For many people, earning and spending money are two different things. Many lack the discipline to plan for their money properly. Grace Makoko (GM), a career banker with over 25 years’ experience in the banking industry in East Africa, speaks to Robert Kabushenga (RK) on financial planning.
RK: The conversation about money is a hard one, sometimes people get carried away. When some people get it they immediately spend it. What is that thing that happened to you that changed our approach to money?
GM: I am a product of a cross cultural union. My parents are from different cultures. Different tribes. My mum is from central. My father from western Uganda.
RK: Don’t go very far. My dad was from the extreme west in Kanungu and my mother from the extreme east on the foothills of Mt Elgon.
GM: Robert that’s not so bad, they were both from farming backgrounds. Mine, one was from a farming culture and the other from a pastoralist culture. Those two cultures look at wealth differently. A pastoralist stores his wealth in cattle. My dad wanted all his investment in cattle. While farmers understand the value of land and property. The pastoralists are nomads by nature. This had a lot of challenges on their approach to building wealth.
The Kikuyus in Kenya also understand the value of land. When you are a farmer, land is everything. That influenced how my parents invested. There was more of tension.
I come from a polygamous family. Dad was very open about it. I am not ashamed of it. We grew up with my half siblings raised by my mother. My dad would always say “…tukaija Buganda kupagasa” we came to Buganda to work and take back home. But his taking it back home was to put it in the cattle. I will pause that one there.
My father was in the generation the colonial government handed power over to. He was in the queue at the right time. He was a civil servant. He was an Economist. Political parties at that time were along religious lines. UPC as for Protestants. And DP for Catholics. So my father was a “Nyamurunga person”. My dad loved Obote at heart. We knew about Obote more that we knew about our blood relatives.
RK: What has that go to do with you and money?
GM: That’s the interesting part. Because my father was educated and a UPC support, we were the people in the thing as we say these days. We were loaded. My brother was on statehouse scholarship in an international school abroad. When we fell sick, we were taken abroad for treatment. Whenever we would be blocked on a roadblock, my dad had a card that he would show and we would be waved on. There is no job my dad would never get you. He sat on so many boards. We were operating under what you could call the open heaven.
When I was joining S1, my shopping was done in Kenya. And this was not breaking news. We did that always. Even a basin was bought from Nairobi. These things you see today, we also did.
In 1986, everything changed.
RK: What happened?
GM: He didn’t plan. He never ever thought that their regime would ever be out of office. The signs came early in 1985 but he was too taken up to be cognisant of them. Along the way my mother had convinced him to put up something in Kampala but not much had come off it. He had an incomplete structure here in Kampala but more investments in the village.
When the government changed, we fell from up there to down, down, down. Seven years after the change of government, my dad died. He died of a broken heart. The change was too much. More than he had ever imagined. It was too drastic.
My dad got cancer in his last days and the idea that he could stand in a line at Mulago hospital was unheard of. It was abominable. He couldn’t cope. He was no longer chauffeured. The Volvo and Peugeot had gone. He couldn’t pull any strings. President Museveni had brought in a new crop of leaders who had not been part of the previous governments.
RK: Let me get this well, Grace; you had this life of plenty and suddenly there was nothing and you had fallen to the bottom? And all this your dad had never anticipated?
GM: Robert, It was not even about money. My dad got me a place in Namagunga while I was in P7. But my mother preferred Gayaza and that is where I went. It was that change in access, influence and mind that you didn’t have to beg to get anything. And he didn’t have a treasure trove. There was no plan.
RK: Grace, you are saying, there is many of us who get into jobs and get deceived that it will last forever and we never look into the future?
GM: Correct. The person you are married to is supposed to complement you. If he had listened to her, they could have invested in property.
RK: Wait a minute Grace, what did your mum tell your dad?
GM: Here is the background story; my mum had got land from her dad. My mum was convincing him to buy more but at the time, Basajja ba Kabaka were not selling to non-Baganda. So she got her dad to convince Mzee Ssebugwaawo to get someone sell my dad land. But she had to be a signatory to the land. From that experience he was more reluctant to buy more. He had more wives and he didn’t find it viable buying land only in the name of one. That is why I brought in the idea of cross cultural unions. He only bought 10 acres. But with the kind of money he had, he could have bought more.
RK: Fast forward, you are broke, how does that change the way you think about money?
GM: From 86, it was a struggle. In high school at Gayaza, it was very hard. They would read names of girls to stay behind after the assembly and we knew what that meant. Fees defaulters. My sister and I regularly found ourselves on that list.
Good for me, I got a government sponsorship to join university but my younger siblings were affected. And dad used to tell us that education is a right not a luxury. Then there was all this shift. Robert, I worked. I worked in my s6 holiday to be able to get shopping for my university.
