By Innocent Ruwende

The Zimbabwe National Road Administration has released $1,7 million in emergency road funds to Harare City Council for the rehabilitation of the city’s roads, which were recently declared a state of disaster.

Harare is expecting at least $15 million for its 2017 allocation considering the state of the city’s roads.

According to the recent minutes of the Environmental Management Committee, councillors noted that Zinara had disbursed $1,7 million in 2016 and council was owed road and maintenance grants by Zinara dating back to 2015, which the road authority had promised to pay.

Last year, Zinara announced that it had allocated $1,2 million for road maintenance, but it is still to release the funds.

“The committee further noted that the funds were inadequate for the repair or maintenance of the 7 000km of roads, drains, public lighting, traffic signals and other street furniture,” read the minutes.

The road network had not had any meaningful routine maintenance over the last 15 years and the current heavy rains left the road network in a bad state.

“Council now discussed the matter expressing concern at the poor state of the road network in the city and observed that the state of the city’s roads was as a result of severe underfunding since the takeover of the vehicle licensing function by Zinara.”

Responding to the allocation of $1,2 million last year, Harare Mayor Cllr Bernard Manyenyeni said the allocation spelt doom for Harare roads.

“It is a joke — what does Zinara do for a living? If Harare has got anything to do with road maintenance we may have to introduce our own road fee. Goodbye roads for now,” he said.

“We expect $40 million to $70 million per year and you would notice it working. We can’t be taking money for water treatment to fix roads.”

Government has put Uganda Telecoms (UTL) under receivership in a move state Minister for Investment says is the only chance to save the troubled telecom company.

Evelyn Anite has told a press conference at the Ministry of Finance Headquarters that placing the telco under administration will save it from collapse.

“Putting UTL under an administrator is the best news for subscribers,” Ms Anite said, “I can assure that if you are a UTL subscriber, it will be here tomorrow and the day after, in fact I want to encourage more Ugandans to have UTL as their first line.”

Government took over the full control of UTL on February 25 after the majority shareholder, Libya government-owned UCom unilaterally pulled out of the struggling company.

Ms Anite said that since taking control, government has evaluated and found that the telco’s liability far outweighed its assets but has resisted a push to wind it up.

The telco is believed to owe about Ush128 billion ($34.7million) in debts.

By Hildebrand Shayo

Presently most bank’s quarterly audited financial reports indicates that these banks are experiencing high levels of non-performing loans (NPLs) ranging from four per cent to 50 per cent with averaged increase from 6.4 to 9.5 per cent when figures are placed in perspective.

Issues of NPLs and costs efficiency are related in several ways with general belief that failing banks tend to be located far from the best practice. While there is no suspicion on positive relationship between assets quality and costs efficiency that most of our banks are drawn in.

There are broad consensus on the view that high NPL levels ultimately have a negative impact on bank but as well as lending to the economy resulting to the balance sheet quality, profitability and capital restraints.

While in the contemporary years, studies on bank competence have taken in account asset quality specifically NPLs as a measure of bank’s performance, our bank’s current NPLs need decisive exit strategy from both a macro-prudential and a micro-prudential perspective.

Whereas isn’t about bank’s officers to go out “to collect” from those who have taken banks facility and have failed to meet their repayment commitment.

The omission to take on board business operating environment might lead to an erroneous banks measures as larger proportion of NPLs may signals that banks use fewer resources than usual in their credit evaluation and loan monitoring process.

The global lender is warning about soaring bad debts because although it may be contested, NPLs are hindrances to economic stability and growth of economies. Current measures taken by Central Bank of Tanzania of reducing statutory minimum reserves from 10 to 8 per cent is only a tip of the iceberg as more robust measures are required because the difference created is going to be of less value of the all-inclusive economy is stressed.

To promptly address the NPLs issues and hence cultivate a workable strategy that will address future similar problem, there is a need to place NPL’s in the business sector and those in the household sector.

In this way the ratio of NPLs to the total loans disbursed by the sector could help to designs appropriate strategy. Proposed approach is due to the fact that from the point of view of management accounting, bank asset quality and operating performance are certainly related.

Implication is that if a bank’s asset quality is insufficient i.e. amount becomes the amount to be collected, the bank will have no choice but to increase its bad debt losses as well as spend more resources on the collection of NPLs.

Naive of bank’s risks, knowledge gained from analysing published audited financial reports indicates that when banks list the loan amount for collection, banks will sustain extra operating costs from what can be termed as non-value-added activities to handle and supervise the collection process.

Non-value added undertakings may involve many hours of bank’s offices of constantly pursuing the debtors financial status, hours of being vigilant of the security value, dialogue and meetings on amortization plans, paying overheads for contract re-negotiation, calculating the costs to withhold, guarantee tracking and dispose of collateral at the time the loans become completely non-payable among other external variables outside bank’s control such as delays in court system, court injunctions and client’s character.

Furthermore, non-value added costs that goes unrecognised is winning the trust from possible lenders and public, preserving the banks from being rated poor as a consequences of external affairs, declining deposits due to a loss in credibility and extra banks resources to monitor loan quality.

