Business

Banking borders in EAC to disappear

Following the single tourist visa, a major deal between banking switch services in Uganda, Kenya, Rwanda and Tanzania is in the offing to unlock more value in the East African banking, finance and trade sectors. Banking switch services allow a customer of one bank to access their account at ATM’s of another bank without opening an additional account. Uganda currently has 5.3 million commercial bank accounts spread out in 27 licensed commercial banks. There are 13 banks on the Ugandan switch run by Interswitch East Africa. “We are soon signing a Memorandum of Understanding with Kenya’s Kenswitch, Rwanda’s Rswitch, and Tanzania’s Umoja. Our goal is to expand to the entire African continent,” Olumuyiwa Asagba, the Interswitch boss said at the Serena Kampala Hotel last week. “We want to be a catalyst for the East African intergration and the move towards having a cashless economy,” he added. The addition of Centenary Bank to the Ugandan switch last week, has doubled the number of interconnected ATMs in the country to 280 from 146. Fabian Kasi, the Centenary Bank boss, pointed out that the expanded ATM network makes banking more convenient. He said this will lower banking costs and boost tourism and trade across East Africa. Emmanuel Mutebile, the Bank of Uganda governor, noted that the switch service will further entrench electronic payments in Uganda and cut banking industry overhead costs currently at 7% of total banking assets (about sh1 trillion). Cumulative commercial bank assets amounted to sh15.5 trillion at the end of December 2012. Mutebile noted that this level is unacceptably high and should be brought down by collaborative efforts. “The adoption of IT solutions to the delivery of services will enable financial institutions to reduce spending on physical premises and on staff costs,” he said. “The innovations are already delivering huge benefits for customers in terms of the speed, reliability and costs of making payments.” Anthony Kituuka, the KCB head of corporate banking, said the move will be a major boost for banks without a regional branch network. “The East African economy benefits when its citizens are able to move from one country to another and withdraw money in the local currency to pay for goods and services,” he said. By Samuel Sanya,The New Vision

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Uganda: Delay in road works costing $1m monthly

A delay in the process of awarding contracts for road works costs the taxpayer $1m (sh2.5b) per month, an appalling situation that calls for early groundwork and planning to shorten the procurement process. Road construction. Institutions such as the Inspectorate General of Government, the Police and courts of law have been used to cause unnecessary delays in procurement. David Luyimbazi, the director, planning at the Uganda National Roads Authority (UNRA), said the delays have affected service delivery. “It takes about four to seven months to procure just a single project. We cannot meet the lead time to prepare the project, and this affects drawback of resources (using the allocated funds),” he said. “The level of preparing and planning is key in timely delivery of projects.” Luyimbazi said over 90% of UNRA funding is spent on procuring goods and services, adding that if delays in the tendering process are checked, a lot of government resources and time would be saved. He was presenting a paper on the effect of procurement procedures on resource absorption and project implementation in Uganda at the launch of the first national development policy forum at the Kampala Serena Hotel last week. The forum was organised by the National Planning Authority (NPA). It will act as a platform for constructive policy debates that should lead to a better understanding of Uganda’s developmental issues and enable stakeholders identify economic and social issues critical to the realisation of medium-term plans and the Vision 2014. Benson Turamye from the Public Procurement and Disposal Authority (PPDA) blamed contractors for poor planning. “Some contractors take on multiple jobs at the same time and use the same equipment and human resource on the projects, which affects performance” he said. Turamye noted that some contractors bid at a low price to get the project, but turnaround and raise the contract price. Jonathan Wanzira, the chairperson of the Uganda National Association of Building and Civil Engineering Contractors, advised that contractors be categorised so that they are awarded jobs based on their experience, financial and technical ability. “People need to know that there is enough work for everyone,” he said. “We should also encourage local content in big contracts that are usually awarded to foreign firms. This will help build capacity.” James Baanabe, the commissioner energy resources in the energy ministry, said contractors do not know how to compile bid documents, which affects their chances of winning contracts. “If contractors do not package their bid documents well, they will be thrown out. The law does not permit to ask the contractor to bring missing documents,” he said. Baanabe called for flexibility in the procurement process to enable competent firms meet the evaluation criteria.

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BoT: Investors keen on long-term bonds

Appetite for long-term bonds remained high where the 15-year government securities auctioned last Wednesday attracted many bids ending up with over-subscription. Bank of Tanzania (BoT) The Bank of Tanzania (BoT) said in its auction summary that the 15-year bond fetched bids worth 32.16bn/- against 29.5bn/- that the government sought to mobilise. The continued high liquidity level in circulation still supports positive performance of government securities in the market. However, despite oversubscription, the government ended up taking only 22.9bn/- as the successful amount, which is a sign that some bidders tendered below the bidding price offered in the market. Weighted average yield to maturity was hiked to 16.9 per cent, from 16.6 per cent of the previous session. A total of 43 bids were received but only 22 emerged successful. According to BoT, auctioning of the 15-year bond was a significant milestone in the debt market that offers opportunity for investors to invest and for the government to raise money for long-term infrastructure development projects. With the auctioning of the 15-year bond, Bank is taking it as a study to determine market behaviour before deciding to issue other long term bonds of 20 to 30 years. Pension funds, insurance companies and a few microfinance institutions are some of the investors in the long-term government papers. Source Tanzania Daily News