I had a cousin, James Mukanga who got me a job in s6 vacation at the Kampala Kindergarten. Mrs Mulumba always took on a Gayaza girl in s6 vacation. I didn’t take on work because I was a hard working girl or very brilliant at that, no. It’s because I had to work.
My dad died when I was in second year and all hell broke loose. The family patriarch had passed away.
I studied food science and technology.
RK: And you wound up in banking?
GM: Yes. So I finished in June 1995 and joined Standard Chattered in December. That year, the bank had had a fraud and fired about 23 people. When I came in, they just took us on. Even as I started work, I had only one ambition; that what happened to me would never happen to my children. So I had a rare focus. I understood the mantra of its better how you finish than how you start. I understood the mantra that is it better to look poor and be rich than look rich when you are poor. The middle class has a semblance of wealth but it is pseudo. What dad had was an appearance of wealth, but he was not wealth. It was just the aura. All my siblings were at Budo, Gayaza and Kisubi and dad would always get you a place there. From the first check I got at Stan Chart, I only had one mantra; store, store, store and invest.
By the way, it doesn’t have to be corruption money, we all have the Joseph years of plenty and scarcity. It comes to each one of us. We all get those opportunities. Time and chance happen to all men. If you get an opportunity you must maximise it. It will not be forever, things will change. I went into the job with that in mind. I had seen how my father had wasted his.
From my first cheque, I saved. Robert, I didn’t have car for the first seven years. I was using a taxi. But within those years I had a house and land.
RK: But you had a good choice of a husband in David Makoko. He is a good man.
GM: True. And I was going to hint on it. That who you marry also means a lot. David understood me but I guess he was also threatened I guess. We lived in austerity.
Robert I cooked on firewood. My brother fetched water from the well. That life was not for us. And this as not in Kyenjonjo, it was in Entebbe. We were able to make the transition.
I just had a sense of reality of what can happen to money if you do not respect it.
RK: Someone once said to me that money is like a visitor and how you treat a visitor will determine whether they want to stay or they want to leave.
GM: And I also strongly believe that anything you respect comes to you and anything you don’t respect goes away. My mother’s family has an appreciation for money. They respect money. They know that money has power. They understand that money gives you options.
You see Robert, today, if power goes off, some people go into a depression, and other people turn on a generator. Those are the options I’m talking about.
RK: For me I eve don’t know, I have my solar, I live off grid. I want to ask you something about your principles on money. Austerity, what does it mean and how did you build this discipline to be aster.
GM: Robert, it all came from my father. He fell sick and I had to take him to hospital in a taxi. A person who had a driver and there he was in a taxi with the tout telling him, mzee semberayo.
RK: Oh no!
GM: My dad had been larger than life. But in his last days, we went to Mulago to line up for medicine. Those memories stayed with me. We agreed with my husband, David, on what we need to do. Budgets don’t work for my husband. But this whole thing of financial planning doesn’t work for many people. We agreed to save 60% of our income and live off 40. That was our plan. Tithe is part of our 60%. From the time we started our plan, we lived off our 40. The human mind is a good thing, if you tell yourself that you will live off 40% you live off that.
We lived within and below our means. By the time we moved to Nairobi as expatriates we were living off my fuel allowance. We had trained ourselves.
RK: Grace, you just punished David!
GM: By that time, we both appreciated where we were coming from. And by the way he is a better money manager than me. We would always swap. One month he would be in charge of money management and the next it would be me. By the end of his month, there would be more money left. By the end of my month there would be more month than money left.
Austerity is for times of plenty not of scarcity. You tighten the bet in the time of plenty. The bible talks about the ant. It stores up its food in summer for winter. You don’t store up for winter in winter. Austerity should come when you have a lot. Joseph told the people to bring a 1/5th of their harvest to Pharaoh. When the famine came, he went dishing out food. And that is the same as the African culture. They kept granaries. And they stored up in the time of plenty.
Dad had not done that. It took him to an early grave. He died at 58. I was only 21 at the time. Austerity is for the time of plenty.
There is a big difference to suffer because you have chosen. In 1986, we were not suffering out of choice, it was imposed on us. This one with my husband paid off brilliantly. We were suffering out of choice. We got to a point where I was not afraid of going to bed.
At the time dad died, he was asset rich but cash poor. He had land. But he had to liquidate to survive. At that time, he had to sell land to raise fees. It influenced the kind of investments David and I made. Invest in assets which have a cash flow so that they can give you money without having to liquidate.
RK: You invest in real estate for rental income or like me have a banana plantation, is that what you mean?
GM: Yes. But if you are going for rental, don’t go for a big house in Muyenga, have smaller houses. Go for lockups in markets. A lockup in Wandegeya market will give you better returns than idle land in Busiika.
