BANK OF UGANDA HERALDS A GOLF BONANZA FOR CEOs

 

BANK OF UGANDA HERALDS A GOLF-BONANZA FOR FOREIGN BANK CEOs

‘This guy is taking us back to the golf golden era of foreign banks…’, reacted Mzee Mashurubu as we read the now circulating circular from Bank of Uganda regarding the minimum mandatory capitalisation of commercial banks, micro deposit-taking institutions and microfinance institutions. We could not immediately click what he meant by golden era of golf for foreign banks, thus he set to explain. From his explanation, what emerged is that in days gone-by, multinational banks were only limited to major towns with one branch,  some even operating from Kampala alone.  The bulk of their customer base was what they term corporate:  the few multinational companies in the country, UN agencies, international bodies, government ministries, departments and agencies, religious institutions and the few NGOs of the day. Add Treasury Bills and Bonds, and the CEO of a multinational bank could project his annual profitability to a high degree of confidence and precision,  at the start of the financial year. With such assured revenue streams, he could as well go playing golf, comfortably sure of a glowing annual statement, with the perks that accompany stellar  performance at the end of the year.

This was the era of the seller, so to speak. In-between and the advent of the digital era, it has been the era of the buyer: that extra customer opening an account being the golden performance metric. And the digital age sets in( consumption  tail-end, as we do in many other things). Even before Covinomics dictated the ‘new normal’, banks were already closing branches, down-sizing, thanks to the fintech factor. ‘Mobile money’ becomes the cash cow for the telcos, though legally incorporated and licenced for communication.  Legal and regulatory lacuna resolved through incorporating ‘mobile money’ companies by the telcos, under Bank of Uganda regulation. Maximum reach to the remotest unbanked village assured.  Thus, from the comfort of his palatial office on Hannington Rd, Speke Road, Crested Towers  and other high end districts of Kampala or even Barkley Avenue in London, a CEO will by a mere pressing on a katoochi by a potato farmer, capture that extra coin from Rwantaaho, the hard-to-reach village in a mountainous sub-county, of  a road-deprived  district.

And therein lies the golden golf era renaissance. Scenario emerging most indigenous MDIs, MFIs and lower club banks cannot meet the minimum capitalisation threshold. Snapped and merged( swallowed?) by the big boys. No physical branches.  We are all banked’ via the fintech companies, with  ‘platform operation’ ( this means what??)  partnerships with the banks.  Soon banking to the rural Ugandan becomes a ‘spiritual’ phenomenon: sending and receiving money through invisible networks.  With assured revenue streams and minimal overheads, the golden golf era is back.

As we try to figure sense out of this, Mzee Mashurubu asks us what sovereignty will Uganda talk of, with banking, finance, telecommunication, manufacturing, infrastructure construction, real estate, oil ( when pipeline and refinery come in 2025?), all in foreign private hands? The way out, he argues, is to have separate thresholds for foreign and indigenous financial institutions and ringfence the MDI, MFI segment for local players. And , …’let our planners and thinkers visit an indigenous bank in our neighbourhood…it plays in all segments of the economy through partnerships and cross-ownership of its business group ecosystem: international banking, standard commercial banking, MDIs, MFIs, fintech, investment finance and real estate. The most innovative bit was in merging MFIs in each regional into a pinnacle MDI, and the MDIs at national level into the commercial bank. Do Central Banks elsewhere do more than regulation?  

 

 

EMYOOGA CASH...MPs GETTING PENNY-WISE

 In a rare stroke of luck, our new MPs got an early low-hanging fruit onto which to exercise their ‘oversight role’ and prove  biting power to their ‘voters’ ( no longer citizens, but voters? Uhmmm !). This is their current rage against the misuse (proper use, says Mzee Mashurubu), of the Emyooga Funds. Emyooga scheme, both in its connotational misnomer and modus operandi, is performing as expected. Full stop. Period. Point (pwã).

And for our MPs to spend their first ‘100-days’ effort on this, is being pennywise…, or bringing it closer home, they are sinking their teeth onto  mukene while some monster is daily swallowing our Mpuuta. Mukene is Ugandan silverfish sardines, while empuuta is our invaluable Nile Perch, the aquatic living renewable gold we  donate daily to foreign interests( a full treatise on this  for another day).

Our dear honourables, here is what deserves your ‘100-days’ attention. For starters, Uganda urgently needs an anti-trust law, to stem monopolies and restrictive commercial practices. What anti-trust legislation does is this: it bars a manufacturer from selling their products directly to consumers. The implication here is that a company manufacturing safety matches  will have five regional  distributors, one in each commercial region of Uganda. Below them, the distributors will have wholesalers in each district under their business territory. And the wholesalers will sell to the  retailers in their territory, and the retailers will sell to users of safety matches.  This is how wealth is spread and shared. This is how jobs are created. This is how income is assured. This is how life is improved.  What pertains currently  in Uganda is a situation where manufacturers operate retail kiosks!

With the anti-trust law in place comes a competition agency, to regulate commercial practices, especially mergers and acquisitions which, unregulated grow into cartels. And since we are good at seeking conformity with established global practices, the establishment of a competition agency will be in line with the Comesa Competition Commission provisions, to which Uganda is a member and its current Board Chairman is Ugandan!

As you begin your calendar of ‘benchmarking’ trips ( one already ticked off, to Turkey!!)),  a visit closer home, to  Kenya  will boost your ‘100-days’ target achievement. Thanks to her anti-trust legislation  and its enforcement agency, the Competition Authority of Kenya, national wealth from the country’s manufacturing and commercial sectors is  distributed across the value chains via authorised distributors, wholesalers, retailers.  Thus, a multinational company  manufactures chocolates ( usually with local ownership percentage or franchise manufacturing), while indigenous Kenyan companies  are the authorised distributors, wholesalers, retailers.  A  related reinforcing  policy and practice worth benchmarking is the country’s human development programme, with a full authority in charge of this. NITA( National Industrial Training Authority) oversees the skilling of Kenyan employees in all sectors. It works thus: every employer, with 5 employees and above, makes a statutory obligatory payment into the national skilling fund, managed by NITA. NITA pre-qualifies training companies in the various domains. Companies hire the pre-qualified trainers for their staff and pass the invoice to NITA who pay the trainers. Each company thus ensures its staff are trained, since the funds are non-refundable and compulsory. The secret of Kenyans dominating management positions in the region lies therein. Multinationals preferring Kenya as their base into the region  lies therein.

To these two,  dear honourables, add the Counterfeits Bill, the banning of imported used underwear, used socks, used shavers, used toothbrushes, used face towels, used handkerchiefs, used floor moppers, pig offals…and Uganda will import labour into our import-substitution industries.

Is this difficult?