WELCOME TO UGANDA AFREXIM BANK

Last week Afrexim Bank opened its regional offices here in Kampala in an event that I think should have had much more play in the media.

The Afrexim Bank has as its stated mission the desire to stimulate trade, primarily within the continent but also improve Africa’s trade with the rest of the world. Worthy goals and we should sit up and take notice.

The bank’s coming to Uganda is not by chance. A lot of work was done and supported by President Yoweri Museveni to win it away from neighbouring Kenya. The Ugandan businessman is bound to benefit from the proximity to the bank if we get organized.

"Of course the bank will be dealing with big deals, but one can hope their expertise in trade financing and the other products they bring to the table, can trickle down through the financial sector and improve our dealings....

But just to give a perspective of what our businessmen suffer because of the gaps in trade facilitation in our economy.

Say I want to import shoes from abroad, a container load for instance. I often have to pay for the shoes cash up front and wait for them to arrive here, which can take anything from weeks to months to arrive. Depending on the volumes I require.

As you can see the problem with this is that, I will have capital locked up for a long period of time, money I may very well have borrowed and are already repaying, before a single shoe has landed on my shelves.

You can imagine that I will mark up the cost of my shoe to reflect all these costs. No wonder other better supported businesses are coming here and running rings around us.

In a more orderly economy we should have access to Letters of Credit. Which we do. But as it is, many of our banks are not recognized abroad so they have to also go through a third party, which is an added cost our businessmen can least afford.

Afrexim with their international reach may very well help us with this challenge.

That is just one aspect of what they do but which is urgently needed in our market.

I am also quite excited about the payment system they intend to introduce here, which they are already piloting in West Africa.

"In many instances our businessmen trading with other businessmen on the continent have to trade in currencies other than our own. So for instance I am trading with an Egyptian businessman I may have to deal in US dollars or British pounds, rather than directly in Egyptian pounds because of the intermediary banks we are transacting through.

With Afrexim’s payment system that may very well be a thing of the past. It is active in all African countries except Algeria, Somalia and Western Sahara.

It has other services of course – asset backed financing, note purchases and project financing, which with their pan African outlook may very well be better than what we are used to.

Of course to deal directly with the bank our businessmen would have to have developed a certain scale – annual revenues of at least $10m, but at least they are here within easy reach of us to begin with.

While that may look like an immediate disadvantage it has its long term benefits.

For one our businessmen will be forced to step up their game, structure their operations in such a way as to make them attractive to Afrexim bank and by extension all other financiers of that kind.

"The informality of our operations is holding us back in terms of size and in terms of the markets we can effectively compete in, here and abroad....

The bank promises to provide some hand holding for our businesses, something that is very badly needed and in very short supply.

One can read all the textbooks they want on business, but transitioning from one stage of business to the next requires help from people who have already been there and can help the process along.

At the Private Sector Foundation of Uganda we welcome the closer proximity of the bank to us. Our members look forward to a very fruitful relationship well into the future.

I urge all our businessmen to investigate the bank and see how they can best take advantage of this opportunity, if not now but in the future.

Otherwise welcome to Uganda Afrexim Bank.