Contained by this context, ignorance of the quality of the bank’s balance sheet may grab the attention of the business partners within and outside that may in turn deteriorates banks efficiency a situation captured by global lender as they warns about soaring bad debts.

Given banking industry business environment predominant in Tanzania today, bank loans will continue to be non-performing since glitches with perceived liquidity shortage purported to be caused by government withdraw of its deposits from commercial banks, commodity prices declines etc and the borrower’s financial health, problems with the design or implementation of lender protection features, or both.

In establishing how to deal with a problem loan, banks have tighten their credit terms as bad loans top 1.98tri/- in the stock of credit in the economy reaching 20.89tri/-. Notwithstanding the fact that lenders in the Tanzania financial landscape are stiffen terms of lending as one of the measures to deal with the escalation of NPLs, that has severely reduced the profits margins of many banks it is imperative from now on to distinguish between a borrower’s ability to pay and willingness to pay as opposed to rely on assets as collateral. Making this distinction is not at all times easy and requires effort.

Cautionary about soar-that turn into bad debt or dead loans will remains to be a problem for Tanzania banking industry and to some extent, this will be unavoidable. With industry’s amateurs diverse drivers for NPLs as a pretext, 59 Tanzanian banks in total, based on the first quota published audited financial reports give the impression that bank’s risk controls for loans are unsuccessful because the banks own a disproportionate levels of bad loans.

There is no one size fits all approach. Different banks pursue different strategies in relation to different types of loans. Strategic issues shaping approach in dealing with NPLs will include whether the loan can be rationalized, the quality of the principal collateral, proposed recovery levels, size of exposure, location of collateral etc.

One important thing is for banks, investors and borrowers to work together and be creative in finding solutions to the problems they collectively face to curb escalating NPLs.

ANALYSIS

Uganda is under attack. It is under attack from the Fall Armyworm in what experts call a “biological invasion”. Unfortunately, it appears, the government was caught unprepared. It has reacted with a mixture of indecision, panic, bluff, and deployment of ineffective intervention. As a result, the farmers – who are at the frontlines to battle the new enemy – are poorly equipped, frustrated, and desperate.

Umaru Ddumba, who has 107-acre farm in in Makukuba Village, Nabbaale Sub County, in Mukono District near Kampala, is a typical farmer in this category.

When he set out to plant his 12-acre maize plantation, he was looking at striking a windfall of over Shs30 million from his crop. He expected to harvest 20 bags of 100kgs each from each acre, which would give him 240 bags. And if he sold each at 150,000, he would get Shs36 million. But today, when you get to his farm, what you see are shriveled plants, with leaves mostly covered in numerous holes of varying sizing as if they were shredded by grenade shrapnel and are still on fire.

The Fall Armyworm, a never before seen pest in Uganda, caught Ddumba by surprise. He had prepared for the usual maize stalk borer(ndiwulira) by setting aside Shs1 million for pesticides and spraying. Instead, by mid- April he had spent Shs7 million on fighting the army of worms – with minimal success, on a field he planted in March. He was looking to harvest in June but is unsure now.

“I have little hope of getting any sizeable harvest,” he says.

But he cannot give up. He continues to spray because he fears the worm may attack his other crops on the farm since he is a mixed farmer who also grows bananas, coffee, and pineapples. He also keeps cattle.

Failure of this maize crop means Ddumba is making losses over two seasons in a row. Last season, he planted seven acres of maize and was expecting to get 140 bags but instead got only 105 as drought ravaged the country.

Ddumba’s losses, however, could have an even bigger implication for the economy. Even before the fall armyworm outbreak, food prices had remained stubbornly high because of the last poor harvest. Failure of this season will mean higher prices and possible stock-outs and famine.

Yet Ddumba is not alone. The armyworm has ravaged over 60 districts out of the 111 in the country. Many of those not attacked are not maize growing districts.

Desperate fight

The farmers, frustrated that they have been left to fight the new invaders on their own, without help from the government, have resorted to desperate measures to try save their crop.

Brig. Kasirye Ggwanga, the maverick soldier who was once the political head of neighbouring Mubende district has a 200-acre farm in Nakisunga village in Mukono District which was still safe in April. As always, he has developed a theory about why other farms are under attack.

“When you do research you find that this worm has mostly hit areas where trees have been cut down because the moths fly easily in empty space unlike in our areas which are still forested and the moths are trapped by the trees,” he says.

But Mukono District Agricultural Officer, Steven Mukasa Mabira, reports that the some farmers whose farms are under armyworm siege are resorting to desperate measures. Some are spraying paraffin on the plants.

Others like Moses Nyanzi, who has an acre of maize in Bbuto village Bweyogerere, are using a mixture of Dudu Cyper (which they have been using for the maize stork borer) and paraffin. While the concoction kills the larvae, it also scorches the young maize.

