Finance

Finance (13)

Is Bank Of Uganda Being Soft With Foreign Banks?

Before the dust raised by Bank of Uganda when it took over the management of Crane Bank for being undercapitalized, news that more banks will suffer the same fate emerged. The banks that were rumored to be clamped down include Cairo Bank, DFCU, Centenary, ABC Bank, Bank of Africa, Diamond Trust Bank and Eco Bank. Bank of Uganda has not come out to clarify on the rumor.

Bank of Uganda took over the management of Crane Bank last week days after defending the Ruparelia owned bank. The move caused a lot of uncertainty and debate in the public domain. Bank customers in the sector panicked fearing that they would lose their deposits. The move did not go down well with Crane Bank owners who described the decision by Bank of Uganda as malice. They say they were looking for an equity investor and the central was aware.

Bank of Uganda’s silence on the state of Cairo Bank, DFCU, Centenary, ABC Bank, United Bank of Africa, Bank of Africa, Diamond Trust Bank and Eco Bank majorly owned by foreign investors has been received with mixed feelings by some sections of the public.

They wonder why the central bank rushed to takeover Crane Bank, an indigenous bank, while foreign banks are equally struggling. Some banks, especially those owned by Nigerians are said to be not making even. They are reportedly making no money at all yet Bank of Uganda looks the other side.

Alfred Owino, a retired banker says that if Bank of Uganda wants a functioning banking sector, all banks that are undercapitalized must be dealt with in a manner that brings sanity in the sector. “It shouldn’t be selective action. International banks repatriate profits yet local banks like Crane Bank invest in the country.” Owino stated in an interview.

Christine Alupo, Director Communications at Bank of Uganda issued a statement on Monday saying the financial Sector is Stable, Sound and Resilient. She encouraged the public to continue conducting their banking business without panic.

But news that Cairo owned by Egyptians and United Bank of Africa owned by Nigerians are undercapitalized and face closure contradicts Bank of Uganda message. As long as such rumours continue to emerge the banking sector will face panic and further insecurity.

“Government of Uganda should be supporting local businesses. Bank of Uganda should be even more keen on foreign banks because at the end of the day, if the fail, they will pack up their banks and return wherever they came from and people will have lost their money. Bank of Uganda should go for them too.” Henry Isabirye, an economics tutor, said.

The Ugandan economy has been not faring well and to many pundits the strife affecting the banking sector doesn’t come as a surprise. High cost of credit has kept away borrowers. Those who borrowed are failing to pay back the loans. People don’t have money to save with banks. You cannot also rule out the impact caused by mobile money. People now prefer to save on their phones than go to the banking halls.

Crane Bank Saga: Bank Of Uganda Breeding Liquidity In Banking Sector

The banking sector in Uganda is poised to slumber into unprecedented liquidity if Bank of Uganda continues to witch-hunt commercial banks, a Crane Bank official said adding that the entire banking fraternity in the country is not doing well. He warned that the public should pay attention to their bankers because of them are worse off.

Bank of Uganda governor Emmanuel Tumusiime Mutebile on Thursday in a public notice announced that the central bank was taking over Crane bank because they are ‘significantly undercapitalised’ and ‘poses a systematic risk to the stability of the financial system’.

But the official at the affected bank emphasized that while they are have liquidity issues, the bank has assets, expertise to come of this distress. He revealed that Bank of Uganda has turned down all potential investors that the bank sought to inject equity in the bank which served Ugandans since 1995. The official doubted the motive of Bank of Uganda.

“This is not good for Crane Bank and the entire banking sector and the public should worry. We have been engaging Bank of Uganda and we have a plan to get where we where before. We are looking for an investor to recapitalize the bank but look where we are,” the official said.

“Bank of Uganda is creating panic in the banking industry and this will lead to liquidity because people will withdraw their money, they will stop depositing with banks and bank will have no money to lend or invest,” he added warningly.

