Dar es Salaam — The value of exports of manufactured goods dropped by $272.4 million (Sh607.5 billion) last year amid a credit crunch, new data shows.

If the trend continues it is likely to hit the endeavour to turn Tanzania into an industrialised middle-income economy as envisioned in the second Five-Year Development Plan whose implementation runs from 2016/17 to 2020/21.

A total of Sh107 trillion – to be sourced from both the public and private sectors – is required to finance the plan.

However, the government believes that what happened last year was nothing unusual.

“Data on exports is always changing according to prevailing circumstances. Sometimes exports increase, sometimes they fall…nothing unusual in this,” Industry, Trade and Investment minister Charles Mwijage told The Citizen yesterday, adding that the government’s industrialisation agenda was still on track.

The value of exports of manufactured goods crossed the $1 billion mark in 2012 to hit $1.037 billion, up from $861 million in 2011.

It further climbed to $1.23 billion and $1.36 billion in 2014 and 2015, respectively, before dropping to $1.09 billion in 2016, according to the Bank of Tanzania (BoT).

BoT says in its January 2017 Monthly Economic Review that there was a marked fall in exports of commodities such as edible oil, plastic goods and ceramic and glassware.

Manufacturers have been taken by surprise and have asked to be given enough time to analyse the trend.

“What we have is a generalised figure. We need to conduct an analysis from the sector’s perspective,” the First Vice Chairman of the Confederation of Tanzania Industries, Mr Jayesh Shah, told The Citizen.

Going by the BoT figures, however, it is clear that the manufacturing sector, like other key areas, has suffered due to a sharp drop in credit as banks adopted a more cautious approach to lending in response to tight liquidity.

The illiquidity was partly attributed to the government’s decision to transfer public institutions’ deposits from commercial banks to BoT and non-performing loans (NPLs).

Total credit to the private sector declined by 7.2 per cent in the year ending December 2016.

NPLs accounted for an average of 9.5 per cent of all loans issued against a target of below five per cent.

The manufacturing sector last year registered a -4 per cent (minus four per cent) growth rate in credit as the entire private sector registered a drop in credit throughout the year.

Interestingly, BoT data, however, shows that there was an 18.5 per cent increase in imports of industrial raw materials in 2016.

The number of new projects may have declined last year as evidenced by a 52 per cent ($618.3 million) drop in the value of capital machinery imports, associated largely with the completion of some major projects, including construction of a cement factory in Mtwara, gas power plants, and exploration activities.

Mr Mwijage told The Citizen yesterday that he was ready visit all major factories in the country and get a first-hand account of challenges faced by manufacturers as part of efforts to boost exports of manufactured goods.

By Haftu Gebrezgabiher

The Ministry of Foreign Affairs announced that the Ethiopian Diaspora Community in different parts of the world raised 2,101,000 USD to back the construction of the Grand Ethiopian Renaissance Dam (GERD).

In a press briefing Friday, Ministry Spokesperson Tewolde Mulgeta said the contribution was made during the last six months in the form of bond purchases, donation and other funding mechanisms.

Tewolde added that the ministry met 199 times over the last six months with the diaspora community through various forums. Following this, the Diaspora made active participation in the fund raising and other programs including ICT, health and educational support, according to the Spokesperson.

For its part, the ministry has made supports to 8,400 people in providing legal protection, investment tips as well as settling salary cases, Tewolde noted.

Reports indicate that Ethiopia has over three million diaspora in different parts of the globe, it was learnt.

Palo Alto, California —

• Five DEMO Africa winners join global startups for Startup Grind Conference and the Lions@frica Innovation Tour

African innovation meets Silicon Valley   this week as part of the 2017 edition of the Lions@frica Innovation Tour in California. The five winning startups from DEMO Africa 2016; Sortd,  Solstice ,  MediaBox, Strauss Energy and ConnectMed, will compete alongside Silicon Valley technology startups, and engage the venture ecosystem in Northern California through a series of curated events and activities. Organized by the Silicon Valley based African Technology Foundation, the fifth edition of Lions@frica Innovation Tour is focused on knowledge sharing with leading Silicon Valley stakeholders, and networking opportunities that will yield deeper engagements between the African startups and their target partners in Silicon Valley. Since the inaugural edition in 2013, twenty-five (25) African startups have benefited from this transcontinental program that seeks to bridge knowledge gaps, and enable African technology startups to showcase their innovation on a global scale.