Once you have the cash flow you can then go for the capital gains. They also say, don’t wait to buy land, buy land and wait because it will appreciate. The challenge with real estate is that the returns are too slow to breakeven. Kampala market takes 10- 12 years to breakeven on real estate. Dad had a bit of land in Tooro but never believed in selling it.
But I also worked towards a promotion at work and not a salary increase. Salary increments usually caters to inflation but not promotion. Promotion comes because of what you do outside your job description. You get a salary for doing your job description.
My entire working life, I wanted to be promoted. Couldn’t do a roll for more than four years. I aimed for promotion. At some point I figured that the good money was when you worked as an expatriate. For the ladies, having back to back babies does not work for your career and promotion. It might be your right. It doesn’t work towards promotion. Because I needed to earn, to be promoted. I never went for lunch. I was balancing being a mother, a wife and an employee. I was at office from 6:30am to 5:30pm.
RK: You wanted to build a reputation that you were this diligent worker?
GM: Yes. I always wanted to be on the list of the people to be promoted without any saying I had been favoured.
All this was motivated by what I had gone through. My father did not see the regime change coming. At the work place, you may never see the regime change coming. It’s subtle but sudden.
RK: it seems like it is sudden if you are not seeing the signs.
GM: my brother used to be a DJ and he would tell when a party was gaming out. If there is a company downsize is coming, you will tell. Don’t pretend like you don’t see covid and its effect on your workplace. Recalibrate. My dad underestimated the new regime. They came in wearing gumboots. They were poorly dressed. They were not as educated as him and his crop. But they had the last laugh.
RK: I had an experience of both. At one point I never knew my career in the corporate world would ever end. Seven or six years later, I started to realise that it was possible. And I began planning my exit.
Questions
Joy Batuusa: How did you get your children to understand and appreciate the sacrifices you had to make?
GM: I learnt from seeing from my parents. When the regime came everyone who was above 16, all the 19 of us never ever recovered. Also my mother made her mistakes. My children grew up in austerity. They didn’t have to understand. By the time they understood, it was the way of life.
Namuddu Grace: How was life after the early retirement?
GM: I didn’t choose to retire. The company downsized and I found myself on the list. We had an issue in the way we parted. But I was ready. I was prepared 5 years before. There was no panic. There was not going to be change in lifestyle. The downsizing had started and I was an expensive hire. When you are not making money, you cut off expatriates. They are an expensive hire.
Let me tell you one thing we did with my husband. When you are an expatriate, the company pays fees for your children, together with my husband, we decided that we would continue to put away the fees money. We created a fees fund. We acted like we didn’t have the expatriate pack.
It is not easy though. Two things happen when you leave the corporate space. People introduce us by the titles of the places we worked.
RK: same thing happened to me. People were introducing me as the former CEO and I had to stop them. I am of the same quantity in my individual capacity. Always introduce me as me. Don’t tag things on the name.
GM: That loss of identity I guess is what affects many people. I guess it was the same thing with my dad.
The other thing is after the job, you have a lot of time. But that is for a season.
RK: Can you give us options of investments that blow off cash
GM: If it’s a business it is going to blow off cash flow at a certain point. If it is a government income you get dividends like a bond, banks now can give you your fixed account interests on a monthly basis, I talked about lockups, farming… it has to be something where you don’t have to liquidate it to get money off it.
RK: In other words, it is an asset which is put to use to make money. So if you have a car working as a taxi, so that it is not just a store of value.
GM: Yes. The caveat on that is that it should be in your area of influence. Your sphere of competence. It is assets that will blow off cash flow that you will go for.
RK: Where are you at in your life now?
GM: I turned 49 in July. Once I returned, I took out a 2 year sabbatical to just ask myself what I wanted to do with my life. I had the luxury of taking a sabbatical because I was financially independent. Then I went into financial markets consultancy. That has evolved and opened doors for me. I am extremely skilled in wholesale banking because I was very well trained. My children are now teenagers, and I have been investing in them. I had promised myself that if my youngest turned 10, I’d do a masters. My former employer valued experience over papers. So I was never under pressure to have one. I finished my masters this month.
RK: Let me put it this way for you; you feel comfortable and in control of where you are!
GM: Yes. And I have an appreciation for geopolitics but also as an investor on why you shouldn’t stuck. There are so many opportunities in this country. For example every after 5 years we have elections but between year 3 and 4, there are so many opportunities.
RK: Give us your last message on money. Something for a take away.
GM: If you don’t remember anything have said today, remember these two:
- To manage money, to create wealth, you must have two important qualities;
- You must be intentional i.e. have discipline. Don’t allow life to happen to you.
- Be patient. Don’t act like this job or day of life? That is the difference between the people who came before 1986 and those who came after. They are intentional and patient.
RK: Grace, I am so grateful, you agreeing to spend time with me.
GM: You are welcome. It was an honour and a privilege to speak to the people.
RK: I will pray to God to bless you.
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