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?