“These five startups have been prepared for the tour through a series of learning activities over a two month long virtual bootcamp”, commented Aliesha Balde, Communications Manager for the Lions@frica program. “We want them to engage the Silicon Valley ecosystem on their own terms, but armed with the right tools and equipped with the necessary resources”.

Over the last five years, DEMO Africa alumni have raised around $16 million in funding and continue to advance the cause for African led innovation on a global scale. Alumni of the tour include Soko, Flowgear, Spacepointe, Zuvaa and Chura.

“After emerging as winners from an application pool of over six hundred startups on the continent, we are eager to ensure that these five companies successfully assume an ambassadorial role for African innovation”, said Stephen Ozoigbo, Managing Partner of the Lions@frica Program. “They are re-inventing Africa’s future, and we are supporting their strategic actions to increase their likelihood of success”.

About the companies

ConnectMed

ConnectMed  is an online medical practice that allows patients to seek treatment from General Practitioners over video for common ailments directly through a web & mobile application.

Country of Origin  — Kenya

Key Executive

Melissa McCoy

MediaBox

MediaBox  is a video-on-demand content aggregation platform that gives viewers the easiest way to watch international and local content, both on demand and live over the internet.

Country of Origin  — South Africa

Key Executives

James Muir

Roeland Van Nieuwkerk

Solstice

Solstice Home Energy Solutions offers a simple multi-energy source management and energy control system for homes and buildings. Solstice uses data from their integrated hardware/software system to provide clean, reliable and affordable energy solutions.

Country of Origin  — Nigeria

Key Executives

Ugwem Eneyo

Cole Stites-Clayton

Strauss Energy

Strauss Energy is a solar energy and manufacturing company that produces innovative BIPV Stima solar roofing tiles. Strauss energy offers a cost-efficient alternative to modern solar roof panels and distributes and sells energy at a significantly reduced price.

Country of Origin  — Kenya

Key Executives

Tony Nyagah

Charity Wanjiku

Sortd

Sortd is a Gmail smartskin that expands the functionality of an email inbox by providing users with the option of organizing emails as a flexible set of lists or tasks.

Country of Origin  — South Africa

Key Executives

Rodney Kuhn

For more information on the Lions@frica Innovation Tour, please visit www.africa.co. You can also follow LIONS@FRICA on Twitter @lionsafrica. For media requests and interviews, contact: aliesha@thea25n.com or call 1 (818)-660–5676.

About LIONS@FRICA

A public-private partnership launched by the U.S. Department of State aimed to enhance and deepen the startup and innovation ecosystems of targeted fast growing African economies through investment in Capacity-building, access to Capital, enhanced Connectivity to global markets, and Credibility, by raising awareness of Africa’s innovation potential.

About African Technology Foundation (ATF)

The African Technology Foundation (ATF) exists to globalize African technologies and introduce global technologies to the African ecosystem. To achieve this, we support a broad range of initiatives around key economic sectors, and we are committed to providing African technology startups and enterprises with the necessary knowledge and resources that empower them to raise the economic profiles of their communities, municipalities and countries.

By Louise Osborne

Renewable energy is becoming increasingly viable worldwide. But how can governments spread the message to the public? In Morocco, the authorities have been looking to religion for the answer.

Revving engines and hooting horns – sounds from Marrakesh’s busy street filter up to the rooftop of one of the Moroccan city’s biggest mosques.

The mosaic-decorated, stone minaret of the Koutoubia Mosque, towers above the flat roof, providing little shelter from the strong sun that beats down onto a row of giant solar panels. That is precisely what Jan-Christoph Kuntze is counting on.