But Ddumba appears to be the most determined. He says when he first realised his maize was under attack from the worm in early March, he immediately dashed to shops in Kampala city’s downtown area called Container Village which is a haven of agro-vet supplies. He was sold an insecticide concentrate called Stryker which is traded by the American company; Control Solutions Inc., and is known to kill a wide array of insects. It is also highly toxic to open water sources, and kills bees.

Ddumba was told to use 20mls of Stryker in 15 litres of water. But it did not kill the worms. Ddumba was possibly not surprised because Uganda does not have an approved directory of approved pesticides and retail outlets, meaning farmers are used at hitting and missing with fake drugs.

So desperate Ddumba hatched a new plan involving a cocktail of Stryker and two acaricides he was familiar with; Dudufenol (also marketed as Dudu Cyper) and Dudu killer (a chemical designed to kill termites and manufactured in neighbouring Kenya). They killed a few worms but not all.

Ddumba was excited when the government finally announced on April 10 that it was joining the fight against the armyworm and the Minister of Agriculture, Animal Husbandry, and Fisheries (MAAIF) Vincent Ssempijja, announced at a press conference at the Media Centre in Kampala that Shs4.5 billion had been set aside for the task.

The resolve of government appeared to be confirmed as Ssempija was flanked by Lt. Gen. Charles Angina, the Deputy Coordinator of Operation Wealth Creation (OWC); a major government project to alleviate household poverty through agriculture.

When Ssempijja announced three recommended companies to sell drugs; namely Bukoola Chemical Industries, Nsanja Agrochemicals Ltd, and Uganda Crop Care Ltd, he was not adding anything new to the fight. These firms were the ones selling the Stryker, Engeo, and Rocket pesticides the farmers were already gambling with.

Ssempijja also said the Agriculture ministry was procuring emergency pesticides, pheromone traps for pest surveillance and motorised spray pumps, and recruiting 3,000 extension workers.

Ddumba’s shock came, however, when Ssempijja unveiled only 2,460 litres of pesticides to be used by OWC officers for all affected districts. Each district was getting between 100 and 30 litres depending on the number of reported cases.

If, as Ddumba says, each litre sprays about 1.5 acres, the government’s effort was equivalent to using a bucket to put out a farm fire.

Later, the Executive Secretary of the Uganda National Farmers Federation (UNFF), Augustine Mwendya, said the government had procured plans another 60,000 litres of pesticide for distribution free of charge to farmers in the affected regions of the country. UNFF is a member of the taskforce which was set up by MAAIF to fight the worm.

But when Ssempijja was asked about the 60,000 litres of pesticide and when they will be distributed to farmers, he sounded cagey and insisted instead that farmers should buy pesticides.

Ddumba says a litre of Stryker goes for Shs32,000 at retail price and the wholesale price is Shs28,000. Since one litre sprays one and a half acres of maize garden, Ddumba who has 12 acres needs eight litres for each spray run. That adds up to Shs224,000 without the labour costs.

But when Minister Ssempijja was launching the official pesticides, he said it advisable to spray twice a day so as to kill the worm and eggs. At that rate Ddumba would be spending close to Shs500,000 for each spray run. Very few farmers can afford that. That means the army worn will continue feasting on their maize at leisure. And the armyworm is a mean eater.

Stealth eater

The armyworm arrives in the night in the belly of multitudes of gray and brown moths that recently popped up in maize gardens across the country. With nobody paying attention, the moths laid up to 1500 eggs per female in clusters under the maize leaves and moved on. Four days later the eggs, still unwatched, hatched tiny greenish caterpillars with black heads which immediately started feeding on the thin layer of the underside of the leaf to avoid the sun and detection. But by week two the caterpillars had grown to about half a man’s middle finger in length, with a thick whitish brown body and a reddish head bearing an inverted ‘Y’ mark. Unsatisfied with the thin layers of the underbelly of the leaf, the caterpillar soon pierced thousands of holes in the maize leaves, ears, and cobs. Since they fed mainly in the morning and evening when it was cool and the farmers were away, it was weeks before they were detected.

Older larvae cause extensive defoliation often leaving only the stalks of the maize plants. On some fields, the larvae also burrowed into the growing point ‘bud’ of the maize and destroyed it. The larvae feed on basically every part of the maize except the roots. The larvae eat the leaves, concentrating on the funnel-like areas formed by leaves. They also dig into the ears and even maize cobs. This means the maize is at risk at all stages. This goes on for between two weeks and one month when the caterpillars morph into the pupa stage in readiness to become adult moths and restart the cycle.

Finally the MAAIF did a demonstration on fighting the army worn on Ddumba’s farm. But the worms remain. Ddumba says they might have become resistant to the drugs. He says he has settled to using only Stryker.

“But I am also trying out several pesticide combinations,” he says.

A Ugandan agricultural scientist, Dr. John W. Bahana, who runs an agricultural consultancy, says the government should not have been caught unawares if it was running an Integrated Pest Management (IPM) system.

