UWEC resumes business as government eases lock down

By Edwin Muhumuza

The Uganda Wildlife Education Center (UWEC) is appealing to Ugandans to visit the National Zoo again following the resumption of business.

This latest development comes following the launch of Standard Operating Procedures (SOPs) in a bid to ensure safety of visitors, wildlife and staff at the Center in the wake of the Corona Virus Pandemic.

Among the SOPs include; washing hands, disinfecting shoes and vehicles accessing national parks at every entrance and maintaining distance of two meters between visitors queuing up at all entrances.

During their launch, Minister of Tourism, Wildlife& Antiquities Col. Tom Butime Ateenyi, said that the move is a revelation of the health plan for tourism enterprises through coherent and well coordinated guidelines supported by well coordinated medical evidence to manage the pandemic.

The tourism industry has recorded fast growth rate in Uganda and generated 1.6bn in foreign exchange earnings in 2019 and the sector contributed 9% to the Gross Domestic Product (GDP) and at least 1 in every 10 jobs globally was related to tourism prior to the pandemic.

The loss in tourism business occasioned by the COVID-19 pandemic has resulted in the loss of jobs, capital flight, failure to meet obligations and fees, coupled with deterioration of properties.

“In response we have consulted widely and developed business continuity and sustainability plan to address some challenges strategically and action areas to include, the health and safety plan, financial recovery plan and thirdly the enhanced destination marketing to signal the reopening of our tourism” Butime said.

In the case of UWEC, it was an opportunity to improve and innovate on the product offer for the past four months.

According to the Executive Director ,UWEC ,James Muhanguzi, prior to the pandemic, money had been released to put in place the required infrastructure, to revamp the facility.

In 2019, a record 370,000 people visited the zoo, majority being Ugandans but that has not been the case this year since the lock down in March this year.

The chairperson Board of Trustees, UWEC, Hon. Flavia Kabahenda, noted that the center is a hub for domestic tourism and Ugandans are so excited and looking forward to associate with the wildlife again and bring nature back to them.

The Assistant Commissioner in charge of quality assurance, Liaz Vivian appealed to all managers of tourism enterprises to establish COVID 19 task force committees led by a team leader and for larger ones to have departmental focal points to help them in ensuring that the COVID 19 task force activities are adhered to, a management plan, mobilize resources so as to buy sanitizers, social distancing masks, hall markings, infrastructure ,document people with varying temperatures, training and availability of information for both customers and staff.

In attendance were tour agencies, associations, hotel owners, freight forwarders, performing arts among other stakeholders.

UBA Provides $200 Million for Nigeria’s Petroleum Industry

By Edwin Muhumuza

The United Bank for Africa Plc (UBA),Group Chairman, Tony O. Elumelu has challenged the private sector in Africa to unite and contribute meaningfully to their economies.

This is as UBA provided $200 million, approximately UGX 750 billion, to the Nigerian National Petroleum Corporation to support investment growth and liquidity requirements.

He made the remarks while the leading pan-African financial services group, acted as Facility Agent Bank for the Nigerian Commercial Banks in a consortium with other international banks in a $1.5 Billion Pre-Export Finance Facility for the Nigerian National Petroleum Corporation (NNPC) and its upstream subsidiary, the Nigerian Petroleum Development Company (NPDC).

This move follows a sharp drop in the price of oil and the ensuing hardship that followed the onset of the Covid-19 pandemic.

Elumelu said, ‘this facility is clear evidence of this – UBA is providing investment that will significantly improve Nigeria’s production capacity and in doing so also demonstrating the strength, depth, and sophistication of our commercial banking capability. I believe that together, working with governments, we can create more jobs and more wealth for people, not only in Nigeria, but across Africa’.

UBA has a strong track record in the resources sector across Africa, having facilitated oil prepayment deals with the NNPC, including its 2013 $100 million participation in the PXF Funding Limited transaction, and a further $60 million in the 2015 Phoenix Export Funding Limited transaction.

In Senegal, UBA was responsible for the EUR 240m Revolving Crude Oil Financing Facility for the Société Africaine de Raffinage and in Congo Brazzaville co-funded the $250m crude oil prepayment facility for Orion Oil Limited.

Other participants in the NNPC deal include Standard Chartered Bank, Afrexim Bank, Union Bank and two oil trading companies, Vitol and Matrix.

In Uganda, UBA is participating in the upstream, midstream and downstream of the oil and gas sector through financing and provision of financial services to players in each of these sectors.

“We are committed to ensuring that our corporate clients in the oil and gas sector of Uganda get access to the best financial services the market has got to offer.” said Mr. Joseph Balikuddembe, Executive Director/Head of Business- UBA Uganda.