A project manager for GIZ, the German society for international cooperation in Morocco, Kuntze tells DW the panels were only recently installed but are already proving a success.

“It’s basically for covering lighting needs and a couple of other energy needs in the mosque,” he says.

Although the roof panels are not visible from the street, a panel standing in front of the mosque informs passers-by how much electricity is being produced by the solar panels at any given time, and how many carbon emissions have been avoided.

Something old, something new

It’s all part of a scheme being pioneered by Morocco’s Ministry of Islamic Affairs. Of around 50,000 mosques dotted across the country, the ministry is responsible for energy and water in approximately 15,000. The government plans to install electricity producing PV, or photovoltaic panels, LED lighting and solar thermal water heaters at around 600 mosques by 2019 and more after that.

Koutoubia is one of the country’s first mosques to have solar panels installed and one of the most-high profile, says Kuntze.

“This is a very old mosque, one of the oldest in Morocco. There’s a lot of awareness-raising potential via this mosqu,e because it’s so important for Moroccans.”

The changes taking place at mosques are just some of the measures Morocco is taking in developing its renewable energy sector. A frontrunner in the region, the country has already rolled out large wind farm and solar energy projects. In 2015, the King of Morocco announced the country would aim to get more than half its electricity from renewables by 2030.

Getting used to green

The project was showcased at the UN climate conference in Marrakesh in 2016. Said Mouline, general director of AMEE, the National Agency for Energy Efficiency Morocco, told the international community how the mosques can help achieve energy targets and raise public awareness.

“We want to show that even in mosques we can have efficient lamps, we can have solar water heaters, we can have even solar PV,” he told DW. “The big deal is to have people sensitized about energy efficiency – seeing technology in the mosque, and then hoping they will install that technology in their houses.”

Currently, Morocco is heavily dependent on energy imports. AMEE estimates that more than 95 percent of its energy comes from outside the country, which makes it vulnerable to energy price fluctuations.

The government believes that energy efficiency and renewable energy are the key to reducing the country’s dependency and providing people with an affordable source of power, at least in the long run. But the initial costs for installing solar panels or measures to make their energy more efficient are beyond what many Moroccans can afford.

“We are looking for financing for citizens, for implementing energy efficiency. We have to convince them that it’s better… ,” added Mouline.

Calling all Moroccans

The call to prayer echoes across the square outside the Koutoubia mosque. People make their way quickly towards the building to take part in Friday prayers, one of the most important days of the week for Muslims.

Few mosque-goers here seem to be aware of the mosque’s solar panels – not visible from street level. Still, people seem to be optimistic about the future of renewables.

“The good thing about solar energy is that unlike electricity, it is always available. It’s from God,” says one man.

A young girl outside the mosque says that she could imagine using renewable technologies in her own home. “This could be the future for Marrakesh to depend only on solar energy,” she says.

There is still a long way to go before Morocco meets its renewables targets. But the future for Morocco’s mosques at least, is looking decidedly greener.

By Hamisu Muhammad and Francis Arinze Iloani

The Central Bank of Nigeria (CBN) has again changed its rules on foreign exchange allocations for manufacturers and travellers in a bid to ease scarcity and ensure enough liquidity.

In the new rules released yesterday, the bank is providing, with immediate effect, direct additional funding to banks to meet the needs of Nigerians for Personal and Business Travel, Medical needs, and school fees.

The CBN expects such retail transactions to be settled at a rate not exceeding 20 percent above the interbank market rate (nearly 366/$1).

The new policy also stopped prioritising manufacturing above other sectors in the allocation or utilisation of the forex.

It added that even though the manufacturing sector would remain the CBN’s strong priority, it will no longer impose allocation/utilisation rules on commercial banks.

Previously, the CBN had directed banks to be allocating 60 percent of the forex to the manufacturing sector, the process that starves other sectors of the needed forex. Nigerian economy has been hit by the scarcity of forex due to the fall in price of crude oil in the international market, leaving virtually all the sectors of the economy contracted in the last two quarters of 2016.

