Delay of final investment decision affecting growth prospects

By Edwin Muhumuza

The current stalemate in the local oil and gas industry that has led to the delay in commercializing Uganda’s petroleum resources is going to have an effect on Uganda’s growth prospects.

This is according to Standard Chartered Bank ,Africa Strategist Ms. Eva Wanjiku Otieno as she was presenting the Macroeconomic & Global Geopolitical Outlook of the region.

Ms Wanjiku noted that Uganda has a mixed growth outlook supported by public investment in infrastructure but the delay of the Final Investment Decision (FID) and upcoming elections would weigh on business prospects.

Ahead of the 2021 general election, she said that Election related uncertainty may increase supply concerns going into H2 of 2020 which may pressure yields higher.

She made the remarks during a Manufacturer’s Business Forum for over 150 manufacturers and various stakeholders at Hotel Mestil, with the aim to provide a platform for market players to network, share forward-looking insights and best practices.

The forum was themed “Practices for Sustainable Business Growth” which brought together subject matter experts and leading manufacturing businesses to deliberate on current trends affecting business growth in Uganda as well as share the latest research on important and policy-relevant topics.

Albert Saltson the Chief Executive Officer, Standard Chartered Bank Uganda said that “This new decade presents immense opportunities for business growth. It is critical that business leaders make insight led and research-based business decisions in partnership with strong and reliable financial partners who will help them stimulate their business growth.”

The Ugandan economy reported strong growth in 2019, estimated at 6.3%, largely driven by the expansion of services. Services growth averaged 7.6% in 2019, and industrial growth 6.2%, driven by construction and mining.

Agriculture grew at just 3.8%. Retail, construction, and telecommunications were key economic drivers. And Inflation is expected to remain below 5%, strengthening the domestic economy.

The Central Bank policy rate being at a historical low level due to subdued inflation has allowed for past easing.

However Government spending continues to increase and expenditures have increased faster than domestic revenues, widening the fiscal deficit which is largely financed through external borrowing, supplemented with domestic securities.

Despite the rise in the deficit, Uganda is classified at low risk of debt distress. But, debt reached an estimated 43.6% of GDP in 2019, up from 25% in 2012, raising medium-term concerns. Lending remains within IMF limits, but risks have increased due to higher costs of debt servicing and infrastructure investments.

This engagement granted an opportunity to the Bank’s clients to learn, engage, network and be empowered to improve their operating environment.

Bank of Uganda losses worry MPs

By Edwin Muhumuza

The parliamentary Finance committee has expressed concern as to why Bank of Uganda is making losses , a trend that is affecting the national reserves.

The committee heard that the central bank had invested Uganda’s reserves in Europe ,a move which did not yield any profits following the negative interest rates.

The revelation was made by officials led by Dr. Adam Mugume, Executive Director of Research, at Bank of Uganda while appearing before legislators to account for another 450bn shillings for re-capitalization.

Mugume told the committee that currently Uganda’s reserves have been invested in the United states of America,whose market offers an interest rate of 2%.

This though did not go well with members of the committee chaired by Hon.Paul Musasizi ,Member of Parliament, Rubanda County East Kigezi Sub Region amid concerns stemming from the conservative investment approach of the central bank with eyes on overseas financial markets.

Uganda has reserves now amounting to US $32billion but these could be swept away in a blink of an eye following poor investment decisions, warned the director of research.

During the interface, Amos Lugolobi ,a member of the committee and chair of the budget committee of parliament wondered why the central bank was adding to Uganda’s debt burden with such demands even after over 200bn was advanced to the bank in the previous financial year for re-capitalization.

Among the central bank’s expenses include monitory policy infrastructure, increased use of garnish orders, and high costs of currency infrastructure.

The Auditor General’s report 2018 notes that Uganda’s debt to GDP ratio of 41 per cent is still below the International Monetary Fund (IMF) risky threshold of 50 per cent and compares well with other East African countries. However economic analysts challenge that figure stating that the country is already well above the threshold with estimates at 55% which they say is unfavourable compared to national revenue collected which is the highest in the region at 54 percent”.

Concerns have always been about the sustainability of debt, taking in more commercial loans, whose conditionalities are probably not very conducive for Uganda as a developing country.

Meanwhile Parliament has resolved to have a national dialogue with officials from Bank of Uganda and the ministry of finance about the fate of Uganda’s economy more so over the ever increasing national debt as a result of multi-year programs that need constant funding as well as supplementary expenditure.

Airtel slashes transaction rates

By Moses Kidandi

Mobile phone company Airtel lowers money transaction rates.

Airtel Uganda has reduced money transfer rates for its customers by 79 percent.

The offer which takes immediate effect will see customers enjoy a reduction of person to person withdrawal charges by 79 and 60 percent which is the most competitive rate on market right now.