Bahana, wrote in a newspaper article, that he has 30 years of fighting armyworms under his belt. He is an expert in this area because he first worked at Uganda’s top agriculture research body, the Kawanda Research Station near Kampala and returned from doing similar work in Zambia. He explains that under IPM, traps fitted with chemicals that mimic sex emitting characteristics of insects are routinely deployed to capture insects from a distance as far as 20kms away.

“High numbers of male moths in the trap; say above 50 each night, will signal an outbreak,” he says.

He says the scientists would then collaborate with meteorologists to determine the cause of the high number of moths as they may have been caused by wind convergences. In any case, he says, outbreaks will be registered in an area seven days after arrival of the moths.

“The rest is no technical stuff,” he says and outlines some procedures; the farmers are alerted by local officials to search for the small worms, pesticides are supplied to as near the outbreak as possible, and farmers are trained on how to spray against the marauding insects.

None of that happened this time. The question now is whether the government will be better prepared for such an invasion next time. Scientists have been warning of this and since, as Bahana says, the fall armyworm is a cousin of the African armyworm, it could become endemic to the region.

Governments warned

In April 2016, several scientists working under several big-name global research organisations published a paper entitled ‘Global threat to agriculture from invasive species. The paper, which was edited by Harold A. Mooney and published in the journal, Proceedings of the National academy of sciences, surveyed 1300 pests to assess their potential to move across the globe and invade new territories. They warned that invasive species, such as the armyworm, threaten global agriculture.

“Overall, the biggest agricultural producers (China and the United States) could experience the greatest absolute cost from further species invasions,” the scientists wrote, “However, developing countries, in particular, Sub-Saharan African countries, appear most vulnerable in relative terms”.

In the survey, Uganda was ranked to be at very low risk compared to Ethiopia, Kenya, and Mozambique. But that was partly because the research based their extrapolations on global trade linkages of which Uganda has few. But Uganda should have been better prepared because the invasion of the armyworm is the second major biological attack on the country in about 20 years. The other was the water hyacinth which devastated Lake Victoria between 1992 and 1998.

Lack of vigilance means the exact time the army worn reached Uganda remains mysterious. Though some reports talk of September and October 2016, MAAIF in its statement says the worms were first reported in May 2016 with farmers in Kayunga, Kesese, and Bukedea reporting “caterpillars” that were destroying their maize. However, other reports say the worms were active in Uganda as early as March 2016. That would mean it took the government a whole year to confirm the outbreak. It would also be an indictment on the breakdown of the agricultural extension service. But Minister Ssempijja is defensive.

“This is a new pest and we had to do tests in laboratories here and abroad to confirm what it was before we could announce the outbreak,” he says.

What is known now is that the Fall Armyworm is a native of the western hemisphere; from the United States to Argentina. In the U.S. it is predominant in the south of the Florida and Texas states. But the fall armyworm, scientifically called Spodoptera frugiperda, is a strong flier and the moth can cover up to 2000Kms annually. That is how it gets about. It remains a mystery, however, how the worm crossed the Atlantic into Africa. A statement by MAAIF on March 27 said it could have been imported in agricultural produce.

In Africa, it was first reported in Nigeria in January 2016. Outbreaks have since been confirmed in Togo, Ghana, Zambia, Zimbabwe, South Africa, Malawi, Mozambique, Namibia, Kenya, Tanzania and Uganda.

It gets the “army” in its name because of the marching behavior of its larvae or caterpillar stage which destroy whatever vegetation is in their wake completely before moving on to the next area. The ‘fall’ has to do with the season they thrive in best in their native home. The larvae in fact love cool weather and can last in that state for 30 days when it’s cooler and only 10 days in warmer weather. That rhymes with the life cycle of the worm, which is between 30 and 90 days.

More than 27,000 farmers in the Brong-Ahafo Region have registered to benefit from the ‘Planting for Food and Jobs’ campaign, Mr Kwaku Asomah-Cheremeh, the Brong-Ahafo Regional Minister, said last week.

Speaking at the inauguration of the District Technical Committees for the campaign in Sunyani, the regional minister said 100,000 interested farmers were expected to benefit in the region.

The committees are made up of representatives from the Ministry of Food and Agriculture, District Co-coordinating directors, planning officers and farmers.

Mr Asomah-Cheremeh reaffirmed government’s commitment to provide storage facilities in every district to address the problem of post-harvest losses.

He said under the campaign, farmers would be supported in the effort to increase production, and advised the unemployed to consider the benefits in farming.

The regional minister said the government has made available ready markets both local and international for beneficiary farmers.

Mr Asomah-Cheremeh reminded the members of the committee of the unique role they play and urged the general public to support them.

Mr Godwin Dzansi, the Dormaa Central Municipal Coordinating Director, on behalf of the committees, thanked the regional minister for the confidence reposed in them, and assured him that they would work to ensure the success of the campaign. GNA

By Rajab Mukombozi

Mbarara — Boda boda riders in Mbarara Town have protested against the release of Mr Jackson Tumwebaze, one of the 20 suspects arrested for allegedly stealing motorcycles.

