FROM MACRO-RIFTS , TO MICO-FISSURES: "SAY NO TO THE DEN OF JUNGLE SUPREMACY PITFALLS , SAY YES TO THE PEARL OF AFRICA WINDFALLS."

IN MEMORY OF THE LATE UGANDAN FEMALE OLYMPIC. HERO, REBECCA CHEPTEGFI, MAY HER SOUL REST IN ETERNAL PEACE.

UGANDA: PRESIDENTIAL DIRECTIVE TO RATIONALIZE THE MICRO-FINANCE SECTOR CURRENTLY BEDEVILLED BY A MULTIPLE REGULATORY QUAGMIRE

Museveni directs Finance Minister, AG on Micro-Finance regulation

File Photo/Courtesy: Minister of the Presidency minister Babirye Babalanda delivered Museveni’s message at the close of a two day National Micro-Finance and Savings Groups Conference 2024

Kampala, Uganda | THE INDEPENDENT |  President Yoweri Kaguta Museveni has thrown his weight behind medium and small financial sector players demanding a one stop regulation centre, saying that multiple centres lead to confusion in which gullible Ugandans may be abused and exploited.

The President whose message was delivered by the Minister of the Presidency minister Babirye Babalanda at the close of a two day National Micro-Finance and Savings Groups Conference 2024 at Hotel Africana on Friday evening, directed the minister of Finance and the Attorney General to deal with the issue as soon as possible.

Under the different laws governing financial institutions, savings and credit cooperatives (SACCOs) report to the cooperatives regulator, the Uganda Microfinance regulator and in cases of SACCOs with capital above 1.5billion to Bank of Uganda.

The operational frameworks and conditions differ under the different regulation regimes, which some of the microfinance players complain are too harsh for them as small players.

But the President said, “That there are simply too many regulatory bodies with separate and sometimes contradictory mandates, the outcome is a confusing regulatory environment that suffocates rather than strengthens the sector. It leaves the population exposed to financial abuse.  Only robust, transparent and coherent regulation can produce microfinance institutions that serve the public honestly and effectively. … The Minister of Finance with the support of the Attorney General must deal with this matter as soon as possible.”

The conference themed on “Leveraging Collaborations, Partnerships and Promoting a Savings Culture to Foster Socio-Economic Transformation” brought together government, regulators, partners, experts and commercial banks and private sector players among other stakeholders from across the country and beyond.

The President made it clear that government’s duty to protect MFIs’ members and consumers against abuse and exploitation, added that he had directed the minister to issue an instrument to deal with the “unscrupulous” players because they are retrogressive to the industry.

The fountain of honour who applauded the microfinance sector role in supporting government’s financial inclusion strategy promised government and other stakeholders would continue making efforts to build capacity and business competencies of SACCOs with a view to sustainability and growth as vehicles to lift Ugandans out of poverty.

He also urged them to prioritise digitization of their services and strategise to grow their markets nationally and regionally.

On the current topical issue of corruption, the President re-iterated he taken time sounding warning to “public officers who pursue selfish and shallow interests” in the course of their duties and it was now time “deal with whoever has turned into a Ndiwulira (stubborn maize weevil).”

The conference was a precursor to the international cooperatives day celebrated on July to be nationally celebrated tomorrow at Kibinge, Bukomansimbi district.

Minister Kasolo extolled the President’s support to the microfinance sector through different programmes including EMYOOGA, PDM and other initiatives.  For this he assured minister Babalanda that those benefiting from the sector were focused and come 2026 (election year), they will voter rightly.

He said government would every year until 2040 invest shillings 1 trillion in the SACCOs until all Ugandans are included in financial service provision.  Government, he said, had decided to give a ten year tax exemption to enable them grow.

During the opening day deliberations there were calls by stakeholders to government to allow savings and credit cooperatives (SACCOs) to form an own bank in light of the special interests of the members. Minister of state for microfinance Haji Haruna Kasolo said he had no problem with it, “even if it means sacrificing the MSC.”

The centre is a government special purpose vehicle incorporated in 2001 to offer affordable development grants and credit to small enterprises and help in capacity development of the beneficiaries and their members.

The cooperative bank, he said would be convenient for the SACCOs and MDIs as big investors continued to access credit through different facilities at Bank of Uganda, the Uganda Development Bank (UDB) and commercial banks.