Industries like electricity, pharmaceutical, property, automobile, printing and services that mostly rely on the imported raw materials have suffered heavy consequences, as their operation cost overshot by about 200 percent in some instances.

At the parallel market yesterday the naira fell to 515/$1 even as traders are uncertain about the effectiveness of the new policy.

Shehu Aliyu, a trader in Abuja, said the new rule if implemented would slow down the rate of naira depreciation.

He, however, expressed doubt about its implementation saying that they had witnessed many of such policies in the past by the apex bank, which had been frustrated by the same people in the banking sector.

The Executive Secretary of the National Association of Small and Medium Entrepreneurs (NASMEs), Eke Ubiji, told the Daily Trust that the new policy in the eyes of manufacturers is like “moving from frying pan to fire.”

Ubiji said the policy will “kill” the manufacturing sector and reverse gains achieved since the 60 per cent forex allocation to manufacturers was introduced.

He said those criticising the proportion of forex allocated to manufacturers should consider what necessitated the policy in the first place, which was the importation of machinery for manufacturing purposes.

“Most manufacturers import their machineries from abroad,” Ubuji said. “They need foreign exchange to import. That was why the policy was put in place,” he said.

He said the reversal of the policy will not only hurt manufacturers but would also have adverse effect on the economy and Nigerians in general.

At the 14th Daily Trust Dialogue held recently in Abuja, the Chairman of Stanbic IBTC Bank Plc, Mr. Atedo Peterside, tackled the CBN for its “failed” policies on foreign exchange.

Peterside said the disparity in the proportions of forex access allowed by the apex bank for manufacturers and other operators in other sectors of the economy was partly responsibility for forex crisis in the economy.

“The directive to banks to allocate 60 per cent of forex to manufacturers that account for only 10 per cent of the Gross Domestic Product has exacerbated an already bad supply situation. 40 per cent is too small to accommodate the rest of the economy and so all other sectors have been crippled, including the service sector, which accounts for over 50 per cent of the GDP,” the bank executive had said.

“In order to further increase the availability of foreign exchange to all end-users, the CBN has decided to significantly reduce the tenor of its forward sales from the current maximum cycle of 180 days, to no more than 60 days from the date of transaction,” the CBN said.

“In order to further ease the burden of travelers and ensure that transactions are settled at much more competitive exchange rates, the CBN hereby directs all banks to open FX retail outlets at major airports as soon as logistics permit,” it added.

Dar es Salaam-based business magnet Yusuf Manji appeared before the Kisutu Resident Magistrate’s Court in the city yesterday, accused of abusing drugs.

Before Principal Resident Magistrate Cyprian Mkeha, the accused denied the charge and was released on bail after the prosecution bench, led by Assistant Director of Public Prosecutions Oswald Tibabyekomya raised no objection to bail. Senior State Attorney Shadrack Kimaro is assisting in the prosecution.

A Court Clerk, Ms Sara Mulokozi, alleged that Manji committed the offence between February 6 and 9, this year, at Upanga Sea View area in Ilala District.

The accused was charged with consuming Heroine, diacetyl-morphine. He was charged under section 17 (1) (a) of the Drugs Control and Enforcement Act No. 5 of 2005, which upon conviction, provides for a fine of not less than one million shillings, a fiveyear jail term or both sentences. Granting the bail, the magistrate sat two conditions requiring the accused to sign a 10m/- bond and secure one reliable surety who also signed the bond of similar amount.

Young African Sports Club (Yanga) Secretary General Charles Mkwasa was at the court to bail out Manji. With Mkwasa, were hundreds of the club fans who thronged the court premises as early as in the morning to witness the arraignment of the club chairman. Magistrate Mkeha adjourned the case to March 16, when it comes for mention.

Investigations into the matter, according to prosecution, have not been completed. The visibly frail Manji arrived at the court premises at around 2.00pm and was locked up for almost an hour before the arraignment.