Crane Bank founder Sudhir Ruparelia confirmed that they were in advanced stages of acquiring a potential investor. This revelation came in the wake of rumors that Sudhir was selling the bank. Despite confirming the negotiations, he said he was barred to reveal the name of investor by the non disclosure agreement he entered with said investor.

Bank of Uganda despite saying they had ‘not received any request from Crane Bank to approve a change in shareholding’, Christine Alupo, the Director of Communication at Bank of Uganda in a statement said shareholders of commercial banks have the option of selling shares to new investors as they deem appropriate.

‘However, any new investor in a commercial bank must satisfy the regulator that they are fit and proper. The BoU does not comment on any negotiations to sell shares in a bank while these negotiations are ongoing.” She explained.

“In line with the Financial Institutions Act 2004 (FIA 2004) as amended in 2016, if a commercial bank wishes to dispose of equity worth 5 percent or more of its shares, the sale must be approved by the Bank of Uganda.”

Experts like Hellen Nakuya who manages an investment firm in Kampala also explained that people will in the long run stop going to keep their money in the banks if Bank of Uganda continues to shut down banks. “What Bank of Uganda must do is to ensure that Crane Bank doesn’t close because people will lose their savings then they will fear dealing with banks,” Nakuya said.

“Bank of Uganda should rectify anything that is wrong at Crane Bank if there is any and give it back to the shareholders and continue to guide them. We don’t want to see a scenario that befell Greenland when people lost their money.” She added.

Bankers Association Looking At Taming Cost Of Credit In Uganda

In an effort to find a lasting solution to the high cost of credit in Uganda, commercial banks under their umbrella organization, Uganda Bankers Association (UBA) embarked on a series of consultative meetings with various stakeholders.

UBA kicked off the consultative process on October 3, 2016, by meeting Members of Parliament from the Parliament of Uganda and is scheduled to meet public, private sector, and civil society member organizations between October and December, 2016.

Commenting on the initiative, Mr. Wilbrod Humphreys Owor, the Executive Director UBA said, “Uganda Bankers Association is listening carefully to the various concerns and contributions being made on this subject because the current challenges impact all of us.

“We are confident that through this consultative process, we shall find good directions towards the challenges around the financial sector and wider economyand make good progress in not only addressing the issue of the cost of credit but also tackling the real underlying causes and dynamics behind the price of this commodity called money”

Mr. Fabian Kasi, the chairman UBA remarked: “I strongly believe that the approach we are taking will result into appropriate recommendations that we can adopt to overcome this challenge and ensure that there’s sustainability in the businesses we all do.

UBA comprises of 25 commercial banks and one development bank in Uganda. Its mandate is to promote a strong and vibrant banking sector, encourage good governance and best practices in banking as well as represent the professional and business interests of its members.

Crane Bank, Bank Of Uganda Assures Customers After Baseless Rumors

Crane Bank has termed it as ‘baseless’ rumors that Bank of Uganda has advised its customers to withdraw their money from the leading locally owned bank. The bank says these rumors are being spread by ‘malicious’ people who are trying to bring the bank down.

Bank of Uganda has also come out to defend the commercial bank explaining that they have not issued such a directive. “It has been brought to our attention that messages have been circulating on Whatsapp instructing depositors to withdraw their money from Crane Bank within the next week. We wish to categorically state that these messages were not issued by Bank of Uganda,” the central bank said in a statement released on their Facebook official page.  

Today social media has been awash with rumors quoting an inside source at Bank of Uganda encouraging Crane Bank customers to go and withdraw their money before next week. The frightening message which circulated on social media reads: Guys if u know anyone with money in Crane Bank tell them to remove it …. Within the next week.

However a manager at the commercial bank has affirmed that these are mere rumors which should not cause any panic. He said “This is a well capitalized bank which has served Ugandans over the years. Our capitalization is about Ushs1.3trillion. How can we be closing? How can Bank of Uganda close such a health bank?” the manager, who asked not to be named because he doesn’t speak for the bank, wondered.