The commercial banks, according to SACCO stakeholders charge very high interest rates and are more often inclined to the usual requirements of collateral, that SACCOs often lack. This translates into denial of access to credit to the small savers and cooperative credit groups.

The argument was amplified by  Tupalle Chandra Sekhar Reddy, a sector expert from India also, while giving experiences from his home country recommended that government policy should be enabling to allow SACCOs and MDIs federate into an own bank that responded to their special needs and circumstances.

Minister Kasolo said that government through its manifesto and other development frameworks, including the National Development Plan and the Vision 2040 looks at SACCO and MDIs as major partners to lift Ugandans out of poverty through access to affordable credit.  He said recent findings indicated 20million Ugandan Adults (81%) were financially included up from 14.3million (77%) in 2018 and part of this national success was through SACCOs and MDIs.

Stakeholders complained about the high Central Bank Interest Rate (CBR) is high forcing credit giver to also charge high interest.  But Bank of Uganda Acting Governor, Michael Ating Ego said this was partially driven by the government “borrowing appetite.”

Government borrowing, he said, made commercial banks look to government as a better client giving better interest and assured repayment.

Atingo also complained about justice delivery, where he said courts tied up too much capital in injunctive orders and delayed disposal of cases.  Up to shillings 6 trillion, he said was currently tied up in cases.

Stanbic Holdings Uganda Chief Executive Sam Mwogeza discounted the notion of commercial banks being indifferent to small credit clientele, saying this was reason Stanbic Bank had entered different partnerships that speak to government financial inclusion policy.

These, Mwogeza said included the Parish Development Model that the bank implements through its Wendi platform, digitization through Flexipay and the Economic Enterprise Research Fund.  To date he said 1500 SACCOs had accessed funds through Stanbic.

 Speaker Anita Annet Among whose speech was delivered by Rwamara MP Amos Kankunda (also chair of the Parliamentary Committee on Finance, Planning and Economic Development) underscored the importance of the SACCO movement and medium deposit taking institutions (MDIs) in augmenting government effort to help lift Ugandans out of poverty and pledged support to the sector.

This she said was reason the House passed the amendment to Micro-Finance Deposit Taking Institutions Act last year to enable the MDIs access credit reference bureau data in their due diligence on clients.   She said Parliament had appropriated an additional shillings 3billion to the Uganda Micro-finance Regulatory Authority (UMRA) to strengthen its work in supervising the sector.

She called on UMRA to in future consider taking discourses like the one at hand upcountry where the majority of stakeholder and beneficiaries reside or take some of the stakeholders outside the country to benchmark colleagues in the region who have made bigger strides.  She disclosed that in Kenya, SACCOs had become so vibrant that their mark today in notable in the taxi and real estate sectors.

Rachael Vanessa Muhwesi who represented the executive director of the Uganda Micro-finance Regulatory Authority said the regulator was working hard to cause mindset change because many of the players and beneficiaries needed this for capacity building and sustainability.

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URN

SUPPLEMENT

TENETS OF TRUST LEGACY

GLOBAL SOUTH ALERT: TRUST FROM SINCE MEDIEVAL ENGLAND, TO BEYOND AMERICAN DECLARATION OF INDEPENDENCE ON JULY 4, 1776.

TAGLINE: "TREASURE THE PEARL , RIDE SPECIAL MOBILITY."

LINK: iSpecial Mobility Ecosystem

VISION STATEMENT: "WHOLE BUSINESS SECURITIZATION (WBS) FOR AFRICA AND BEYOND."

🌐 iSpecial Mobility Ecosystem

PUBLIC-PRIVATE SECTOR TO BLAME FOR A YAWNING DOUBLE-DIGIT GAP BETWEEN THE INFLATION RATE AND THE PRIME COMMERCIAL LENDING RATE AVERAGING OVER 12% APR BENEFITING BANKS AMONG OTHER LENDERS

Govt , Borrowers share blame of high interest rates, says Ggoobi

What you need to know:

monitor.co.ug, July 19, 2024 | Permanent Secretary and Secretary to the Treasury Ramathan Ggoobi has said that both government and borrowers are to blame for Uganda’s high interest rates. 

Speaking during the second National Microfinance and Savings Group Conference 2024 in Kampala, Mr Ggoobi said that whereas some government actions partly contribute to high interest rates, the blame is equally shared by borrowers, some of whom are not creditworthy, untrustworthy, and lack good quality collaterals against which loans are advanced.  