The massive reductions will apply to all transactions between one million and seven million shillings.

By lowering rates Airtel wants the see an increase in the number of mobile money users and improve access to affordable and basic financial services across the country.

NSSF declares 11% interest rate for 2018/2019 financial year

By Deo Wasswa
The National Social Security Fund (NSSF) has today declared an interest rate of 11% for the Financial Year 2018/2019 to its members, over and above the 10 year average rate of inflation now at 6.71%.

This was announced by the Minister of Finance, Planning and Economic Development, Matia Kasaija, during the Fund’s 7th Annual Members Meeting at Serena Hotel.

The interest declared is lower than last year’s 15% interest due to a decline in regional equity prices and strengthening of the Uganda shilling, which affected the valuation of the Fund’s holdings in all foreign currency balances and equity valuations, thus impacting the Fund’s over all income.

“The stock exchanges in East Africa, and generally in the whole of Africa suffered significant reduction in value of the listed entities, affecting entities like the Fund that invests regionally,” the Minister said.

The new rate translates into UGX 978 billion and will be calculated and credited on the balance outstanding on the members accounts as of 1st July 2018, in accordance with provisions of the NSSF Act.

“Although lower than what I declared last year, the rate I have declared today is higher than 6.7% – the 10 year average rate of inflation, the Fund’s benchmark. It is also higher than annual inflation of 3.4% recorded last Financial Year,” he said.

“Most important, the Fund has paid its members a real return, thus eliminating the risk of erosion of the value of their saving as a result of inflation.

NSSF Managing Director Richard Byarugaba said that in spite of the difficult investment environment, the Fund performed over and above most performance targets.

“Overall, we created value for our members. In fiscal year 2012/2013, we committed to pay members a real return – at least 2% above the 10 year inflation. We have consistently delivered on this promise and have done so again this year,” he said.

NSSF Board Chairman, Patrick Byabakama reassured members that the Fund was on a growth trajectory, having grown its assets under management by 13.6% from UGX9.9Trillion in the previous financial year to UGX11.3 trillion in 2018/2019.

He also said that the Fund’s focus going forward will be to conclude the Real Estate projects as well as innovations to be responsive to needs of the members that will be occasioned by the proposed NSSF Amendment Bill.

Samasource Kampala center to employ 250 youth

By: Gloria Nakiyimba

More Ugandan youth are to be employed by U.S technology company Samasource which has opened its Kampala offices at Kanjokya Street in Kamwokya. The new Kampala tech hub was opened on Friday by, US ambassador Deborah Malac who noted that as technology usages around the world become more sophisticated and complex Samasource will empower its employees to help Uganda adopt Artificial Intelligence to transform business.

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“U.S companies here have promoted impact sourcing as a hiring strategy to combat youth unemployment, support inclusive economic development and promote tangible business benefits. I am particularly impressed by Samasource’s ability to generate employment for and upgrade the skills of workers from low income and vulnerable communities allowing them to perform high-quality, information-based services” Ambassador Malac remarked.

She emphasized that the private sector plays a critical role in growing economic growth sustainably, pledging that her government will continue to engage with the government of Uganda on how it can best attract diverse investment and trade by fighting corruption and cutting bureaucratic red tape.

A leader in providing secure, high –quality training data for Artificial Intelligence[AI] technologies, Samsource first established its footprint in Gulu in northern Uganda where it has been operating for seven years now. The pioneer Gulu office has created more than 500 jobs targeting tech-savvy youth in that part of the country.

According to Leilah Janah founder and CEO of Samasource, “the opening of our new facility in Kampala is a representation of all we stand for at Samasource-connecting people to digital work and giving them the skills need to uplift and empower themselves and their communities”.

With the opening of the Kampala center, the company will be able to employ more than 250 members of the community. Samasource trains data for computer vision and NLP use cases which companies use to propel their AI technology forward in industries such as automotive, consumer internet, e-commerce, robotics and many more.

Neo – liberalism is killing Uganda says Prof. Yash Tandon

By Edwin Muhumuza

Prof. Yash Tandon , a professed socialist has said a mix of maxism and socialism is key to solving Uganda’s economic and political challenges which he attributes to a well – engineered ploy by the west to keep Uganda poor. He made the remarks as he launched his book titled “Common People’s Uganda” .

The book is a Marxist-socialist manifesto that he presents to Uganda as a solution to the current socio-economic and political challenges especially the widening gap between the rich and the poor.According to Prof. Yash Tandon, Ugandans need a national dialogue uniting all political forces, through which, President Museveni should prepare to hand over power to the young generation.

He however, urges Ugandans not look at Museveni as the chief enemy, saying the enemy is neo-liberalism engineered by western institutions such as the International Monetary Fund (IMF), World Bank, World Trade Organisation (WTO) among others, which have captured Uganda specifically and Africa in general.