The central bank which regulates commercial banks said in a statement signed by Christine Alupo, Director Communications, that they have received several inquiries from the public on Crane Bank following reports that they are seeking strategic investors. Crane Bank recently informed the public that they are in negotiation with an investor to buy the banks shares.

On the selling of the shares, the central bank said “The shareholders of commercial banks have the option of selling shares to new investors as they deem appropriate. However, any new investor in a commercial bank must satisfy the regulator that they are fit and proper. The BOU does not comment on any negotiations to sell shares in a bank while these negotiations are ongoing.”

The bank said the selling of shares is intended to increase their capacity to be able to lend to the public. “The selling of shares need to be structured in a way that we are able to lend to the market and run a health bank. Look, we have 46 branches spread across the country, to be able to run these branches sufficiently, every branch needs to have about 2-3 million dollars to be able to lend to the customers.” A crane bank official said.

Rumors that Sudhir Ruparelia, the owner of the bank sent a letter to 500 of his 500 top debtors calling in the loans, according to Crane Bank management, is false and should be treated with contempt. Crane Bank is a Ugandan bank which has served its customers since 1995. It is the first locally established bank to cross borders. The bank operates in Rwanda and has set its eyes on entering South Sudan.

The bank which currently employees about 2000 Ugandans has been a pillar in supporting traders, farmers SMEs, educational institutions and other businesses in the country. According to a previous press statement, Crane Bank has provided financial services to corporate and retail sectors in Uganda for a number of years, largely focusing on Micro, Small & Medium enterprises (SMEs).

The award winning Bank aims not only to provide the best services at the most economical terms to its customers, but also to encourage the culture of banking within the unbanked population. Crane Bank also exercises its corporate responsibility beyond its core business. More than 15,000 people benefit from the different initiatives as part of its commitment to society.

Crane Bank owned by the Ruparelia Group, supports communities in a range of ways, through organizing medical camps, contributing to educational centers, sponsorships of various activities, contributions of school fees, as well as educating the public on financial products.

 

MTN Group Ventures Into Micro Insurance After Partnering With MMI Holdings

MTN Group and MMI Holdings on Wednesday announced the launch of a micro insurance joint venture, branded aYo. The joint venture will benefit from the scale, combined expertise and market access of both companies, to provide a strong basis to compete in a changing mobile financial services industry. 

Insurance penetration is low in many countries across Africa, and utilising the resources and capabilities that each of MMI Holdings and MTN provide, aYo will be able to improve this to offer relevant, accessible and easy to use insurance solutions to consumers. 

Commenting on the partnership, Herman Singh, Group Chief Digital Officer of MTN said that “as MTN, we are excited about this partnership as it gives us an opportunity to further expand our bouquet of mobile financial services offerings across our footprint. Working with MMI, and harnessing the rapid growth of mobile on the continent, we will be able to leverage our core competencies, strong brands and scale to deliver much-needed insurance solutions to our customers.” 

Danie Botes, Group Chief Operating Officer of MMI Holdings remarked that “the partnership with MTN will create new revenue streams for MMI, help achieve significant scale, explore opportunities in new markets and segments, and capitalise on the growth of micro insurance on the continent. The partnership will also allow us to further extend our client-centric vision of financial wellness across the Africa continent.”  

The aYo offering will be rolled out in a number of African countries from the end of 2016.

Crane Bank Offering Life Insurance Scheme With Maisha Saving Accounts

Ever since it was opened 21 years ago by Sudhir Ruparelia, Crane Bank has continued to lead the financial sector with incisive innovation.  This has position the Kampala Road headquartered bank as the leading indigenous bank in the country.

This also shows in the way they package their financial products to benefit local people. At a time when government is championing financial inclusion including promoting insurance uptake, Crane Bank started a product that both serves as a saving tool and an insurance product.

The bank introduced Crane Maisha Saving Products from which customers can choose three saving methods. Crane Maisha Products are available as an upgrade to existing customers without having to change their account numbers or Crane Access card.

Crane Maisha Access Account

The Crane Maisha Access Account Is a basic banking account that facilitates first time bankers with an efficient way to receive electronic transfers of funds as well as making payments to third parties.