For instance, he said, because government has been increasingly borrowing from the domestic market, banks have prioritised lending to government, while the private sector players who seek to access credit are subjected to high interest rates. 

However, Mr Ggoobi noted that government was working on a plan to mitigate domestic borrowing by focusing its attention on local revenue mobilisation, which would increase Uganda’s tax-to-gross-domestic ratio to at least 16 percent from the current 14 percent. 

“Our long-term strategy is to mobilise our revenue from taxes and reduce internal borrowing. We are also improving traceability of the borrowers by introducing national identification [and improving the quality of collateral by] improving the land register,” he said.

“Us as borrowers, we are not trustworthy. In most cases, credit is about traceability and the quality of the collateral. Banks like it when government borrowing increases because they have a better borrower,” Mr Ggoobi added, noting that financial institutions see government as a non-risk borrower compared to many private sector borrowers that easily default. 

While addressing the NTV-Absa Post Budget Dialogue last month, Mr Ggoobo said banks were sitting on about Shs27 trillion, noting that government was only borrowing the excess. 

However, he also indicated that government, despite public pleas, had continued to borrow from the domestic market “to save some of these banks”.

The share of domestic debt has been growing over time. As of December 2023, the stock of public debt rose to Shs93.38 trillion, of which external was Shs55.37 trillion, while Shs.38 trillion was domestic debt. 

Mr Ggoobi also indicated that government has put in place more measures to improve creditworthiness by working with Uganda Registration Services Bureau to register business borrowers, which will eventually improve the quality of information about borrowers.

“Interest rates have reduced. 10 years ago there was an average lending rate of 25 percent, today the average prime lending rate is a 17.7 percent. This is still high, [but] we are fighting to bring it to a single digit and that can be done by addressing the challenges,” he said.

The second National Microfinance and Savings Groups Conference 2024 sought to leverage collaborations, partnerships, and promotion of a savings culture to foster socio-economic transformation.

Monitoring borrowers

State Minister for Microfinance Haruna Kasolo, urged banks to monitor people who they lend money instead of waiting for them to default. 

“Banks should not wait for businesses to collapse. They collect 2 percent of the loan for monitoring. They should use it to visit and advise businesses rather than celebrating when they fail for them to auction mortgaged properties,” he said, noting that government has through the Parish Development Model extended Shs2 trillion with each PDM Sacco across the country. 

Mr Kasolo also indicated that government last year launched the Second National Financial Inclusion Strategy (2023-28) to combat poverty and spur economic growth through accessible financial services.

“This conference marks a crucial step in promoting collaboration and knowledge exchange within the microfinance sector, paving the way for a more inclusive and digitally empowered financial ecosystem,” he said. 

SUPPLEMENT

TENETS OF TRUST LEGACY

GLOBAL SOUTH ALERT: TRUST FROM SINCE MEDIEVAL ENGLAND, TO BEYOND AMERICAN DECLARATION OF INDEPENDENCE ON JULY 4, 1776.

TAGLINE: "TREASURE THE PEARL , RIDE SPECIAL MOBILITY."

LINK: iSpecial Mobility Ecosystem

VISION STATEMENT: "WHOLE BUSINESS SECURITIZATION (WBS) FOR AFRICA AND BEYOND."

🌐 iSpecial Mobility Ecosystem

UGANDA: ALTERNATIVE INVESTMENT CONFERENCE – 2024

THEME: "Catalyze Private Capital for Value and Social Impact."

 

Capital Markets Authority- Uganda is proud to be sponsoring the Alternative Investments Conference 2024, which will take place on June 12th at Sheraton Hotel - Kampala.

This year's theme, "Catalyze Private Capital for Value and Social Impact," aligns with our mission to enhance Uganda's private markets and drive economic development.

The conference aims to change investor perspectives, highlight investable projects, and build meaningful connections within the investment community.

We invite industry regulators, policy makers, financiers, investment professionals and those interested in exploring alternative investment opportunities to be part of this enlightening event.

Don't miss out ! Register here to participate: 

CLICK THIS LINK FOR REGISTRATION

SUPPLEMENT

TENETS OF TRUST LEGACY

GLOBAL SOUTH ALERT: TRUST FROM SINCE MEDIEVAL ENGLAND, TO BEYOND AMERICAN DECLARATION OF INDEPENDENCE ON JULY 4, 1776.