Immediately after completing the bail approval procedures, Manji’s leading counsel, Mr Alex Mgongolwa said their client will be immediately taken to hospital, noting that his health condition is unstable. In the trial, Mr Mgongolwa is assisted by advocates Hudson Ndusyepo and Jeremiah Mtobesya to defend the accused.

Manji, among other persons, was implicated in the crime since last week after the Dar es Salaam Regional Commissioner, Paul Makonda, named him in the list of suspected drug abusers and dealers.

He was later directed to report to Central Police station for interrogations, the order he complied with. Reports had it that during the interrogations, Manji fell sick and had to be rushed to Muhimbili National Hospital where he was admitted until yesterday when he was arraigned.

Meanwhile, JIMMY LWANGILI reports that video vixen Agnes Waya, Masogange, and 16 other suspects of drug abuse were yesterday taken to the Government Chief Chemist for testing, with the police promising to release the result today. Dar es Salaam Special Zone Police Commander Simon Sir-ro told reporters in the city that Masogange and 349 other suspects were arrested during the ongoing crackdown against drugs.

“After investigations, the suspects may be released, put under police supervision or arraigned,” said Commissioner of Police, adding that nine police officers who had been suspended, pending investigations on their involvement with drugs were yesterday handed over to the Drugs Control and Enforcement Authority (DCEA) for further investigation.

Commissioner Sirro further said the police have arrested a 23-year old Omary Bakari, a former student at the University of Dar es Salaam Computing Centre, over the publication of false statement on social media.

The suspect was arrested on Wednesday night at Mbezi after he published false claims on facebook that Dar es Salaam RC Makonda had mentioned names of prominent figures dealing in narcotic drugs.

“In interrogation, the suspect admitted to have committed the crime and he will be taken to court,” said Sirro, hinting that in the crackdown on drugs from February 1 through 15, the law enforcers arrested 349 suspects, seized 612 pellets of Heroin, 816 bundles and 89 rolls of marijuana and 19 bundles of khat.

Osogbo — A member of Osun House of Assembly, Mr Olatunbosun Oyintiloye, has called on Nigerians to “cut their appetite” for foreign goods to fast-track the growth of the nation’s economy.

Oyintiloye, who is the Chairman of the House Committee on Information and Strategy, made the call in an interview with the News Agency of Nigeria (NAN) on Sunday in Osogbo.

He said Nigeria as a nation must also cut its dependence on foreign goods, increase local production and enhance entrepreneurship.

He said these would help to strengthen the Naira which was under too much pressure.

The lawmaker said that Nigeria had failed to take advantage of the huge opportunities in the agriculture and manufacturing sectors.

“We need to cut our appetite for foreign goods; we should also cut the importation of food to 25 per cent of the current volume.

“It is really shameful that in spite of our endowments in natural resources, we are still dependent on imported food items as a nation.

“By importing, we are simply developing the economies of the countries we buy from through job creation, value chain maintenance, capacity for product development and other spin-off effects of production.

“We have to feed our population and depend less on importation to fast-track development of our country,” Oyintiloye said.

By Ndamu Sandu

Economic measures put in place by Reserve Bank of Zimbabwe (RBZ) governor John Mangudya to drive economic growth will come to nothing in the absence of structural reforms, analysts have warned.

In his monetary policy statement released last week, Mangudya announced a raft of measures that included, among others, the extension of the $200 million interbank facility, putting caps on lending rates and bank charges to bolster confidence within the economy and to stimulate production and productivity across various sectors of the economy.

Mangudya said the measures were necessary as the country needed to pursue a new economic development model which was anchored on an export-led growth strategy to balance exports and imports while simultaneously addressing the structural rigidities besetting the economy in order to expand output.

Economists told Standardbusiness last week that Mangudya’s prescriptions gave temporary relief but would be meaningless in the absence of bold reforms by government to complement the monetary policy measures.

“Government has to make bold reforms on how it is spending money in the economy. The mismatch between expenditure and revenue has to be addressed,” an economist with a local bank said.

