingy category; it is great economics.
- For example, you’ve asked me to offer this talk for free. This is wise economics.
- So I am here to talk about economics that works; not to glorify your stingy traits.
Economics That Works
- Not eating every meal out is economics that works ; Never taking your loved one out for a meal is stingy.
- Not buying every round of drinks is economics that works ; Never taking your turn to buy a round of drinks for your friends, especially when you drink on other people’s is stingy.
- Saving for business or retirement is economics that works ; Never doing anything fun for yourself and loved ones because you’re saving for business or retirement is stingy.
Economics of being Stingy
- Frugality is a virtue. You’re lucky that:
- You’re unwilling to spend wastefully, and you’ve made a virtue out of it.
- You’ve refused to get on the bandwagon of society that is struggling to impress others with their wealth and perceived position in society.
- You’ve refused to join the spendthrifts who put their spending ahead of their ability to do so.
- You’ve turned the stigma of being labelled stingy and cheap into a ‘popular sub-culture’
- You value what money can buy and you’re using it optimally and remain proud of your decisions.
- Even if you find yourself feeling dishonest in your preferences and choices, so be it.
- You have the honour in being a minimalist, and have the ability to differentiate between need and want.
- But don’t go hungry and make a virtue out of skipping lunch.
- Now you need to put creativity into your frugal lives to think about how best you can multiply the money you save out of your discipline.
- Economists posit that saving is not for the sake of saving. Save for a goal – for an investment.
- I request you design the END to your frugal life around an investment that can enable you make more money, employ others, and turn into a big-time investor.
Where to invest
Evidence-based investment
- Economists use “multipliers” to separate productive/profitable & unproductive activities.
- Multipliers simply seek to answer the question: with injection of a uniform amount in a given business, where would it generate more output or income?
- In Uganda, service-related activities have the highest output multipliers followed by construction & agro-industry, and lastly agriculture.
- In services, financial services have the highest output multiplier (3.0); followed by wholesale & retail trade (2.8); and tourism (2.6) – the rest of the services have low multipliers.
- Transport has the second lowest multiplier in Uganda (1.6)
- In agriculture, livestock has the highest multiplier (2.8); followed by coffee & tea (2.7); other cash crops Cocoa, Vanilla, Flowers, Cotton, Tobacco-Farm, Sunflower (2.4)
- In industry, construction (2.9) and agro-processing (2.5) have competitive multipliers; while manufacturing has low multiplier (1.9)
- Agriculture has the lowest labour income multiplier in Uganda (0.38). Meaning? For every shilling of direct labour income generated in agriculture 0.62 shillings are lost!
Tips on Starting an SME
- Do a self-inventory: Are you motivated and resilient?
- Develop a business concept that you’re passionate about
- Do market research: Do people need the product or service?
- Develop a business plan: idea becomes a business idea when it’s documented.
- Identify your market: Assess your target customers
- Select an attractive business name and reserve it.
- Register your business name
- Secure permits and licenses
- Set up the books: set up a record keeping system
- Choose the best location: accessible to your customers, offers an opportunity for growth, right level of competition & proximity to suppliers
- Ignore the naysayers
Stakeholders of your Business
- Shareholders (you and other owners)
- Managers
- Workers
- Customers
- Suppliers
- Bankers
- Government
- The general public
The fundamentals of doing business
- Invest in products/services with a few substitutes;
- Aim for Quality not Profitability
- Aim for sales revenue maximization
- Aim for growth of your business, not sustainability per se.
- Separate Ownership and Control
- Don’t attract government/regulators
- Seek to satisfy expectations of all stakeholders – particularly workers, customers, suppliers, bankers, GoU
Key offices/Institutions
- Uganda Registration Service Bureau (URSB) – to register your company
- Uganda Revenue Authority (URA) – to obtain a Tax Identification Number (TIN), register for VAT
- Kampala Capital City Authority (KCCA) – to obtain trading license
- Uganda Investment Authority – to access incentives
“Investing is like watching paint dry or watching grass grow. If you want excitement, go to Las Vegas.” Paul Samuelson
Thank you very much Ramathan Ggoobi for the resources.
It is now up to you guys to be more stingy, save more and invest more. feel free to come back here and tell us your success journey after making use of this.