A total of 12 number plates were allegedly recovered from Mr Tumwebaze’s shop on Garage Street, Mbarara Town last week when he was arrested. However, he was at the weekend released by police to the dismay of boda boda riders.

“This tycoon has been a major threat to the boda boda industry and has always boasted that he cannot be arrested. We are not surprised that he has been released even when we are still bringing incriminating evidence against him,” said Mr James Arinaitwe, the chairperson Mbarara Municipality Boda Boda Association.

Mr Mohamed Mpagi, the publicity secretary, said such actions by police compel the public to take the law into their hands. “We have tried our best to restrain our colleagues from mob justice, but with such scenarios of arresting and freeing key suspects, there is no way we can again convince them that security is committed to helping them,” Mr Mpagi said.

Investigations ongoing

He added that they have petitioned the Inspector General of Police and Director General of the Internal Security Organisation to intervene. The district police commander, Mr Jaffer Magyezi, on Sunday, however, said Mr Tumwebaze is still being investigated and he will be prosecuted.

“He was only released on police bond and we are still investigating the matter before charging him,” Mr Magyezi said.

The police led by the district police commander, Mr Jaffar Magyezi, paraded the suspects with some exhibits on April 18. The suspects, including a 68-year-old man, Mr Majidu Muhairwe, were arrested during the Easter period.

Mr Magyezi said that between January and August last year, an average of 10 motorcycles were stolen every month and three cyclists hacked to death.

While the thefts had reduced because of police teaming up with cyclists to arrest criminals, he said it is on the raise again.

By Ashleigh Furlong and Bernard Chiguvare

It’s been 20 years since the Braaf family first submitted their claim to a portion of the Cape Town International Airport land. Some family members now strongly believe that they have been “cheated”.

Adam Braaf, 74, and the oldest surviving member of the family, said his family was forcibly removed from the land where the airport now stands by the apartheid government. “We were resettled in Elsies River. The spaces we are occupying [now] compared to what my parents used to have is very small. They used to breed cattle and other animals at the airport area, but now we cannot do that.”

Last month about 40 Braaf family members picketed along Borcherds Quarry Road over the land claim lodged in the 1990s. They say only a few relatives were compensated for the claim.

In documents seen by GroundUp, the Western Cape Land Claims Commission appears to have muddled through the claim, unsure of its validity.

Two of the Braaf siblings submitted separate claims for two pieces of land. In the original claim factors such as the erf number and street address did not match land in the airport area.

Braaf, a pensioner, said he worked as a foreman for private planes at the airport for eight years before going into the painting business.

Marisha Kannemeyer, a family member who has been spearheading their campaign, said that her great grandfather was forcibly removed from the land by the apartheid government in the 1940s. She said relatives currently live in Delft, Klipfontein and Belhar.

She said the land claim was settled on 21 January 2011 but that only one part of the family received the R333,867 payout. Out of the 15 people who shared the money, all but one member of the family received under R20,000 each. The rest of the family received nothing from the Commission.

In 2016, Kannemeyer said she went to the Commission’s offices in Cape Town and asked to see the file. “I was surprised to see all the mistakes,” she said.

In a letter to David Smit, the Director of Restitution at the regional commission earlier this year, Kannemeyer wrote that the Commission had failed to make calls to the claimants, filed incomplete forms without asking the claimants for more information and had lost files.

In 2008, Blessing Mphela the then Acting Chief Land Claims Commissioner wrote to Beverley Jansen the then Regional Land Claims Commissioner, regarding the Braaf’s claim. He said: “Apparently the claim was being investigated up to a point where an offer [for about R300,000] was made, according to the claimant. Certainly an offer can only be made on the basis of a valid claim. I need to be clarified on the purpose of further investigation when the claim was already at the point where offers were being made.”

The family have said that the smallest of the two pieces of land they claimed for was valued at R270,000.

Kannemeyer said that her great grandfather owned a piece of land almost four times the size of the land that part of the family were compensated for.

The Commission has not responded to questions by GroundUp. The Deputy Director of Communications at the Western Cape Department of Rural Development and Land Reform Vuyani Nkasayi said that he “unfortunately doesn’t have any information” on the land claim. This is despite the head of the the Director of Restitution at the Western Cape Commission having previously been personally involved in the land claim.

Nkasayi said that they would wait until the article was published and “take it from there”.

COLUMNBy Muniini K. Mulera

Dear Tingasiga:

This year’s Convention of the International Community of Banyakigyezi (ICOB) will be held in Orlando, Florida, USA, from August 3-7 under the theme: “Empowering Youth and Communities”.

This theme captures the essence of ICOB. We are driven by one central goal, namely, to empower Banyakigyezi through education. When we started ICOB in 2003, our main focus was the formation and growth of the Kigyezi Education Fund (KEF), through which we would support vocational training of young Banyakigezi.

Through KEF, a small number of Banyakigyezi in Canada, UK, USA and Uganda have funded four fully equipped Information and Communication Technology (ICT) centres and an electrical and plumbing college programme.