Government has been running budget deficits and financing the gaps through borrowing from the domestic market, thereby crowding out the private sector.

Another economist weighed in, saying whichever measure one puts in place “will have no effect until the structural issues have been attended to”.

“Whenever you put monetary measures to structural issues, it doesn’t work. Monetary policy is the engine oil in a car. The car will not move if it does not have fuel or wheels,” she said.

Businesses have in the past complained of unfriendly legislation and high costs of utilities which increase the cost of production and make local products uncompetitive. This has been compounded by the use of a strong currency, the United States dollar. RBZ has been advocating for internal devaluation as the use of the multicurrency regime makes the apex bank unable to devalue the currency and stimulate exports.

Zimbabwe National Chamber of Commerce CEO Chris Mugaga said Mangudya’s statement might be a good policy in a wrong environment.

“We are in a tough environment which needs robust structural changes. A depressed economy is managed better through fiscal policy,” he said.

Mangudya implored banks to ensure bond note-dollar parity by observing the policy to deposit bond notes into the dollar accounts without requesting the banking public to differentiate between bond notes and dollar cash.

The measure, Mangudya said, was essential to ensure that bond notes continued to trade at parity with the dollar and to reflect the fact that bond notes are supported by the $200 million offshore facility to support the demand for foreign exchange attributable to bond notes.

But a banker told Standardbusiness that the dollar-bond note parity would only be sustained if foreign currency was available.

“The issue of parity cannot go away until we address availability of foreign currency. If a number of companies are not accommodated [in the disbursement of dollars], they will resort to an alternative source which is the parallel market,” the banker said.

The banker said controls had become the main tool of the monetary policy, which he said was unhealthy.

Mugaga said the greatest worry would be when RBZ was forced to read the riot act on banks to ensure they adhered to the measures on cutting lending rates and bank charges.

He said it was “not sustainable in this environment” for banks to cut lending rates as they were under pressure.

But University of Zimbabwe economics lecturer Albert Makochekanwa said the high interest rates were discouraging companies from borrowing and fuelling high default rates.

“One of the major reasons why companies are not borrowing, even if the money is there, is because interest rates are high. It discourages companies from borrowing and at individual level it results in high non-performing loans.

The higher the interest rates, the higher the chances of people failing to pay,” said Makochekanwa, chair of the Economics Department at the University of Zimbabwe.

Mangudya said he was alive to the structural reforms required and urged government to complete the implementation of policy measures to address structural reforms. Of particular concern, he said, were structural reforms that related to the ease and cost of doing business, fiscal consolidation, state owned enterprises and incentives to expand output and productivity.

“These structural reforms are quite fundamental as they are the bedrock of achieving the supply-side development goal that is anchored on the need to balance exports and imports while simultaneously boosting domestic demand or output,” he said.

“This model requires significant levels of investment financed mainly through equity, as opposed to debt to mitigate against overgearing or leveraging the country. Addressing the structural reforms would therefore enhance business confidence and attract investment, both domestic and foreign investment.”

In the outlook, Mangudya said the mutually beneficial three-pronged policy approach relying on monetary, fiscal and structural policies being pursued by government and RBZ would go a long way in stimulating the economy and boosting productivity.

By Julius Businge

When The Independent recently spoke to William Sekabembe, the chief of business and executive director at dfcu about the bank’s strategy on digital banking, his comments reflected the popular view.

“We are investing heavily in technology so we can serve our customers without necessarily opening new branches in all parts of the country,” Sekabembe said.

His comments came at a time when sections of people argued that digital banking tools were silently killing jobs. Digital banking uses simple gadgets like phones and other internet enabled tools like tablets to make commercial transactions without necessarily visiting a service provider. Digital banking, therefore, sounds like a death knell on jobs since, according to informed sources, closing even the smallest bank branch in the smallest outpost kills at least about 15 jobs.

Media reports recently indicated that Equity Bank alone shed 660 jobs last year because of adoption of new digital technologies in Kenya. Up to 63% of the bank’s transactions are now conducted on the new technology platforms compared to just 7.4% of transactions conducted at its branches and 21% through agents as of September 2016.