Crane Access is an ATM based transactional account. The account can be opened with minimum balance of Shs10, 000. You get a Free Visa Card for the first year. And you can monitor your account through personal internet banking.

With a monthly charge of Shs2, 000 the account holder will be covered under a life insurance scheme during the period the account is maintained. The account holder uses the savings to keep a safety net for a loved one in the event of a death or disability of the account holder. 

In the event of death or disability of the account holder, Crane Bank through its partners will pay the nominated beneficiaries an amount of Shs5, 500,000 directly into their account in Crane Bank as insurance compensation.

Crane Maisha Savings Account

This is an account that facilitates flexible short, medium and long term saving with the benefit of earning interest. The bank customer earns an interest of 5% p.a. with minimum balance Shs50, 000. The customer savings can be accessed at any time through various deposit and withdrawal banking channels.

Like the Crane Maisha Access Account, with a monthly charge of Shs2, 000 the account holder will be covered under a life insurance scheme where in the event of death or disability of the account holder, Crane Bank pays the beneficiaries an amount of Shs5, 500, 000.

Maisha Fixed Deposit Account

This is a type of savings account where a deposit is made for a specified period of time that pays out a fixed rate of interest and safeguards your loved ones through a life insurance scheme.

This account encourages a savings habit as the money you deposit needs to be in the account for a period of time without you making any withdrawal. Investing in a fixed deposit account earns you a higher interest rate and can act as a fall back for your business in the event of a cash flow squeeze.

With this type of account, you get to choose how long you want to invest your money in a fixed deposit account ranging from 1 month to 2 years. It comes with life insurance cover equivalent to principal amount with maximum limit of Shs100 Million to safeguard your loved ones in the event of a death or disability.

Crane Maisha Fixed Deposits can earn you interest of about 14.5% in a period of two years. To open Crane Maisha Fixed Deposit, a minimum amount of Shs1, 000,000 is required. There is no maximum amount you can deposit.

Accessing your savings

To open any of the Crane Maisha Saving Accounts you need to have a beginners deposit amount which varies. You will also need a Local Council letter, valid ID preferably a National ID, passport, driver’s license or verified employer’s ID. You can access your savings at any of the 46 Crane Bank branches, personal internet banking, Crane Bank ATMs, SMS & Email alerts. Various minimal fees might apply in the course of operationalizing your account.

Crane Bank: Insuring You With Maisha Saving Account

Insurance is an important financial product that many Ugandans are not so keen on, they think it is not necessary. Many are forced by law to pay for motor insurance. Many Ugandans continue to ignore insurance, even life insurance which takes care of their lives.

The reasons for their lack of interest in insurance vary however with Crane Bank’s Crane Maisha Saving Account, a financial product that enables customers to save and at the same time get life insurance, many Ugandans will be get a life insurance scheme.

With Crane Maisha Savings Account, a customer can access their savings anytime, anywhere either at Crane Bank branches, Personal Internet Banking, Crane Bank ATMs, SMS & Email alerts or with any VISA enabled ATM’s worldwide.

Crane Bank marketing manager, Avinash Srivastava, explains that with minimum balance Shs50, 000 and a monthly charge of Shs2, 000 the account holder will be covered under a life insurance scheme. This is on top of earning an interest of 5% p.a.  

The life insurance scheme will be active during the period the account is maintained, where in the event of death or disability of the account holder, Crane Banks through its partners will pay to the nominated beneficiaries an amount of Shs5, 500,000 directly into their account in Crane Bank.

The bank also offer customers an option of operating Crane Maisha Access Account for first time saves or a long term Crane Maisha Fixed Deposit Account and earn a higher interest rate of as high as 14.5%. The initial deposit on the fixed account is Shs1m with no Maximum.

NSSF Starts Ushs14.5b Housing Project

The National Social Security Fund (NSSF) has commissioned construction of its Shs14.5bn housing project in Mbuya, a high end residential area in Kampala, in its continued effort to expand its real estate investment portfolio to deliver value to its members.

