The idea that we can all become something is baffling! How is it to be achieved in an individualistic social system. It is paradoxical, one can become whatever one desires yet one cannot do so because of the numerous hindrances occasioned by others pursuing the same idea. Therefore, how will a dreamer visualize her goal in such a state of affairs.
In the late twentieth century, the West ‘won’ the cold war and the battle of economic ideology. For matters of clarity, the west is capitalist Europe and America. The west, being masters of media, managed to spread the capitalist gospel. They successfully painted communism as an oppressive ideology aligned with the likes of Joseph Stalin.
In time capitalism, inherent in which is the theme of a free market, was globally adopted. This, it was said, was designed to grow the wealth of nations. Today, formerly communist states are grappling with adopting a capitalist system. The question of state power and a free economy is still prevalent. We can’t, of course, forget Obote’s 1968 move to the left and Museveni’s switch from communistic ideologies to capitalism at the opportune time.
Yet today, as Hernando De Sato relays in his Mystery of Capital, capitalism has proved to work best, if not only, in the West. Other countries that have attempted to adopt the system have struggled with corruption, inequitable distribution of wealth among other things. Further, he shows that capitalism has failed to do the one thing for which it was adopted; elimination of poverty. Therefore, why has it failed? Why would it fail elsewhere and work in the West?
It’s that idea again! We can all do anything; for, anything is possible! The West preached capitalism without preaching its will. As a Christian ought to do God’s will, a capitalist ought to do as capitalism wills. It is a system built on capital. Before diving, let’s be clear about the fact that wealth isn’t capital. One would have to know how to transform one’s wealth into capital. If we’ve been attentive, wealth is abundant in many of the countries that are now struggling under capitalism.
What, then, does it require to turn wealth into capital? Simply, people prefer the unbureaucratic informal sector to the tedious bureaucratic necessities of the formal sector. Thus, proper documentation is absent from most businesses in the country!
Yet, as Hernando notes, the basis of capitalisation is engrained in documentation. The channels through which an entrepreneur can accrue capital all demand it. Transaction receipts are as important as a certificate of incorporation. The things that many business owners overlook – especially those who run SMEs – are the most important when seeking to acquire a loan; or even when simply opening a bank account for a business.
It is inarguable that banks control the economy! In any case, an individual with a piggery will achieve growth to a certain point beyond which it is impossible to grow without relying on a bank. The biggest block to this is that such growth requires expansion which in turn demands loads of capital. A person in such a case has the option of seeking a bank loan; or an investor. None of those options are practical if proper documentation has been missing form the firm. The investor will want to know the firm’s financial position before committing; as will any bank. As such, those individuals who ignored invoices, receipts, audit reports and taxes are hindered!
A business loan necessitates – inter alia – having a trading licence, sales records or financial reports, loan budget, financial cards for owners and the company itself; all these need to be had at hand. Their absence translates into further expenses to acquire them – as laymen say – express! Many Ugandans rob themselves of access to capitalisation channels because they shy away from ‘formalities’.
Therefore, one of the qualities that has to be imparted or groomed is the culture of documentation. Only it can reflect the true health of a firm’s financial status. Those that understand this fact struggle in partnerships with those that are ignorant of it.
For many entrepreneurs, the solution has been discovered in hiring specialists. Ironically, many business men and women talk of how useless it is to pursue further education; yet the backbone of their success is the educated.
One of the embryonic steps to acquiring capital from wealth is mastering the art of documentation. Tedious as it is, the necessity of it is inevitable in a capitalistic economy! Yet, it is only the genesis of entrepreneurs’ struggles!
Author Profile
- Joel Kenneth Ndawula is a Christian, and a Lawyer currently undertaking his LL.M at Uganda Christian University. As an avid reader and writer, he offers incisive legal commentary on current affairs. He can also be reached via email: [email protected]
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