The furor over job losses led the bank to issue a quick statement indicating that it would not be retrenching all workers but would instead reallocate them new roles within the bank. Bankers in Uganda share the share view. Instead of leading to net job losses, digital banking technologies, in fact, herald any rush of specialty jobs in the sector.

Bank executive have told The Independent that human contact remains critical in key areas that still require traditional way of banking. These include sales and marketing, product development, investment banking, loans, relationship management, and more.

Others say that once new banking segments like agency banking (where banks use agents to offer financial services in areas where they do not exist) come into play in Uganda, digital banking will open up a whole new array of jobs.

United Bank of Africa’s Head of Business Development, Don Atwine and Stanbic’s Head of Digital Banking, Veronica Sentongo said as banks become more efficient and improve performance, more jobs will exist in the area of financial literacy programs.

Banks will be working towards increasing the bankable population from the current about 30% of the bankable population of12 million. They added that there is still room for bankers to give advisory services to customers regarding retail and wholesale banking.

The question of unemployment is a major concern in Uganda because the country continues to grapple with about 500,000 people entering the labour market every year of which a small number of these get formal employment.

The services sector – where banks fall – contributes a substantial 50% to the national gross domestic product and that means a lot in terms of job creation and the multiplier effects.

The Uganda Bureau of Statistics (Ubos) data indicates that 64% of the unemployed Ugandans are aged 24 and under, which is on the backdrop of high population growth rate of over 3.3%. That is higher than neighboring Kenya’s 2.7% and Tanzania 3.0%.

Specific official employment figures for banking in Uganda are not available but the rate of job losses among tradition bank positions of tellers, office staff, guards, supplies vendors and more is not negligible given that the number of bank branches and Automated Teller Machine (ATMs) has been on the rise.

The last Bank of Uganda’s report on financial inclusion released three years ago put the total number of bank branches in the country at 658 up from 167 recorded in 2004 whereas ATMs jumped to 835 from 152 in the same period.

The onward trend curve for these numbers is likely to stagger somewhat as digital tools continues to excite bankers and their customers.

“I am able to buy airtime from my bank account by using mobile money on my phone,” said Josephine Alinaitwe a Stanbic bank customer, “It saves my time, energy and costs to move to a bank or ATM.”

Indeed Sentongo (the head of digital banking at Stanbic Uganda) said if Arinaitwe and others can transact using digital tools, there is no need of opening branches everywhere because they are expensive. She did not give specifics but a former employee of Crane Bank, now dfcu bank said it costs approx. US $2 million (Approx. Shs billion at current exchange rate) to put up a full-fledged commercial bank branch. Considering many factors, the official said, investing in centralised IT systems that would ably handle transactions without face-to-face meetings between customers and the bank, would make a good investment.

Sentongo said that digital tools have reduced the bank’s operational costs per customer by 80%.

“We spend Shs12, 500 to serve one customer at a branch compared to Shs2, 500 when we serve them using digital platforms,” she said. She added that 55% of the bank’s transactions have migrated to digital for the last two years and that new software is being sought to enhance the platform.

At Standard Group level, according to a notice quoting Peter Schlebusch, the group’s chief executive for personal and business banking, 95% of the group’s transactions are already electronic “making it a genuinely digital bank”.

In 2015, according to Schlebusch, 825 million financial transactions worth $29 billion were processed through the Stanbic banking app.

As a consequence of this, branch transactional volumes have declined and ATM and branch transactions now make up less than 5% of total banking transactions.

The group names Uganda amongst markets where it continues to enhance its integrated universal banking app, which allows personal, business and high net worth customers to view and transact with a single digital identity. The other markets the group mentions include South Africa, Ghana, Namibia and Botswana.

Other banks locally are telling similar good stories about the new tools.

Don Atwine (the head of business development at United Bank of Africa) said digital banking is becoming another competitive area of business which they cannot ignore.

