Skip to main content

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.

Labels:

Comments

Post a Comment

Popular posts from this blog

THE MUKWANO I KNEW

We have lost the greatest Ugandan entrepreneur of our time, Mr Amirali Karmali, more popularly known as Mzee Mukwano. I have known Mzee Mukwano for more than 40 years and most of what I am today is due to him. And I am not alone. "He has helped countless people through school – as he did me. Helped countless more in business – as he did me. And he has been a steadfast friend and source of support to countless more – as he was to me.... I first met Mukwano around about 1977. My mother was the secretary for the chief of operations at Uganda Airlines, a man I knew only as Hamid. Mukwano had come to charter the Uganda Airlines’ Hercules plane and I happened to be around the office then. He was a short man, an unassuming man, but clearly a serious businessman who would charter the plane to bring in goods that were in high demand here. He run a popular whole sale shop in Nakasero – Egesa Commercial Agencies, a beehive of activity and the go-to place for anythin...
Post a Comment
Read more

COME HELP BEAT BACK HIV/AIDS

Uganda has made tremendous strides in containing the AIDS pandemic. For some of us who were around in the 1980s and saw the worst effects of the AIDS pandemic, the way the country has contained the disease is not what we had envisaged back then. Ignorance, stigma and lack of drugs surrounding the disease saw thousands die horrible deaths – wasting away, tortured by opportunistic diseases and being shirked by family and a society out fear.  The doomsayers were projecting a major fall in our population, a collapse of the economy and a total breakdown of social cohesion. That the country is still around and fighting back the disease successfully, could not have been envisaged in those scary days of the 1980s when the disease came into the public conscious. Thankfully rather than sweep the problem under the carpet like many of the neighbouring countries, President Yoweri Museveni led a fight back against AIDS that had at its core widespread dissemination of infor...
Post a Comment
Read more

ARE WE HELPLESS TO DO ANYTHING ABOUT THE CARNAGE ON OUR ROADS?

Recently there was a horrific crash between a passenger bus and sand laden Isuzu truck on the Masaka-Kampala highway. To look at the pictures of the aftermath it is a miracle that only two were killed and 20 injured in the accident, which it is reported was a head-on collision between the two vehicles. We don’t go a week without news of a major accident on our trunk roads. I suspect that a combination of poorly maintained vehicles, improperly trained or inexperienced drivers, driving at break neck speeds are to blame. "A few months ago, there was a suggestion that the new paved roads were not properly designed and therefore causing the accidents, but I think that is a case of poor workmen blaming their tools.... If one was to buy this argument, what about the argument that we had fewer accidents when our roads were pot holed and it would take whole days travelling journeys that now take a few hours? So, we should we go back to our potholed roads? "Accord...
Post a Comment
Read more

GIVE OUR TRAFFIC POLICE A CHANCE

Last week during an investor interaction   Kampala Capital City Authority (KCCA) officials called on police to stop overriding traffic lights while directing traffic. KCCA argues that the traffic lights are large investment and it makes no sense for police to countermand them. In a classic case of “The importance of the river was not known till it dried up” on Friday the traffic police desisted from directing cars at the traffic lights leading to the worst traffic snarl-up in the city’s history. People were stuck in traffic jams around the city for hours and long into the night. Maybe it was the unhappy coincidence of the traditional Friday traffic and pre-Christmas excitement but without the traffic police directing traffic it was a mess. They made their point. It of course points to the bigger issue of a revamping of Kampala’s road network, which has remained   largely the same since independence but with an exponential increase in cars in the last three...
Post a Comment
Read more

UMEME A RECOGNISED SUCCESS BUT …

  Recently the World Bank did a survey of the power utilities on the continent. Of the 39 utilities surveyed only two, in Uganda – Umeme and in Seychelles, were able to cover their operating costs and capital expenditures – maintenance and expansion of the grid. The report went on to point out that only 19 or about half of the surveyed utilities were able to meet their everyday costs like salaries. Essentially most of our power utilities on the continent are technically bankrupt. This has far reaching ramifications for the industry as a whole. When you, the client, pays your bill, Umeme then passes money up the line to pay the transmission and generation companies. If Umeme does not collect the revenues due to it or does not price the power at an appropriate rate, the pain will be felt up and down the sector. The transmission company would not be able to maintain and extend its network and the generation company would not be able to generate efficiently or build ...
Post a Comment
Read more

WE NEED A BETTER SOLUTION FOR KAMPALA TRAFFIC

I am sure I am not the only one feeling it. Kampala’s traffic is becoming increasingly unbearable. Even the removal of roundabouts around the city seem to have an opposite effect to the intended purpose of easing traffic flow in the city. Kampala Capital City Authority (KCCA) has an ambitious plan of flyovers, underground tunnels and railway transport, which should help the cause, I hope. The snarl ups that we are coming fast accustomed to, are not only an issue of teeth grinding inconvenience but have a real cost on our economy by hampering and increasing the cost of doing business. A recent World Bank report suggests that as an economy, we are losing about sh3trillion annually due to traffic jams. The losses come in form of delayed deliveries, higher fuel consumption and the health consequences of seating in a smoke filled environment. To put this in perspective this is the combined budget of the health, agriculture and ICT ministries in this year’s budget. Or ...
Post a Comment
Read more

REAL ESTATE DEVELOPMENT CAN BE KEY IN OUR TRANSFORMATION

I have been around long enough to see real estate development, or maldevelopment, lead to the sprawl that is Kampala today. From atop the Skyz Hotel in Naguru, one can see as far as Mukono to the east, Entebbe to the South and Bombo to the north. At night the lights from traffic, streetlights and from residences makes it a sight to behold. But we were here in 1986 when Kampala’s outer limits were Kibuye roundabout, Rubaga, Wandegeya, Ntinda and Nakawa. The NRM did the smart thing and removed restrictions – rent controls, on real estate and spawned a real estate boom that has led to the dramatic expansion of the capital city’s boundaries to what they are today. During the same period the government’s National Housing & Construction Company (NHCC) has not kept pace with private developers, be they individuals or companies developing a few dozen units. "Official statistics suggest that there is a 550,000 deficit of acceptable quality housing in Uganda of ...
Post a Comment
Read more