The project comprises of 40 high end, 3 bedroom apartments, and other amenities such as a club house, swimming pool and landscaped gardens. This is the second project the Fund is constructing in Mbuya, after 6 high end apartments were constructed and sold in 2012.

Addressing guests at the groundbreaking ceremony today, NSSF Managing Director, Richard Byarugaba said that the Mbuya project reinforces the Fund’s strategy to diversify its investment portfolio as well as implementing planned real estate projects.

“We are making significant progress in real estate in line with our mandate to create value for our members.   Projects such as this one we have started in Mbuya give us a better opportunity to give NSSF members a reasonable and consistent return on their savings. The project will be completed in about 24 months and we project to earn a return of about 20% on our investment,” Byarugaba said.

The project will enable NSSF to continue to diversify its revenue streams thereby minimizing any risks within its asset classes. It will also create hundreds of direct jobs for both the skilled and semi-skilled Ugandan youth living in Kampala and beyond, thereby reducing the unemployment burden of the country, he added.

The Mbuya housing project comes a month after the Fund kick started a mixed development project in Jinja town worth Ushs 3.3 billion. Byarugaba added that the housing project in Mbuya is in response to a housing deficit and lack of adequate and well-planned real estate in Kampala- an investment opportunity that the Fund has identified.

 “Once complete, the estate will provide accessible first-class residential apartments. Ugandans are hungry for property in planned housing projects and we hope that this estate will be a model that can be replicated elsewhere in Uganda. We are keen to launch all our planed housing projects because we have deliberately chosen to be the solution to Kampala’s housing deficit problem,” he added.

Each apartment will occupy an approximate gross floor area of 160 m² with 3 bedrooms, the master bedroom en-suite with both a bath tub and a shower and the other 2 bedrooms sharing a bathroom, lounge opening to a terrace, dining room, kitchen, drying yard and servant quarters.

Mr. Patrick Byabakama Kaberenge, the NSSF Board Chairman noted that the new venture is in line with NSSF’s real estate investment strategy and the Fund’s 10-Year Strategic plan.

“By the end of this year alone, the Fund would have invested close to Ushs 578 billion in real estate projects in Uganda,” Mr Kaberenge said. Other real estate projects that the Fund plans to undertake include Lubowa Housing Project, Pension Towers and the Off-Taker Housing Project.

“As a Board, we committed to supporting Management to kick start real estate projects that have stalled. The fact that the Fund has launched 2 significant projects in just a month is testimony that my Board is delivering on our commitment,” he said.

He further explained that the Fund aims to reduce its portfolio risk by having a well-balanced and diversified portfolio in line with its Investment Policy. As at December 2015, the Fund’s Fixed Income investments stood at 76.9% of our total assets, Equity was at 15.3% and Real estate followed at 7.8%. Today, its total assets stand at Ushs6.25 trillion up from Ushs5.975 trillion in December 2015.

NSSF Campaign To Inspire Savings Culture

The National Social Security Fund (NSSF) has launched a savings campaign dubbed “Friends with Benefits” aimed at educating its members and the general public about a savings culture and better usage of benefits. The campaign will run as a TV show programme profiling retired workers who invested or used their NSSF benefits to transform their lives, and those of the communities around them.

Richard Byarugaba, the Managing Director NSSF Uganda, said, the campaign aims at showcasing inspiration success stories from members who have received and used their benefits to change their lives. The programme will also look at how the retirees’ success stories have benefitted the communities they live in so as to motivate existing and potential members to invest in retirement savings.

“Over the last 30 years, NSSF has paid Ushs1.1 trillion to 250,000 members who have claimed their benefits on retirement. This is a significant amount we have put into the economy of Uganda and is in line with the Funds’ commitment to deliver a better life to our members,” Byarugaba said.  

The “Friends with Benefits” campaign we are launching today will bring those stories to life to give hints into various ventures that one can undertake with their benefits packages for a better life.”