Uganda’s inflation hits 4.7%

By Edwin Muhumuza

Uganda’s annual headline inflation has been recorded at 4.7percent for the year ended July 2020 from 4.1 percent registered in June 2020.

This on account of an increase in annual core inflation that was recorded at 5.8percent in July compared to 4.9 percent in June which was mainly driven by services inflation specifically transport services inflation that increased to 47.3 percent in July from 34.2 percent in June.

According to the Uganda Bureau of Statistics (UBOS) Principal Statistician, Sam Kaisiromwe, the lifting of the lock down to allow cars and vehicles to resume domestic and long haul distance travel is testament to these results.

Relatedly, there was a reduction in consumer prices of food crops which registered a minus 5.8 percent in July compared to minus 5.0 percent in June.

Food crop prices have decreased for the second month running.

The decline is attributed to annual vegetable inflation that declined however fruits inflation increased, in other wards fruits prices are still going down but the rate at which they are going down have reduced in this month compared to last month, he added.

This trend was mainly driven by reduction in prices of vegetables such as green pepper, eggplants, tomatoes, round onions and green cabbage. Others were fresh beans, banana-standard, Irish potatoes, beans, sugarcane, tomato ketchup and whole cassava.

However, those that increased include, bus fares, taxi fares for medium distance while food items like water melon, ice cream, and whole grain maize increased in price.

In the Energy Fuel and Utilities sector, inflation declined to 6.6 percent for the year ended July 2020 compared to 8.3percent for the year ended June 2020.The decrease is mainly due prices of solid fuels mainly charcoal which has declined to 21.0percent from 26.4 percent. Additionally prices of firewood declined.

It is however noteworthy that annual prices of liquid fuels specifically petrol increased from a minus 7.4percent to minus 6.4 percent while monthly liquid energy fuels increased by 0.4 percent in July compared to 0.5 percent rise in June.

In the health sector, a combination of medical products, appliances and equipment, out- patient services and hospital services registered a decrease to 3.1 percent from 3.2 percent, but hospital services specifically registered a 4.1 percent rise from 3.7 percent.

Analysis by geographical areas and income groups revealed that Jinja city registered the highest inflation of 5.6 percent followed by Kampala High Income and Masaka centers at 5.2 percent. The main driver was transport, food and non-alcoholic beverages which saw an increase in prices.

The least annual inflation was registered in Mbale at 2.8 percent which was due to decrease in prices of food and non-alcoholic beverages coupled with a reduction in prices of clothing and footwear

KACITA officials interrogated

By Robert Segawa

Kampala central police has interrogated the leadership of Kampala City Traders Association on grounds that there is information that the association is inciting and flouting the presidential directives against Corona Virus.

Last week, KACITA leadership through it’s spokesperson Isa Ssekito vowed to open arcades even if the president does not ease the lock down.

Police also in the same week issued summons to the KACITA leadership last week for accusing them of inciting Traders and not abiding by the presidential guidelines which may cause the spread of the virus.

The traders’ leaders including chairman KACITA, Evaristo Kayondo are now being interrogated by the political desk at Central Police Station Kampala.

Patrick Onyango Kampala metropolitan police spokesman has confirmed the appearance of KACITA officials.

UBA appoints new managing director

By Edwin Muhumuza

United Bank of Africa has appointed a new Managing Director who has replaced Johnson Agoreyo who has been at the helm of the bank for the last 4 years.

The appointment of Chioma Mang as the incoming Managing Director/ Chief Executive Officer (MD/CEO) of UBA Uganda comes with over 30 years’ experience in banking.

Prior to this role, she was the CEO of UBA Gabon and UBA Liberia.

The new MD/CEO takes over from Johnson Agoreyo whose key achievements as the Managing Director of UBA Uganda has been the successful turnaround of UBA Uganda’s operation after 8 years of loss making to profitability.

As at December 31st , 2019, UBA ranked 12th / 25 in Profit before Tax and 15th /25 in liabilities in the banking industry.

Among other includes Strong Risk management and corporate governance, Improved Brand visibility and market perception of UBA in Uganda, Improved BOU rating to satisfactory, Obtained Banc assurance and agent banking licenses in Uganda, Growth of the Branch network from 9 to 16,Relocation of the Head Office to a more strategic befitting Corporate office ,Won Various mandates including Fuel cards management and E-Voucher system for the government of Uganda and Increased Digital Banking play in Uganda with introduction of key products for example LEO Chat banking – a first in the market.

The new appointment represents further strategic recognition of the growth of UBA’s business in Uganda and its critical importance to the UBA Group says a statement from the bank.

UBA is one of Africa’s leading financial institutions, with operations in 20 countries and 3 global financial centers: London, Paris and New York.