ICOB (Apex) has funded electrical installation and plumbing programmes at Nyakatare Technical Institute in Kanungu District. ICOB has also funded ICT centres at Rukungiri Technical Institute in Rukungiri District, Seseme, Muhabura Diocese in Kisoro District and Uganda Martyrs Technical Institute at Nyarushanje in Rukungiri District. The Korean Government and the African Development Bank have adopted the ICOB (Apex) projects at Nyakatare and Rukungiri, respectively, for on-going support.

Last week, I received the happy news that the installation of an ICOB (Apex)-funded 35- station ICT Centre at Kizinga Technical School in Kabale District was complete. I have had the privilege to observe our partners in Uganda work with great efficiency, honesty and respectful collaboration to implement this project.

I honour Mr Denis Nkoreki, the headmaster of Kizinga, whose commitment and honest handling of this project has been exemplary; Mr Narcis Rwangoga, an IT expert whose guidance has been extremely helpful; Ms’ Peninah Ngategize, our Uganda-based ICOB board member, who has shown unconditional commitment to the success of this project; Ms Eleanor Bageine and Mr Shem Bageine, community members from Kizinga who have not wavered in their support for the project. This team has demonstrated the selfless spirit of volunteerism that is the central culture of ICOB.

As in the other ICOB-funded projects, we hope that this initial investment at Kizinga will catalyse the growth of a full-fledged, expanding programme that serves the registered students and interested learners from the surrounding community. We also hope that the government will support our efforts through additional funding and invitation of development partners to support Kizinga.

The success we have had so far has been because ICOB has focused on one mission, namely, growing the KEF, with an agenda that is exclusively aimed at supporting technical education. Had we attempted to support other worthy causes, our limited resources would have been spread too thin to have an impact.

It is tempting to congratulate ourselves on a job well done. However, considering the collective financial blessings that very many Banyakigyezi enjoy, I believe that we can do much better than our modest efforts have yielded so far. We have the means to more than quadruple the annual fundraising revenues that we generate from our annual fundraising drives at our conventions.

We should not wait for the next convention to donate to this important effort. I encourage you to visit www.abanyakigezi.net and set up on-going support for the KEF.

We shall definitely encourage delegates to Orlando to come prepared to dig very deep in their pockets and support this important cause. Some individual Banyakigyezi could easily fund whole ICT centres or other technical training programmes without feeling any strain on their bank accounts.

These centres, programmes or colleges could be named in their honour or in honour of their parents or other person they choose. The joy of seeing Kigyezi rise again would be the perfect reward for such investments.

Education was the engine that powered our journeys from the misty hills and valleys of our beautiful homeland to the common room of change agents that Banyakigyezi have been all over the world. Our success was the result of great sacrifices by our forebears and our seniors that enabled us to get excellent education. Our individual intellectual abilities were less important than our collective access to opportunities for advancement through great schools.

We were lucky to have had access to excellent education steered along by some of the most dedicated teachers I have known. Today, in villages all over Kigyezi, live equally bright, even gifted, boys and girls whose journey can be changed from one with a dead-end to one of success and fulfilled contribution to humanity. There is a future governor of Bank of Uganda in Iboroozya village, Rukiga County. What she needs is the kind of opportunity that we received at a highly discounted price.

If we focus our collective minds on Kigyezi, energised by the memory of the great sacrifice made by our parents that made Kigyezi a respected place of academic excellence, we can turn KEF into a transformative engine for our development. We have the means to fulfil our obligation to empower Kigyezi with the most important tool in life: high quality education for her children. We can and we must look beyond ourselves. That will be the central agenda at Orlando. I hope to see you there.

ANALYSISBy Martin Luther Oketch

To guard against risks that may arise from pan-African banks, Bank of Uganda (BoU) has signed various Memoranda of Understanding (MoU) with supervisors of commercial banks with presence in the country to enable regular and proactive interaction and sharing of information on these institutions.

Africa-based banks are expanding across the continent and now dominate the banking sector in many countries. These pan-African banks are establishing cross-border networks and overtaking the European and US banks, which traditionally dominated banking on the continent.

Unlocking the potential

The new pan-African players are driving the expansion of financial services and economic integration in helping unlock the huge potential of a fast-growing region. The advantages related to pan-African banks are numerous in the sense that the economies of both host and home countries receive numerous benefits from cross-border banking.

Increased efficiency

The International Monetary Fund (IMF) says the rise of the pan-African banks has increased competition and efficiency, introduced product innovation and more modern management and information systems, and brought higher skills and expertise to host banking sectors. A number of pan-Africa banks have exported innovative business models and delivery channels, such as mobile banking by Kenyan institutions, to host countries.

These advances have helped expand the availability of banking services and products, in what is called financial deepening. Pan-African banks have also extended banking services to the previously unbanked population.

In an interview with Prosper Magazine recently, the executive director supervision at BoU, Ms Justine Bagyenda said regulators routinely share information on the shareholders, directors, and senior managers of supervised institutions; key information pertaining to the performance of associates or holding company; giving the list of shareholders, directors and officers; details of the Group management structure which clearly indicates the allocation of Group senior management responsibilities, among others.