TAGLINE: "TREASURE THE PEARL , RIDE SPECIAL MOBILITY."

LINK: iSpecial Mobility Ecosystem

VISION STATEMENT: "WHOLE BUSINESS SECURITIZATION (WBS) FOR AFRICA AND BEYOND."

🌐 iSpecial Mobility Ecosystem

GLOBAL AGENDA 2030 : UGANDA'S MAIDEN TEN-FOLD GROWTH DEVELOPMENT ROAD MAP – NDP IV ( 2025/2026 - 2029/2030)

Ministers Lugoloobi Says NDP IV Crucial for Uganda's Economic Future

Theme : "Sustainable Industrialization for Inclusive Growth, Employment, and Wealth Creation." 

File Photo/Courtesy: Hon. Amos Lugoloobi, Minister of State for Planning

softpower.ug | MUHAMADI BYEMBOIJANA | May 29, 2024 | The Minister of State for Planning, Amos Lugoloobi, has announced that the National Development Plan IV (NDP IV) should be ready by September 2024. This plan will inform the country's macroeconomic framework and budgeting processes for the fiscal year 2025/26. 

NDP IV is the fourth out of six National Development Plans (NDPs) designed to implement Uganda Vision 2040. It is also the last plan to deliver the Global Agenda 2030 of the Sustainable Development Goals (SDGs) and the first within the implementation of the government's strategy for achieving ten-fold growth. 

The goal of NDP IV is to achieve household incomes and employment for sustainable socio-economic transformation, under the theme "Sustainable Industrialization for Inclusive Growth, Employment, and Wealth Creation." 

Speaking at the National Planning Conference, Minister Lugoloobi stated that the strategic direction for NDP IV was approved by Cabinet in March 2024, aligning with the strategy of growing the economy ten-fold. He revealed that the government expects NDP IV growth. (2025/26-2029/30) to provide pathways to attaining the much-desired double-digit growth.

In his remarks, the Permanent Secretary and Secretary to the Treasury (PSST), Ramathan Ggoobi, explained that the government has introduced the concept of Indicative Planning Figures ((PFs) to ensure that NDP IV is fiscally realistic with more effective allocation of limited resources. 

Ggoobi emphasized that IPFs represent a step towards ensuring the efficient use of government resources, safeguarding ongoing commitments, and strategically addressing new priorities in line with the ten fold growth strategy. He highlighted the importance of carrying forward critical projects such as the standard gauge railway (SGR) and oil projects within NDP IV. 

He stressed the need for prudent and effective planning in developing NDP IV, ensuring that development plans are based on available resources and aligning resources with revenue forecasts to maintain financial stability. He warned against overambitious projections and underfunded priorities. 

Ggoobi encouraged programme leaders to focus on developing detailed Programme Implementation Action Plans (PIAPs) with clear resource allocations. He also called for effective coordination and collaboration between the government and development partners to maximize resource utilization and minimize duplication of efforts. 

The government plans to achieve NDP IV through five strategic objectives: 

Sustainably increasing production, productivity, and value addition in agriculture, minerals, oil & gas, tourism, ICT, and financial services.

 Enhancing human capital development. Supporting the private sector to drive growth. Building and maintaining strategic sustainable infrastructure. 

Strengthening good governance, security, and the role of the state in development.

Meanwhile, Lucy Nakyobe, the head of Public Service, noted that the government will prioritize selecting a few high-impact growth enhancing projects over a consortium of projects. She emphasized that the benefits of these high-impact projects, in terms of enhancing household incomes, wealth creation, and job creation for Ugandans, should outweigh the costs of invested public funds. 

"This will be achieved by implementing the Public Investment Management Systenm (PIMS) reforms, improving governance of project selection, enforcing competitive processes for contractors, and minimizing costs associated with lengthy and cumbersome procurement processes, she said. revealed

Charles Olwenyi Ojok, Deputy Executive Director,  the National Planning Authority (NPA), that NDP IV will guide future national budgets and other decentralized plans. 

SUPPLEMENT

TENETS OF TRUST LEGACY

GLOBAL SOUTH ALERT: TRUST FROM SINCE MEDIEVAL ENGLAND, TO BEYOND AMERICAN DECLARATION OF INDEPENDENCE ON JULY 4, 1776.