UBA Uganda represents UBA pioneer country activities in the East and Southern African sub-region.

Informal sector to get interest free loans to stimulate businesses

By Daudi Zirimala

Business people in the informal sector have a reason to smile after White Army Poverty Eradication Uganda a local NGO has started giving out loans to them without interest to enable them stimulate their businesses.

According to the Chief executive Officer of White Army Adam Mugga, the informal sector are vulnerable because their businesses were much affected by Covid-19 pandemic and that is why they decided to come up with this stimulus package to enable them access free interest loans.

Mugga noted that initially the stimulus package was going be rolled out in eight parishes that make Lubaga South before they roll it out to areas of the country.

Experts caution SMEs on quality

By Edwin Muhumuza

Experts in business and continental trade have advised Small and Medium sized Companies to ensure quality in the wake of the African Continental Free Trade Area AfCFTA) treaty.

This during the Second Strategic Leaders’ Summit that was held at Sheraton hotel under the theme: “Digital Innovation and Corporate Governance for SMEs in the New Market Frontier,” courtesy of the Human Capital International Organization.

Last year countries except Eritrea ratified the treaty that will see them open borders to enable free trade.

However such economic trends tend to affect locally based Small and Medium sized enterprises in numerous ways following the entrance of larger corporations and much more stiffer competition amid the risk of being thrown out of business.

The tax manager at Price water house Coopers (PwC Uganda) Juliet Najjinda said that AFCFTA will become a big market and that means SMEs should start working together to produce in large quantities adding that SMEs should get cheap raw materials within the continent instead of China and ensure they produce quality products as well.

The treaty will among the objectives, eliminate tariffs and non-tariff barriers while enabling intra continental trade and movement of people, goods ,services and intellectual property rights .

Contrastingly, the Uganda Revenue Authority is concerned that the move will see a reduction in revenue by close to 50% in the next five years according to the URA assistant commissioner Public and Corporate Affairs, Ian Rumanyika.

“We have opened up these borders [under AfCFTA), there is no doubt that the goods that will be coming in our country will not be taxed. Currently, the domestic revenue collections contribute around 58 per cent, compared to international trade that brings in 42 per cent. Now the 42 per cent is going to reduce further to 20 per cent,”he said.

The Human Capital International president, Emmanuel Dei-Tumi said this year’s summit, brought together key players in digital innovation and providing them with the platform to discuss the opportunities and challenges of the agreement and exchange ideas on leveraging technology and good governance for SMEs growth.

The former UN undersecretary general and chairman of the Mo Ibrahim Foundation ,Abdoulie Janneh noted that government should facilitate the growth of SMEs as drivers of growth with over 90 per cent of all the businesses in the continent are SMEs and employ over 80 per cent of workers who are the youth.

The Ministry of Information and Communications Technology Permanent Secretary Vincent Bagiire said that government was doing everything possible, to digitalize the economy adding that the reason most companies that use technology are increasingly becoming successful is because they are harnessing data.

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.

BAT gross revenue hits shs.86.2 BN mark

By Edwin Muhumuza

British American Tobacco Uganda has posted gross revenues of Ushs 86.2 billion and a profit before tax of Ushs 9.7 billion.This in its half year results for the six months ended 30 June 2019.

BAT Uganda Managing Director, Mathu Kiunjuri said that in the first half of 2019, gross revenue increased by 17% to Ushs 86.2 billion driven by growth in volumes due to distribution efficiencies and portfolio transformation. Profit from operations increased by 11% to Ushs 9.8 billion due to the growth in revenues, partly offset by higher cost of operations.

The increase in cost of operations was in line with volume growth, inflationary increases and additional investment in the brand portfolio.

Profit before tax increased by 9% to Ushs 9.7 billion in line with growth in revenues, offset by finance lease costs recognised in line with revised accounting standards said Kiunjuri.

BAT Uganda Chairman, Hon. Elly Karuhanga said in as much as contribution to Government revenues in the form of Excise Duty, Value Added Tax and Corporation Tax increased by 19% to Ushs 50.2 billion, illicit trade in tax- evaded tobacco products continues to pose a threat to Government revenues and shareholder value.

According to third party research findings, the market saw an increase in illicit tax-evaded cigarette sales in the first quarter of this year, standing at 22.2%,translating into an estimated loss in Government revenue of UShs 30 billion annually.

“Whilst we applaud the Government of Uganda for steps taken to address the cost of doing business in this market, we reiterate that the trade in illicit tax-evaded cigarettes continues to pose a threat to the legitimate tobacco industry and sustainability of Government revenues,” He noted.

Karuhanga also expressed confidence in the exceptional quality of talent within the Company and partnerships with over 30,000 business partners, as the right strategy to deliver business growth and continued value to all stakeholders.