According to Ms Bagyenda all supervised financial institutions are required “to establish in country primary data and disaster recovery centres in order to ensure business continuity in cases of closures of related parties in foreign jurisdictions.”

This peer-to-peer learning effect is further reinforced as host regulators benefit through joint on-site supervisory visits of foreign subsidiaries with home authorities and as they participate in supervisory colleges, which bring together regulators for individual banking groups.

Ms Bagyenda stated that while pan-African Banks do not necessarily present a risk to the soundness of the banking sector, they have unique inherent risks by virtue of their connections to a wider banking Group and which can impact on the performance of the local subsidiary.

Ms Bagyenda said: “There is close collaboration with the Home Supervisor right from the licensing process and on an ongoing basis to ensure timely communication of emerging issues about the institution and its affiliates and timely intervention should problems arise.”

Pan-African banks can also help host countries raise their financial standards. This is because banks from more advanced African economies use higher home-country standards in their subsidiaries, and host authorities are exposed to more sophisticated reporting and supervisory practices such as capital standards recommended by the Basel Committee (an international group of bank regulators) and the International Financial Reporting Standards issued by the International Accounting Standards Committee.

“This cooperation is complimented by periodic Supervisory Colleges and Joint Cross-border inspections, aimed at strengthening the supervision of cross-border banking groups. BoU conducts consolidated supervision which looks at the overall group structure of any bank so as to identify risks to the bank arising from its group relationships,” she said.

Ms Bagyenda explained that Supervised Financial Institutions (SFIs) are required to submit an Annual Return, showing the relationship between the local subsidiary and its affiliates of parent bank/subsidiaries, as well as information on material non-compliance issues or issues of an adverse or potentially adverse nature that may affect the operations of the bank.

In her recent insights on the pan-African banks, the IMF managing di rector, Ms Christine Lagarde, stated that the expansion of cross-border banking has been impressive.

Ms Lagarde said 10 African banks now have a presence in at least 10 countries on the continent, and one is present in more than 30 countries.

“This expansion inevitably has brought a host of new complexities. With varying regulatory regimes across countries at different stages of financial sector development, it should not be surprising that effective oversight of cross-border banking presents immense challenges,” she said.

Ms Lagarde was uncomfortable, saying: “Unified accounting and reporting standards are absent. Data weaknesses abound (and) national secrecy laws and constraints on information flows impair cooperation among supervisors in home and host countries.”

She said bank holding companies are headquartered in one country and have subsidiaries across the region that operates under their hosts’ rules and regulations and this places an important burden on supervisors who have primary oversight of the holding companies.

Host countries essential

Ms Lagarde stressed that it is also essential that host countries are informed and consulted, and for host country supervisors to be involved.

Since financial sector development is an integral economic development of a nation/region, Ms Lagarde says IMF policy advice consistently focuses on financial issues, including under the Financial Sector Assessment Programme; with IMF regional centres across Africa delivering training and technical assistance related to consolidated and cross-border supervision.

Working examples

Some banks now operate across Africa with quite a number claiming sizeable market share already.

In a telephone interview with Prosper Magazine on April 5, the general manager business development at Bank of Africa (BoA), Mr Calve Serumaga, said the bank which has 35 branches in Uganda and employing 450 people, covers many countries in Africa.

“We are operating in 18 African countries. We are in Burundi, Rwanda, Uganda Tanzania and Kenya. We employ local citizens and we do a lot of training at the group level to the existing staff to improve on their technical competence,” he said.

Mr Serumaga said the reason why BoA employs the local talent is because they understand the environment they work in better than imported labour.

“We think that with the introduction of Agency Banking and integration of telecommunication companies, and the mobile money banking services, there is need to bring in new technologies to bring equipment that matches with the market trend,” he said.

Head of marketing and corporate communications at United Bank of Africa, Mr Stephen Kasambeko, said told Prosper Magazine that they have eight branches and employ 160 people. “We do both corporate and retail banking services,” he said.

unique risks

The risks include: Poor domestication of strategy leading to weak market penetration; complex reporting structures and interference from the Group; significant expenses on expatriate staff; disruption in business continuity arising from interruptions.

The others are Intra-Group exposures; delays in capital allocation owing to capital restrictions on the parent company; contagion risk – loss of confidence or interventions such as closure of related entities in a foreign jurisdiction can trigger problems for the local subsidiary, even if the local bank itself is sound.

At times there are also complex management structures which impair effective supervision and cause corporate governance issues.

By Francis Byaruhanga

How can Rwanda deliver more affordable housing units and ensure low and middle-income earners acquire decent homes in the medium-term? This question becomes more pertinent particularly as the country’s urban population continues to grow rapidly while few houses are being delivered for this market segment.

However, the Rwanda Housing Authority (RHA), city authorities and other stakeholders say there is no cause for alarm “as there are new initiatives in the pipeline to bring more housing units on the market particularly affordable homes.