TAGLINE: "TREASURE THE PEARL , RIDE SPECIAL MOBILITY."

LINK: iSpecial Mobility Ecosystem

VISION STATEMENT: "WHOLE BUSINESS SECURITIZATION (WBS) FOR AFRICA AND BEYOND."

🌐 iSpecial Mobility Ecosystem

ROBUST CORPORATE GÓVERNANCE: AN INEXPENSIVE STEPPING STONE TO BE USHERED INTO THE REALM OF CAPITAL MARKETS

Capitalize on Governance to access Patient Capital

By: Josephine Okui Ossiya,

Chief Executive Officer,

Capital Markets Authority – Uganda

What you need to know:

Access to capital remains the top challenge that business founders and owners in Uganda face. In the case of bank financing, access to capital is mainly driven by variables such as cash-flow projections (an indicator of ability to service debt) and the availability of a security that can be pledged by a borrower. 

In simple terms, if a borrower does not demonstrate the ability to generate cash-flows in the future or provide a satisfactory security, they are unlikely to access credit from a bank. In the case of capital markets, among the key drivers determining access to capital is projections around your cash-flows and how organised your business is, as represented by your corporate governance practices. The ability to generate cash-flows in the future and sound corporate governance practices are critical to accessing long-term, patient, non-bank capital in the capital markets. But what role does corporate governance play in increasing access to capital markets?   

DAUNTING IRONY: VIRTUOUS DEBTORS (BANKS) REAPING MASSIVE WEALTH ACCUMULATION AT THE EXPENSE OF DELINQUENT CREDITORS (DEPOSITORS)

BoU Report: Banks Thrive on Interest Income from Government Securities

File Photo/Courtesy: Bank of Uganda, Headquarters Building.

ankoletimes.co.ug, May 18, 2024 2:02 PM | According to Tumubweinee Twinemanzi, the executive director in charge of supervision at the Bank of Uganda (BoU), the profitability of commercial banks in Uganda has been significantly influenced by interest income derived from government securities.

The banking sector witnessed a substantial increase in net profit after tax, marking a notable growth of 15.9% to a total of sh1.5 trillion. This surge in profitability was predominantly propelled by a 13.8% rise in interest income and a 14.4% increase in fee income, as reported by Twinemanzi.

Twinemanzi further elaborated that during the year ending March 2024, the profitability of supervised financial institutions was predominantly fueled by interest income earned from government securities.

Data from the Bank of Uganda indicates that the return on investment for banks experienced a marginal improvement, edging up from 2.9% to 3.1%. While this suggests a slight enhancement in the sector’s overall performance, it underscores the importance of interest income from government securities.

Examining the cost-to-income ratios, credit institutions and microfinance deposit-taking institutions recorded ratios of 112.7% and 97.1%, respectively. These figures provide insights into the operational efficiency and financial health of banks within the sector.

In April, leading commercial banks released their earnings reports for the period ending December 2023. Notably, Dfcu Bank’s lending to the government resulted in approximately sh131 billion in interest income during the review period, reflecting a significant increase from the sh86 billion recorded previously. The bank reported a profit after tax of sh34 billion for the period.

Similarly, Absa Bank Uganda earned over sh162 billion in interest income from investment securities in 2023, contributing to its net profits of sh146 billion, compared to sh141 billion in 2022.

The passage of the sh72.13 trillion national budget by Parliament on May 16 allocated a substantial portion to servicing Uganda’s debt to both domestic and foreign lenders, amounting to about sh34.017 trillion. This underscores the significance of government debt instruments in the financial landscape and their impact on the banking sector’s profitability

SUPPLEMENT

TENETS OF TRUST LEGACY

GLOBAL SOUTH ALERT: TRUST FROM SINCE MEDIEVAL ENGLAND, TO BEYOND AMERICAN DECLARATION OF INDEPENDENCE ON JULY 4, 1776.

TAGLINE: "TREASURE THE PEARL , RIDE SPECIAL MOBILITY."

LINK: iSpecial Mobility Ecosystem

VISION STATEMENT: "WHOLE BUSINESS SECURITIZATION (WBS) FOR AFRICA AND BEYOND."

🌐 iSpecial Mobility Ecosystem