Stanbic bank committed to improving Uganda’s future

It was in 1998 that government sold its stake in Uganda Commercial Bank (UCB) to Stanbic bank. Twenty years on, Stanbic has maintained its position as the biggest financial institution in the country. The Observer caught up with Patrick Mweheire, the Stanbic managing director, to reflect on the past two decades as well as the future of the bank.

Stanbic bank has been operating in Uganda for 20 years; what have been the bank’s main contributions to the country?
As a proud financial anchor in Uganda’s remarkable growth story over the last couple of decades, Stanbic has played an essential role supporting the economy through its growth and transformation. As the leading bank through this period, Stanbic has been a pioneer on many fronts and has led the innovation and stability of the banking sector which is extremely critical in the Ugandan economic ecosystem. 
And as trustee of the former Uganda Commercial Bank, Stanbic has been able to consolidate and create a true Ugandan banking icon with assets in excess of $1.5 billion, serving as a true financial gateway for individuals, institutions and the public sector. 
Being a subsidiary of a leading global bank, Stanbic has been able to infuse global best practices and work closely with the other commercial banks and the regulator in formulating and implementing many world-class financial policies that have made the Ugandan banking sector more stable and sustainable.
This has extended into delivering innovative products that have supported Uganda’s recent and substantial infrastructural boom. With a leading customer loan portfolio of Shs 2.2 trillion, Stanbic has been a key enabler in the agriculture, manufacturing, construction and trade sectors.
And more importantly, with 40,000 SME clients, Stanbic bank is a key promoter of this critical underserved segment of the economy which generates 80 per cent of our manufacturing output and 90 per cent of new jobs created. 
And finally, Stanbic has helped stabilise the financial markets and provided liquidity to the government by holding the largest portfolio of government securities.   
High interest rates are one of the key issues often mentioned as holding back private-sector-driven growth; have banks done enough to keep interest rates low and attractive for Ugandans?   
Stanbic has honoured its commitment to match the movements of its Prime Lending Rates (“PLR”) consistently with the movements of the CBR (Central bank rate).  As a result, we lowered our lending rates by 7.5 per cent points over the last 18 months in perfect synch with the reduction of the CBR from its high in March 2016, something we are very committed and proud of.   
I would, however, like to broaden the subject beyond high interest rates by posing another question; why is it that even with high interest rates, there are still six loss-making banks in Uganda and the Return on Equity (“ROE”) of the industry at 16 per cent is still the lowest in the region? 
There is a productivity issue that we must address - which is the high cost of doing business in the country.  Banks in Kenya and elsewhere globally generate much higher ROE’s within much lower interest rate environments.
We need to work more closely with all stakeholders to bring the cost of doing business down by collaborating across the industry and being ruthless in digitizing the sector. 
We will continue to track movements of the CBR with equal adjustments to its PLR and at just 17 per cent, Stanbic now has the lowest PLR in the market, allowing Ugandan individuals and businesses to borrow at affordable rates.
Ugandan businesses face the challenge of sustainability over the long haul; how can the bank help them overcome this and other business challenges?
As custodians of customer deposits, our primary responsibility in the bank is to manage risk and this is non-negotiable.  That being said, we worry about the attrition rate of Ugandan SMEs and the fact that less than 30 per cent of them make it past their third birthday. 
We have closely examined the matter and concluded that whereas access to financing is one of the key issues faced by Ugandan businesses, it’s not the main cause of failure.  Lack of access to markets and access to resources such as (legal, procurement guidance, quality control [and], governance, amongst others) are the more crucial challenges.
In fact, if you had these taken care of, the access to financing is a natural positive outcome.  We have taken the initiative to fund and create an SME incubator that takes SMEs through building capacity in these areas at no cost to them. 
We think it makes business sense to lengthen the life of these SMEs so they can be customers of the bank even longer. We are not doing this alone and have partnered subject matter experts to lead the training of these modules and will have the first class of SME graduates in June 2018.   
Post-graduation from the SME incubator, Stanbic will also provide a mentor to each SME for a 12-month period to ensure that the incubator capacity building is appropriately put into practice in the marketplace. 
I believe this is a very powerful intervention that can be scaled across the country and have a meaningful impact on business sustainability and ultimately job creation.
Approximately 160,000 SMEs in Uganda employ 2.5 million people and if we can enable each of them create an additional four jobs, it would go a long way in solving our unemployment problem. 
The youth form the bulk of the Ugandan population; in what ways are Stanbic’s activities helping to build a brighter future for them and Uganda?
Education and youth empowerment is the core pillar of our corporate and social responsibility (“CSR”) initiatives. We allocate approximately 70 per cent of our annual CSR budget towards training of youth at all levels (ECD, Primary, Secondary and Tertiary).
We have invested in excess of Shs 8 billion in youth educational initiatives over the last several years and have recently launched our flagship National Schools Championships which aims to promote financial literacy and impart soft skills among the leaders of tomorrow.
There is no better return on investment than investing in our youth.
Oil and gas have the potential to transform Uganda; is the bank playing any role in the development of the sector?   
We agree and as a result have been heavily involved in the promotion of increased local content in the sector. Whereas the figures (up to $15 billion) going to be spent on developing the sector are indeed staggering, it’s irrelevant if Ugandan companies do not participate. 
We have hosted several high-level local content awareness workshops and facilitated forums aimed at upskilling local players while fostering strategic partnerships.
We are also working closely with the oil companies and their tier-one suppliers to deliver some innovative financial products that can support Ugandan companies to win contracts. 
We are also playing a key role as lead arranger and advisor in arranging up to $2.5 billion of project financing for the East African crude pipeline, one of the largest construction projects in the region bound to have a profound impact on the economic future of East and Central Africa.
How is Stanbic helping to create a better tomorrow for Ugandans?
We believe the future prosperity of this country lies in the creation of opportunities for the social and economic empowerment of its people.
As a bank, we remain true to that promise by supporting the key sectors today that will provide the catalysts for Uganda’s sustained growth tomorrow.

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