‘’Uganda Neoliberal policy makers in Uganda are in denial about two things. One is a reluctance to look at imperialism in the face, and acknowledge that the capitalist-imperialist system of production and wealth distribution is inherently and fundamentally flawed. And the second is that left to the so-called ‘free market’, the system not only divides people between the rich and the poor but further compounds this division over time because the market rewards the rich and penalises the poor.’’

A united Uganda, he argues is what is needed to fight western imperialism. He also argues that political leaders should unite to broach a socialist vision that works for ordinary Ugandans.

In attendance was the third deputy Katikiro, Apollo Makubuya, interim president Alliance For National Transformation ,Hon. Mugisha Muntu, Governor Bank Of Uganda Emmanuel Tumusiime Mutebile, Former Buganda premier Mulwanyamuli Ssemwogerere ,Uganda People’s Congress President Jimmy Akena, elder statesmen, civil society and the media. The launch was moderated by Makerere Uiversity Historian,Prof.Ndebesa Mwambustya.

Prof.Ezra Suruma, Chancellor ,Makerere University who gave the key note address agreed with Prof.Yash that indeed Uganda was facing an enemy or power that has been pressing Ugandans that must be addressed by everyone through contributions geared towards overcoming them other than opting for blame-game politics. He cautioned that, ’’when you dare to act there is a cost including loss of life’’

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UPC’s Jimmy Akena said it is going to take more work to restore what used to be the pride of Uganda economically because the foundations set by former president Milton Obote have been altered so much.

Alliance For National Transformation interim president Mugisha Muntu in his closing remarks noted that the challenges of Uganda are rooted in her politics and thus there has be general consensus across the board of all political actors to solve the question of how power is going to be transferred from one group to another in a democratic fashion and thereafter Ugandans can decide on what market system they want for themselves.

On the question of Patronage Politics, Prof.Yash notes that it is a trend not only in Uganda but a universal phenomenon especially in market oriented capitalist systems seeming to support the Cuban system with the argument that it was done in the national party’s democratic system. He adds that the world is approaching a system where the ‘’empire is collapsing’’ with regard to the EU-Brexit, nationalistic tendencies coupled with a gradual shift of power; industrial, political, economic to China where the Chinese Yen is likely to displace the US Dollar.

Tiwa Savage, Wizkid all at the UBA 70 years Celebration in Nigeria

By Edwin Muhumuza

United Bank for Africa (UBA) Plc celebrated 70 years of operations . The platinum anniversary was combined with the bank’s annual CEO awards ceremony as members of staff from all 23 countries of operations who had excelled over the past year were rewarded in the midst of thousands of guests.

The Chairman, UBA Plc, Mr. UBA Celebrates 70 years with CEO Awards gala, accompanied by his wife Dr. Awele, remarked that UBA remains a leading financial institution on the continent and hitting the 70th year mark was a laudable achievement.

He said, “It is a time to celebrate UBA’s rich heritage and legacy over 70 years and to tell everyone who has contributed to what UBA is today, that we appreciate all they have been doing and how they have ensured that the investment put into the bank over the past decades have paid off.”

The Group Managing Director/Chief Executive Officer, Mr. Kennedy Uzoka, spoke about the banks’ achievements over the past 70 years and some of its objectives for the coming years, commending staff for their hard work and resilience that have contributed to UBA retaining its position as Africa’s top bank of choice.

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“Every year, it is our tradition to appreciate our people who have put in their very best and gone far and beyond the call of duty to deliver excellent services to our customers and this year is even more exciting as we celebrate 70 years of our existence.

From Uganda, Chief Dealer, Isaac Kasozi Iga scooped an Award of Excellence for his remarkable contribution as one of the main revenue contributors to the Group.

Chairman of Zenith bank, Jim Ovia ,commended the management and staff of the bank, adding that UBA remains one of the greatest banks in Sub Saharan Africa and is built to last. He congratulated all staff and shareholders noting that he should have bought UBA shares but it was not too late to do that.

In attendance at the epic night of activities, were royal fathers, captains of industry, political leaders, clients and friends of the bank. Some of the guests present were the Ooni of Ife, Oba Adeyeye, Enitan Ogunwusi; the Emir of Kano represented by the Sarkin Shanun of Kano, Alhaji Shehu Mohammed; Former and Present Governors of Cross Rivers State.Former Presidents Olusegun Obasanjo and Ibrahim Babaginda who could not attend the event sent in letters of congratulations to commend the bank on its landmark achievements.

