Stanbic has been a key financier for a number of mega projects such as the construction of Karuma dam. FILE PHOTO
What has been your main contribution to Uganda so far?
As a financial anchor in Uganda’s growth story over the last couple of decades, we have played an essential role to support the economy through its growth and transformation.
We have been a pioneer on many fronts and have led the innovation and stability of the banking sector which is extremely critical in the country’s economic eco system.
We have been able to consolidate and create a true Ugandan banking icon with assets in excess of $1.5b serving as a financial gateway for individuals, institutions and the public sector.
Being a subsidiary of a global brand, we have been able to infuse global best practices and work closely with other commercial banks and the regulator to formulate and implement many world class financial policies that have made the Ugandan banking sector more stable and sustainable.
This has extended into delivering innovative products that have supported Uganda’s recent and substantial infrastructural boom.
We have also been a key enabler in the agriculture, manufacturing, construction and trade sectors as well as supporting more than 40,000 SMEs, a critical sector of the economy that is mainly underserved.
SMEs generate 80 per cent of our manufacturing output and 90 per cent of new jobs. Therefore, we have built deliberate plans and products that have been key in supporting this important sector of the economy.
As a financial anchor in Uganda’s growth story over the last couple of decades, we have played an essential role to support the economy through its growth and transformation.
We have been a pioneer on many fronts and have led the innovation and stability of the banking sector which is extremely critical in the country’s economic eco system.
We have been able to consolidate and create a true Ugandan banking icon with assets in excess of $1.5b serving as a financial gateway for individuals, institutions and the public sector.
Being a subsidiary of a global brand, we have been able to infuse global best practices and work closely with other commercial banks and the regulator to formulate and implement many world class financial policies that have made the Ugandan banking sector more stable and sustainable.
This has extended into delivering innovative products that have supported Uganda’s recent and substantial infrastructural boom.
We have also been a key enabler in the agriculture, manufacturing, construction and trade sectors as well as supporting more than 40,000 SMEs, a critical sector of the economy that is mainly underserved.
SMEs generate 80 per cent of our manufacturing output and 90 per cent of new jobs. Therefore, we have built deliberate plans and products that have been key in supporting this important sector of the economy.
High
Interest rates are one of the key issues often mentioned as holding
back private sector driven growth, have banks done enough to keep
interest rates low and attractive?
This is a serious problem, however, as Stanbic, we have honoured our commitment to match the movements of Prime Lending Rates consistently with the movements of the Central Bank Rate.
As a result, we have lowered our lending rates by 7.5 per cent to 17 per cent over the last 18 months in synch with the reduction of the CBR.
However, I would want to broaden the subject beyond high interest rates by posing another question, why is it that even with high interest rates, there are still 6 loss making banks in Uganda and the Return on Equity of the industry at 16 per cent is still the lowest in the region?
There is a productivity issue that we must address - which is the high cost of doing business in the country. Banks in Kenya and elsewhere globally generate much higher return on equity within much lower interest rate environments.
We need to work more closely with all stakeholders to bring the cost of doing business down by collaborating across the industry and being ruthless in digitising the sector.
This is a serious problem, however, as Stanbic, we have honoured our commitment to match the movements of Prime Lending Rates consistently with the movements of the Central Bank Rate.
As a result, we have lowered our lending rates by 7.5 per cent to 17 per cent over the last 18 months in synch with the reduction of the CBR.
However, I would want to broaden the subject beyond high interest rates by posing another question, why is it that even with high interest rates, there are still 6 loss making banks in Uganda and the Return on Equity of the industry at 16 per cent is still the lowest in the region?
There is a productivity issue that we must address - which is the high cost of doing business in the country. Banks in Kenya and elsewhere globally generate much higher return on equity within much lower interest rate environments.
We need to work more closely with all stakeholders to bring the cost of doing business down by collaborating across the industry and being ruthless in digitising the sector.
Ugandan businesses face sustainability challenges. How have you helped them in this regard?
As custodians of customer deposits, our primary responsibility is to manage risk and this is a non-negotiable.
That being said, we worry about the attrition rate of Ugandan SMEs and the fact that less than 30 per cent of them make it past their third birthday.
