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

HOW TO RECOGNISE A PONZI AND NOT FALL VICTIM

Another Ponzi scheme has come crashing down around the ears of hundreds of “investors”. Unsurprisingly. In its recent reincarnation poor Ugandans were lured into a scheme where they bought computer tablets. This entitled them to a monthly pay off, $100, and a Christmas bonus for their children. In this case the unsuspecting investors -cum -victims were being given a share certificate. Meaning you accept to take the part of the risk in this project. Which was inadvertently reducing their burden of risk and liability for the issuing company. I leave that area to smart lawyers to handle.   As is always the case with these things, it’s not quite clear where the pay-out will come from. A common characteristic of these schemes is that you might get initial payments before you starting missing a few and the stories begin. The promoters of these schemes or scams often use the money from the latest entrants to pay the older “investors” until one of two things happen. Either...
Post a Comment
Read more

BEWARE OF THE CON MAN

I read with a mixture of horror and sympathy for the victims of the latest Ponzi scheme gone bad in town. Last week a company, Global Cryptocurrencies Ltd, collapsed and along with it went billions of shillings, by police estimates, of their clients’ money. The company working out of an obscure office on Namirembe road, managed to rope in all manner of clients with the promise of magical returns – 40% a week! I have been in business for most of my life, if I could be guaranteed 40% week I would sell everything I own and jump in with both feet. Or maybe not. And this is why. They say if anything is too good to be true, it is. If you can get an annual return of 40% on your investment you will be doing extremely well. So if you put in a million shillings in your business and walk away at the end of the year with sh400,000 after taxes you have found a good thing, and I would like to be your friend. I have seen my share of scam artists and con men. Below are my fast an...
Post a Comment
Read more

KEEP UP PRESSURE ON CORRUPTION

There has been a flurry of activity surrounding corruption in recent weeks, with a few public officials caught red handed taking bribes. The public deprived of services because of a few greedy individuals are understandably gleeful.  However they are also those who are a bit sceptical, wondering whether this campaign will last or will peter out along the way. It is heartening to see that President Yoweri Museveni has put his full weight behind the latest attempt and provides a positive signal to all parties concerned. He should be supported by every well-meaning Ugandan so that this drive does not fizzle out in a few weeks. I choose to be optimistic about this anti-corruption drive, because rolling back the endemic that corruption has become, is one of the first steps we need to take towards attaining middle income status as a nation and for any other meaningful development we hope to see in the future. We see it in our daily lives. Beyond the moralit...
Post a Comment
Read more

THE KEYS TO OUR HEALTH ARE WITHIN OUR REACH

I prefer to speak about business. But it is obvious to me as it should be to everybody, that the fruits of business can’t be enjoyed without good health. As we progress in age we need to take care of our health more than before, focus on prevention because our bodies can no longer bounce back from illness as fast as they used to. The other day I happened upon a Facebook video from Dr Luke Coutinho, an Indian doctor who treats cancer patients. He made a wonderful video that moved me -- “Four things people with cancer have in common.” Look it up. Coutinho, in the video said that when he looked at the data from hundreds of patients, from all over the world, that had been treated at his facility he found four commonalities. The first one he said was chronic constipation. He explained that constipation, infrequent bowel movement, means the body is retaining toxins that should not be there. These toxins then find their way back into our bodies and provide the environment fo...
Post a Comment
Read more

SPORTS AS AN ANALOGY FOR BUSINESS

Like everybody else I know, my spirit was lifted by the success of our athletes at the World Athletics Championships last week. The diminutive Halima Nakaayi showed the heart of a lion, sprinting over the last 100m of the women’s 800m event to snatch victory from a more favoured American runner. It was so uplifting to watch. Subsequent stories about the challenges she has had to overcome to get where she is now were testament to the determination of the woman. Joshua Cheptegei’s victory, while no less inspiring, had a different quality to it. Cheptegei was the man to watch going into the event. He won previously at the Commonwealth Games last year and the in the just concluded Golden League. He was a silver medalist in the 10,000m at the last World Championships in London, pipped to the tape by the now retired Mo Farah. Cheptgei still had to battle the Kenyans and the Ethiopians all the way. But as a favourite he lived up to expectations, which sometimes is more diffic...
Post a Comment
Read more

OIL IS COMING BUT LET US NOT FORGET OUR GOLD

The country is operating on a time table that first oil will be seen in 2020. There is a lot of frenetic activity around building supporting infrastructure, getting investment approvals, ensuring local participation and any number of other things to ensure readiness the moment the oil starts gushing down the pipeline to the coast. And so we should. I was intrigued the other day to read in the Kenyan press how Kisumu County, just across Lake Victoria from us, has set upon an ambitious project to ensure egg and poultry meat self-sufficiency for the county within the next few years. Under the plan Kisumu County will train 100 farmers every month over the 12 month pilot period. The intended aim is to be able to satisfy the county’s demand for 25,000 broilers and 75,000 eggs daily. Whereas I would prefer that this was private sector driven deal, I like this plan for a number of reasons not least of all that it shows leadership by the county and secondly, it relies o...
Post a Comment
Read more

FINANCING OUR ENTREPRENEURS, A CHALLENGE WE CANNOT IGNORE

In recent weeks the issues of financing for business has been in the news, in one form or the other. We have seen the challenge a past minister is facing with having to hang onto his home. The case is in court, so we can’t discuss its merits and demerits, just to say he may have fallen prey to some predatory practices, with the lender skirting dangerously on the edge of the law. Across the border in Kenya a cap on bank lending rates has been repealed. Three years ago Kenya’s parliament passed a law restricting lending rates to two percentage points above the rate at which the central bank lent money. In reaction banks pulled back their lending to businesses, depressing the economy and prompting the reversal. So now banks can “properly” price their loans, often to the discomfort of small and medium sized businesses. The two incidents are related and speak to the availability and cost of credit. In my business career I have benefitted immensely from credit. It is next...
Post a Comment
Read more