Leopold Uwimana, the affordable housing division manager at the Rwanda Housing Authority, said the government is, for instance, collaborating with developers and other stakeholders to bring down the cost of decent homes. He said they are working with Ministry of Local Government, districts, Rwanda Development Bank, and Rwanda Development Board to co-ordinate and attract investments into the sector.

He added that affordable housing developers and sector investors benefit from a range of incentives, including tax waivers, noting that the government supports them with basic facilities, like electricity, water, sewage, roads and other essential needs.

Uwimana said that an affordable housing development fund will also be put in place. The initiative, he said, will enable investors in affordable housing get low interest loans; buyers, too, will access mortgages at low interest.

Developers have for long complained about high cost of land and building materials, poor sector-relevant technology and high cost of financing for investors and property developers as some of the main challenges discouraging them from building low-cost homes.

According to a 2012 housing market study conducted in the City of Kigali, 340,000 new housing units are needed by 2022. Eighty-six per cent of these should be affordable housing and mid-range housing, 13 per cent social housing, and less than 1 per cent to be premium housing. At least 34,000 housing units are required annually to meet this demand.

Uwimana noted that the Ministry of Local Government is working with districts in the City of Kigali – Kicukiro, Gasabo and Nyarugenge – to help them build capacity and meet requirements of issuing municipal bonds to finance affordable housing projects and not to wait for public funds.

He said the affordable housing fund and land banks are key to finance and facilitate affordable housing investors.

Pascal Nyamulinda, the City of Kigali mayor, says they are working with developers, city engineers and one-stop centres to encourage them to invest in affordable housing as per Kigali and provincial cities master plans.

“We advise developers and constructors to consider affordable housing in their investment plan to ensure low-income earners are also catered for in terms of provision of decent homes,” he says.

More partnerships

Meanwhile, RHA said they are also partnering with sector players to deliver more affordable housing units on the market. “We have already partnered with the Abadahigwa ku Ntego, subsidiary of the Kigali Veterans Co-operative Society (KVCS), to build 56 affordable houses in Kabuga, Gasabo District.

The project targets first-time home buyers who are low-income earners,” according to Uwimana. He said government is negotiating with Moroccan investors who will invest $68 million for the construction of 5,000 affordable houses by 2018.

According to Uwimana, RHA is building affordable houses that will cost Rwf6 million for a self-contained unit with one bedroom, while those of three bedrooms will go for Rwf18 million. He said 2,700 housing units are being constructed at Rugarama in Nyamirambo, while construction works for another estate of 60 houses in Kabuga at Ndera sector start in June.

The houses will have three bedrooms at a cost of Rwf18 million each. About 560 housing units will be constructed in Batsinda and the project will also start by June.

The trends

According to Uwimana, most real estate developers target high profits (of up 40 per cent) of their investment which makes homes very expensive for the ordinary Rwandan. He added that the local investors do not have enough capital to invest in the sector, but noted that this problem would be addressed by the affordable housing fund that government will put in place.

Beatrice Chege, the head of mortgage finance at KCB Bank Rwanda, said most developers sell ‘affordable’ houses between Rwf30-50 million, which is out of reach for medium and low income earners. He said there is need for more incentives to the sector to encourage investors into the affordable housing market segment.

More challenges

Victor Ombima, an architect at Architectural and Allied Services Limited, said the cost of affordable homes depends on the location of the houses, adding that in Kigali one has to part with Rwf30 million for house with one living room, two bathrooms and a kitchen.

“However, affordability of houses in Kigali is largely affected by the many challenges developers face, including access to affordable building materials like timber, which is scarce in Rwanda. Though stones and aggregates are sourced locally, but other materials are imported which make houses expensive,” he added.

Ellie Habyarimana, the managing director at New World Construction, company that deals in the construction projects and house designs based in Kigali, said previously they faced problems with acquiring construction permits.

Stephen Milindi, the managing director of Misteph Company, a developer dealing in rentals, sales and management of commercial and residential properties, said is hard for developers to cut prices if the government does not provide them incentives like electricity, sewage systems, tax waivers and free land.

“It will be hard for private sector players to reduce prices of affordable housing units without government intervention,” he added.

John Nsabimana, the head of Urukumbuzi Company Limited Kigali, said high interest rates charged by banks push up the cost of houses, including those categorised as affordable homes.

He added that sometimes developers build houses at high rates and fail to get customers. “All this forces us to sell the houses expensively to make some profit and repay bank loans,” he said.

Vanessa Ingabire Olga, a resident of Gasabo District, says one shouldn’t rent or buy a house that costs more than 30 per cent of their income because that would be a burden.

She said the houses are costly in Kigali because the land is expensive.

How I did it

Vincent Sakindi Kayumba says he built his home in Kanombe, a Kigali suburb using a loan of Rwf30 million, repayable in 15 years.

The annual interest rate on the loan is 17 per cent. Kayumba, who earns Rwf1 million a month, says few people can secure such a big loan.

“Besides the principal loan, the bank also gave me other personal loans to finance my construction project,” Kayumba says.