We have closely examined the matter and concluded that whereas access to financing is one of the key issues faced by Ugandan businesses, it’s not the main cause of failure.
Lack of access to markets and access to resources such as (legal, procurement guidance, quality control, governance amongst others) are the more crucial challenges.
We have taken the initiative to fund and create an SME incubator that takes SMEs through building capacity in these areas at no cost. We think it makes business sense to lengthen the life of SMEs. Apart from this we have partnered with industry experts to lead the training of these modules and will have the first class of SME graduates in June.
After the graduation, we will also provide a mentor to each SME for 12 months to ensure that the incubator capacity building is appropriately put into practice in the market place.
I believe this is a very powerful intervention that can be scaled across the country and have a meaningful impact on business sustainability and ultimately job creation.
Approximately 160,000 SME’s in Uganda employ 2.5 mm people and if we can enable each of them to create an additional four jobs, it would go a long way in solving our unemployment problem.
As custodians of customer deposits, our primary responsibility is to manage risk and this is a non-negotiable.
That being said, we worry about the attrition rate of Ugandan SMEs and the fact that less than 30 per cent of them make it past their third birthday.
We have closely examined the matter and concluded that whereas access to financing is one of the key issues faced by Ugandan businesses, it’s not the main cause of failure.
Lack of access to markets and access to resources such as (legal, procurement guidance, quality control, governance amongst others) are the more crucial challenges.
We have taken the initiative to fund and create an SME incubator that takes SMEs through building capacity in these areas at no cost. We think it makes business sense to lengthen the life of SMEs. Apart from this we have partnered with industry experts to lead the training of these modules and will have the first class of SME graduates in June.
After the graduation, we will also provide a mentor to each SME for 12 months to ensure that the incubator capacity building is appropriately put into practice in the market place.
I believe this is a very powerful intervention that can be scaled across the country and have a meaningful impact on business sustainability and ultimately job creation.
Approximately 160,000 SME’s in Uganda employ 2.5 mm people and if we can enable each of them to create an additional four jobs, it would go a long way in solving our unemployment problem.
The youth form the bulk of the Ugandan population. In what ways are your activities helping to build a brighter future for them?
Education and youth empowerment is the pillar of our corporate and social responsibility initiatives. We allocate approximately 70 per cent of our annual CSR budget towards training of youth at all levels.
We have invested in the excess of Shs8b in youth educational initiatives over the last several years and have recently launched our flagship National Schools Championships which seeks to promote financial literacy and impart soft skills among the leaders of tomorrow.
There is no better return on investment than investing in youth.
Education and youth empowerment is the pillar of our corporate and social responsibility initiatives. We allocate approximately 70 per cent of our annual CSR budget towards training of youth at all levels.
We have invested in the excess of Shs8b in youth educational initiatives over the last several years and have recently launched our flagship National Schools Championships which seeks to promote financial literacy and impart soft skills among the leaders of tomorrow.
There is no better return on investment than investing in youth.
Oil and gas has the potential to transform Uganda. Are you playing any role in the development of the sector?
Oil is an important aspect of Uganda’s future and as a result we have been heavily involved in the promotion of increased local content in the sector.
Whereas the figures (up to $15b) going to be spent on developing the sector are indeed staggering, it’s irrelevant if Ugandan companies do not participate.
We have hosted several high level local content awareness workshops and facilitated forums aimed at skilling local players while fostering strategic partnerships.
We are also working closely with oil companies and their tier one suppliers to deliver some innovative financial products that can support Ugandan companies to win contracts.
We are also playing a key role as lead arranger and advisor in arranging up to $2.5b of project financing for the East African crude pipeline, one of the largest construction projects in the region bound to have a profound impact on the economic future of East and Central Africa
How are you helping to create a better tomorrow for Ugandans?
We believe the future of this country lies in the creation of opportunities for social and economic empowerment of its people.
As a bank we remain true to that promise by supporting key sectors today that will provide the catalysts for Uganda’s sustained growth tomorrow.
We believe the future of this country lies in the creation of opportunities for social and economic empowerment of its people.
As a bank we remain true to that promise by supporting key sectors today that will provide the catalysts for Uganda’s sustained growth tomorrow.
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