At the celebrations, the story of UBA was depicted in the Tony Award winning Broadway musical of the Lion King. Serengeti depicts the story of the young cub who grew into a strong Lion, in spite of the odds, and empowered all the other animals in the jungle. Great performances by A-list artists such as ‘science students’ crooner, Olamide, Phyno,Patoranking, Dbanj and female sensation, Tiwa Savage entertained the audience of over 2500 guests. The surprise act which ended the night on a high, was the performance by award winning Nigerian artist, Wizkid.

Central bank hopes new regulations will improve digital banking

By Alice Lubwama

The central bank is working on regulations that will improve digital banking in the country.

While speaking at the launch of Brac Uganda bank limited,the director in charge of national payments in the central bank, Mackey Aumo said that the regulations will enable to stream line the business and also allow different players to participate in money transfer and lending .

Uganda is the first county in Africa to have Brac bank.

Brac has been operating in Uganda as micro finance institution since 2006,providing financial services to low income communities.

The institution has 163 branches in 84 districts of Uganda with over 200,000 customers.

The executive director of Brac Uganda Jimmy Adiga said that they will target the house holds through women and youth because they are committed to work.

Adiga adds that they will also provide micro insurance to all it’s customers.

Adiga also said that they have upgraded 32 out of their 163 outlets in Uganda to meet the required bank of Uganda standards for tier2 institutions.

According to bank of Uganda rating tier2 are credit institutions but not fully fledged commercial banks.

Brac is the 4th tier2 credit institution in Uganda joining mercantile credit bank,post bank, and opportunity bank .

UDB posts 14% growth in profits

By Edwin Muhumuza

Uganda Development Bank recorded a post- tax profit of 9.5bn in 2018 from UGX8.3b in 2017 representing a growth of 14%. This was revealed during the release of the Bank’s financial and development impact performance for the year 2018.

Managing Director Patricia Ojangole noted that the bank is growing through its several interventions around the country.

“Am proud to note that our financial performance for 2018 was very good and am proud to announce what we have been able to achieve with support from our key stakeholders; the government of Uganda and the ministry of Finance in general.” This is upon Government’s contribution to the financial institution that nearly doubled from UGX 52billion to UGX 100billion.

Gross loans grew by 28% from UGX 242billion in 2017 to UGX 309 billion in 2018 while total income improved by 31% from 31billion to 41 billion driven by a 55% increase in interest and related income. Additionally the Bank’s balance sheet continued to grow, registering a 24.4% growth rate to 370billion from UGX 297billion in 2017.

Ojangole attributes this trend to using the three core developmental indicators namely jobs, gender and taxes noting that the Bank’s operations maintained and created 54034 jobs of which 47% were taken up by females while 43% of the total jobs were taken up by youth.

The Development Finance Institution is focused on accelerating socio-economic development through sustainable financial interventions in line with country’s development priorities and as such,the total tax contribution to government by various companies supported by the bank was Ushs 110bn up from 96bn.

Such companies are mainly into the business of Agro-processing ,tourism, and primary agriculture Others are hospitality, minerals, oil and gas, human capital development manufacturing and Infrastructure which registered a 16% improvement in annual turnover and a 70% growth in profitability.

The year 2018 also saw an increase in borrowing of 24% to 97billion from 78 billion amid continuous sourcing for alternative funding opportunities in a bid to leverage its equity.Meantime UGX154billion was lent out to small and Medium Sized Enterprises(SME’s),manufacturers and organized business groups to ensure inclusive growth.

Head of Risk and Compliance Moses Ebitu, noted that the adoption of the IFRS Financial instruments; which sets out the requirements for recognizing and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items did not deter the bank’s performance.

New banker’s partnership to strengthen agency banking

By Daudi Zirimala

The Uganda Bankers Association (UBA) has signed a partnership with International Financial Cooperation (IFC) intended to drive financial inclusion in the country through agency banking.

According to the Managing Director UBA Wilbrod Owor Hamphrey, in this partnership IFC has injected in 1.9 million Us dollars in supporting Agent banking system, enhancing product proposition by enabling citizens access their bank accounts.

He noted that currently financial inclusion is the way to go and achieving this, Uganda bankers Association has registered 8805 approved agents across the country who can help Ugandans to open up bank accounts at anytime and starting giving out mobile money loans using bank agents in the country.

“The shared agent platform is a leading concept in the region in terms of reducing cost of doing business in the banking sector,” says Wilbrod.

Speaking at the signing of the partnership the IFC Regional Director East Africa Jumoke Jagun Dokunmu said that a third of the Ugandan population have access to bank accounts ,which is not good enough to reach financial inclusion.

She said that financial inclusion practices have a positive trajectory in Africa due to the development of digital financial services and innovations like agent banking system.

IFC will continue supporting various developments in Uganda through innovations like this to enable government achieve its goal of private sector development and prosperity to the people of Uganda said Jumoke.