“Digital banking is one of our strength as a bank… .our aim is to digitize almost everything in the bank as we grow this business,” he said, adding “About 30% of the bank’s transactions are digital. The target is to keep electronic transactions going up, Atwine said.

Opportunities for growth

Michael Niyitegeka, an ICT consultant in Kampala told The Independent in an interview that once well implemented – with concrete firewalls to prevent cyber crimes – digital banking will cut costs of doing business and result into improved efficiency in addition to increased profit margins.

“… and ideally that should result into reduced interest rates and other charges levied by banks on services offered to their customers,” he said.

Even Bank of Uganda Governor Emmanuel Tumusiime Mutebile reads the situation the same way. While addressing bankers in Kampala at a dinner on November 25 2016, he urged them to find ways of cutting operational costs so as to check the high cost of lending [hovering around 24% per annum] that was killing private sector growth.

Mutebile said annual operating costs as a percentage of average bank assets were as still as high at more than 7% than they were 10 years ago. As a percentage of their earning assets, he said, banks’ operating costs averaged nearly 11%.

The good thing, according to Niyitegeka is; access to mobile phones currently printed at slightly over 50% (where about 20 million people noted as telecom customers) will bolster the new system that widely uses digital banking.

Commenting on unemployment worries, Niyitegeka said: “… yes it can hurt employment but it can indirectly create more when banks become more efficient and engage in other forms of banking.”

The other forms he was referring to includes agency banking (where banks use agents to offer financial services) which many Kenyan banks are embracing in order to reach out to all the bankable population.

Kenya’s digital success story has seen banks swiftly respond by downsizing their branch networks.

Bank of Africa is shutting down 12 out of its 42 branches. Ecobank is closing nine out of its 30 branches. Diamond Trust Bank is doing the same.

All these banks have physical presence in Uganda. But top officials at these banks have not openly come out to announce their detailed strategy on the matter.

But Niyitegeka said that the decisions in Kenya are justified and Uganda would follow at the right time.

“When you have an agent to offer services on your behalf in places where you are nonexistent you do not need to be there physically,” he said, “I hope agency banking will make things happen when it comes to Uganda.”

Niyitegeka equated agency banking to telecommunication mobile money platforms that are creating thousands of jobs directly and indirectly in Uganda and other markets where the service is offered.

By Owen Khamula

Malawi Law Society of Malawi (MLS) has sharply criticised embattled Agriculture minister George Chaponda for his regionalism and tribalistic remarks over his maizegate scandal.

In a statement, the MLS secretary general Khumbo Soko warns Chaponda against dragging regionalism and tribalism into the maizegate saga.

“These remarks are divisive,” says Soko.

Chaponda told the parliamentary inquiry on maizegate that he was a target on maizegate because he was from the south.

The Agriculture minister also wondered on Capital FM radio recently why his cabinet colleague, Finance minister Goodall Gondwe was not a target yet he was involved in the procurement of the maize from Zambia.

But the MLS says such remarks have potential to divide the country further.

Gondwe says his involvement in the procurement of the maize was minimal as it was through the Reserve Bank of Malawi which provided Letters of Credit to Admarc to enable the state grain dealers buy the Zambia maize.

However, the presidential commission of inquiry on maizegate and the parliamentary joint Committee on maizegate found the conduct of Chaponda in his dealings with Transglobe most inappropriate, suspicious and raising issues of corrupt practices.

Meanwhile, the ministry of Agriculture is calling on staff to return to work at the ministry headquarters at Capital Hill on Monday.

The ministry, in a paid press release aired on radios, says electricity has now been restored at their offices.

This follows a raging fire which destroyed the offices of Chaponda, his secretary and ministry of Agriculture secretary Erica Maganga leaving other offices in the dark without electricity.

Some sections of society described the fire as an act of arson attack to conceal evidence in the maizegate saga as the Anti Corruption Bureau is moving in to investigate the minister further.

However Chaponda has denied this, saying if he would have concealed evidence when the two inquiries were investigating him.