Participation

Beneficiaries will be required to submit a short real and compelling story (100 words) on how their lives have been transformed as a result of the benefits they received. In addition, relatives and friends can also share stories of beneficiaries they know whose lives have been transformed because they put their benefits to excellent use.

The Top 20 successful stories will be aired in a compelling TV show where winners will be selected through voting by the public.

According to Byarugaba, the campaign will run for a period of 4 months and the winner will be rewarded with shs30 million in prize money. Participants will submit their stories until June 7, 2016 and these shall be vetted by a selected panel of judges that will be announced at a later date. 

The campaign is expected to ignite national conversations about the need for every single Ugandan, regardless of their background or salary level, to save and invest for a better life hence cultivating a savings and investment culture among Ugandans.

Goldstar Insurance Donates To Needy Children

 

When you walk into Katalemwa Cheshire Home, a facility that has been taking care of disabled children since 1970, your mood changes to sombre.  This sad change of mood is caused by the vicinity of children struggling to live.

Many of these children are born with disabilities while some are disabled by accidents and diseases. Their parents bring them to Katalemwa for correctional therapy and medical rehabilitation. And as it is well documented, Katalemwa is doing a good job however they are strained by their insufficient resources.

Katalemwa receives about 20, 000 children every year brought in from different parts of the country yet the facility is ill equipped. For example it has only 200 beds which means it struggles to host all patients brought in. So they only retain serious cases and other cases are attended to at home.

To continue offering services Katalemwa solicits for funding from donors, corporate organizations and well-wishers. On Tuesday, 12 April, 2016, Goldstar Insurance, one of the leading insurance services providers in Uganda, visited the home and delivered 25 wheelchairs to benefit some of the needy children and adults.

According to Paul Kavuma, the deputy managing director of Goldstar Insurance, the wheelchairs contribution is one of the many activities the insurance company is going to carry out as they celebrate making 20 years in business. Goldstar started operating in Uganda in 1996. And for that matter, they are carrying out a series of CSR activites and give back to community.

Samali Matovu, the executive director of Katalemwa Cheshire Children’s Home acknowledged that the donation will help them rehabilitate children. She lamented that many parents cannot afford to buy equipment for their children hence the need for support from organizations like Goldstar.

“With the new wheelchairs from Goldstar, children will be able to access social services like education because they can now move to school. Mobility had hampered them.” Matovu, who revealed that sustaining the home’s activities is a challenge, said.

Katalemwa offers services like occupational therapy, physiotherapy, counselling, measurement and fitting of assistive devices, construction of therapy equipment at home using locally available raw materials and empowering caregivers with basic rehabilitation skills to children suffering from spina bifida, hydrocephalous, cerebral pulse, intellectual disabilities, and bone deformities among other complications.

Olive Nabiryo, an occupational therapist at the home explained that children go through stages when recovering. She said that many of the children have weak limbs therefore they can support their bodies. “We go through stages, after one stage, we go to another, sometimes the child takes a lot of time to learn a stage. We work with parents and we teach them how to rehabilitate their children. Parents learn from what we do.” She said.

Hussein Lukwago, also an occupational therapist, said that because of weak limbs children cannot control their muscles. But through physiotherapy, these children are taught how to walk, eat, use toilet and move their bodies.

The home also has a playground which is used by children to play and relax. It is fitted with learning materials and play tools. Barbara Namudope, the programmee officer at the home, explained that playing is part of the therapy. The home also has a learning center which according to Berna Namujuzi said is used to teach these children daily living skills that help them to be independent.

Through donations, the home managed to construct their own workshop from where they make eqipments used by the children. From the workshop, they make wheelchairs, standing flames, walkers, CP chairs, crunches, beds, toilelts.

William Semuyamba, an orthopedic technician said sometime they make an equipment according to the need of the patient. “We try to suit the needs of the user.” He said.

Sharifah Nansumba, another orthopedic technician, said they use local material to make these equipments because their suitable for the environment, readily available, easy to repair while the imported equipment are expensive and hard to repair because spare parts are not available.

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