Entrepreneur explains why he launched a water transport business on Lake Victoria
EarthWise Ferries is restoring water transportation services in Uganda.
Water transportation was once a vibrant industry in Uganda. The collapse of the ferry system on Lake Victoria has had a severe impact on economic activities around the lake. Today, EarthWise Ferries is restoring these services in Uganda, serving an emerging merchant class. South Africa born entrepreneur Robert Smith, founder and CEO of EarthWise Ferries, shared with How we made it in Africa’s Dinfin Mulupi his experience of doing business in Uganda and the impact of re-establishing economic corridors across and around Lake Victoria. Since the launch of your first vessel MV Amani, what experience have you had in business?
The inspiration to establish EarthWise Ferries came from the desire to create wealth, provide a service for the emerging middle class and directly employ people while building infrastructure, which is sure to have a multiplier effect on the regional economy. Since the launch of the MV Amani, there has been a significant increase in ridership. EarthWise was asked by the Ugandan government to ply a route to the Ssese Islands 35 miles south-west of Kampala. Although this was not part of the original business plan, EarthWise has been able to train a committed crew, develop operating procedures, and provide a comfortable and safe passenger ferry service. In order to help cover the costs of running to the Ssese Islands, EarthWise has also run evening cruises in Murchison Bay for local businesses and hotel operators. This has helped to bring the operation towards a break-even position.
What challenges have you faced?
The greatest challenge facing EarthWise has been working though the bureaucracy and lack of supporting infrastructure. The ports require maintenance and modernisation. Generally speaking, governmental offices are willing to work with EarthWise and are very cooperative. However, sometimes there is a lack of clarity about certain areas of responsibility, which causes delays and confusion. The labour force, although plentiful, does require training, which is costly and time consuming. Finally, when running a service oriented company, training management and employees to operate in a consistent and on-time manner takes extra effort and considerable amounts of time.
Describe your experience of doing business in Uganda.
We embrace the growing desire expressed by the government in Uganda to encourage the private sector to invest in their country. We have avoided the challenges of doing business in Uganda, such as its reputation for bribery and corruption. I applaud Uganda for taking a more aggressive stand against corruption, thus making any bribe asking illegal. We therefore take a similar stand and do not allow our employees to pay any sort of bribe in order to facilitate our business. This has kept us out of trouble, although we have wondered if our firm stand has caused unnecessary delays at times. We have had hints from officials, but we ignore them. I believe that the opportunities in Uganda are solid. This is especially true if there is continued political stability and continued pressure against corruption. I do worry that the discovery of oil will fuel a new era of corruption as the spoils are fought for. We shall see if this turns out to be true.
Do you intend to expand to other countries that rely on Lake Victoria, like Tanzania and Kenya?
Yes, EarthWise will be expanding to both Tanzania and Kenya. A passenger service to Mwanza, Tanzania, is scheduled to begin in July 2013. Service to Kisumu, Kenya, is scheduled for early 2014 or sooner. From that point forward, EarthWise will begin to focus on expanding into the freight business.
Hundreds of people have died in East Africa in the last 12 months due to vessel accidents. What measures do you take to ensure safety?
The most common problems causing accidents are overloading (due to unreported cash sales that are charged for passengers over the base load, which is then split between the crew) and the pressure on the crew to go to sea under adverse conditions. The smaller handmade ferries on the lake usually have no safety equipment and are easily capsized when the conditions on the lake become adverse. We have developed a system where overloading is not only not tolerated, but is avoided by the vessel reporting the displacement via sensors on the ferries. If overloaded, the system is designed to shut the gearing down so that the ferry cannot leave port. We also, of course, have every modern tool available to the marine industry to give the crew what it needs to conduct a safe passage for our passengers.
Describe the expected economic impact your ferry services will have on the East African region.
The EarthWise Ferry system provides a safe and economically competitive mode of transportation around Lake Victoria. There are 30 million people who reside around the circumference of the lake. Today, transportation between both major and smaller cities, not to mention the smaller islands around the lake, is slow, unsafe and often too expensive for a large part of the population. Through a comprehensive ferry system, many of the needs of these passengers will be met.
Your future plans for the business?
In 2013, EarthWise will institute an international passenger ferry service between Kampala, Mwanza, and Kisumu. A smaller ferry operation will be set up to service the Ssese Islands. EarthWise plans to continue to re-establish the passenger ferry system on Lake Victoria. As these operations mature and the operations’ personnel are hired and trained, EarthWise will move into the freight services business. The freight service on Lake Victoria is growing along with the economies of Kenya, Tanzania and Uganda. As these economies continue to grow, the need to move agricultural and manufactured goods between these countries will also expand. During the next decade, EarthWise plans to take advantage of this expanding market opportunity.
What advice would you give other entrepreneurs looking to do business in Uganda?
Doing business in Uganda, though rewarding and definitely worth pursuing, will take longer than you think and cost more than you think to get off the ground. I have seen several vessels around the lake that are rusting, having never been completed. Clearly the businessmen that aspired to commence with their ferry or water-transportation business had great plans and enthusiasm. They also clearly ran out of money and steam. Prepare for a long journey to sustainability, and do your best to build in as much reserve capacity as you can. If your business is highly regulated like the marine business that we are in, make sure you communicate with the officials that are overseeing you and stay on good terms with them as much as possible. They are just trying to do their job, so impatience and anger is not helpful. You have to be tenacious and courageous. Without those characteristics pushing you and your team, it will be very easy to get discouraged and as a result your business venture may end up rusting on the shores of the Lake.