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DSE chief calls for increased foreign participation

Limited foreign investors’ participation at the Dar es Salaam Stock Exchange (DSE) has been constraining the bourse from expansion. DSE Chief Executive Officer, Mr Moremi Marwa DSE Chief Executive Officer Mr Moremi Marwa said the decision to raise the share of foreign investors’ participation was still under consideration by the regulator. “Throwing the fledging bourse open to foreign investors could be an important milestone that would attract more wealth and make the market vibrant,” he said. Under the current framework, foreign investors are allowed to purchase only up to a maximum of 60 per cent of shares floated at the exchange while the remaining 40 per cent is being reserved for local investors. The Nairobi Stock Exchange (NSE) foreign participation is over 70 per cent, while in Uganda it is 100 per cent, thus putting the bourses in the position to attract substantial investments from outside the country. By allowing more foreign investors to chip into the DSE, he said, immediate impact would be seen in the shares by gaining their true value. “Most of the shares were currently undervalued despite registering outstanding performance at the bourse,” he noted. The bourse that opened its doors to the public in 1998 is currently having the total market capitalization of around 16tri/-, of which the domestic market capitalization amounting to 6tri/- from 18 listed companies, constituting of 12 locals firms and six cross-listed. Statistics reveal further that the DSE depth of domestic market capitalization ratio to Gross Domestic Product (GDP) stands at 12 per cent and 33 per cent for total market capitalisation respectively. The investors base at the bourse is only 185,000, the figure which is marginal compared to total population of 45 million and economic activities. Source Tanzania Daily News

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Rwandan Youth in US launched Istayconnected LLC system

IstayconnectedLLc is US-based Company that provides international mobile top up to over 250 operators in more than 100 countries, and prepaid electricity for Rwanda and Indonesia. All the transactions are done through the company’s E-commerce website:  istayconnected.net. The team behind Istayconnected LLC Istayconnected LLC was found by young Rwandans who study in the USA, after these student realized how expensive can be to be in touch with family and friends back home, that’s how istayconnectedcame to exist to solve those expenses by reducing the costs. Istayconnected has brought Diaspora members much closer to the families they left home. One of the users of this system said that “It is amazing being in London and buy airtime for your parents in Kampala! It is fascinating being in Canada and be able to buy your family electricity.” Diaspora members are now able to support their family through buying airtime and electricity for them. It does not take too much to show someone you still think or care about them. The process is not complicated, you only need access to the internet, own one of the international cards like Visa, Master Card, or Discover etc.. Once you open istayconnected home page it directs you through whether you want to top up or purchase the electricity. Istayconnected LLC was launched on 10/15/2013, ever since the company has been growing exponentially.  From the time the company was launched, on a 3months period of timeit’s revenue increased by 87%, number of transactions increased by 66% (per January 2014 report). The company has gained clients due to the company’s reputation and customers’ satisfaction has kept those customers. According to our customers’ feedbacks, based on a brief survey most customers enjoy our services simply it is easy to access, it is fast, and convenient. Three members of the company visited Rwanda and Uganda over Christmas break, where they had meetings with telecommunication companies in both countries like MTN Rwanda, TIGO Rwanda, Airtel Rwanda, MTN Uganda, Orange Uganda and Airtel Uganda.

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Tanzania accountancy body demands global recognition

The Controller and Auditor General, Mr Ludovick Utouh, has called upon the UK-based Association of Chartered Certified Accountants (ACCA) to give some exemptions to Certified Public Accountants (T) holders in qualifying for their examinations. CAG, Mr Ludovick Utouh He said that he believed CPA (T) holders were entitled to special exemptions in ACCA examinations to reciprocate on a similar treatment accorded to ACCA holders by the National Board of Accountants and Auditors (NBAA). “ACCA should be more considerate in giving exemptions to our CPA(T) holders. I believe it is appropriate for Tanzanian youth to acquire international qualifications,” he said at a seminar for financial journalists in Dar es Salaam over the weekend. Founded in 1904, the Association of Chartered Certified Accountants (ACCA) is the global body for professional accountants offering the Chartered Certified Accountant qualification (ACCA or FCCA). As of May 2012, ACCA was one of the largest and fastestgrowing global accountancy bodies with 154,000 members and 432,000 students in 170 countries. Mr Utouh said he believed there was a strong reason for ACCA to forge closer working relations with NBAA for the two institutions were working on a similar path to train professional accountants. “We have a very strong and reputable body offering CPA certificates to students. I think they two bodies need to work together,” he said. The ACCA Head of Education and Development in Eastern Africa, Mr George Njari told the ‘Daily News’ that ACCA would be able to give CPA (T) holders special exemptions by October or November this year. He said the move had been delayed as the NBAA were still revising their syllabus. “We have been working with NBAA on that but they are currently revising their syllabus. We’ll be able to subject CPA (T) holders to our process once the revision work is complete.

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Twiga Cement plans new marketing strategies

The Tanzania Portland Cement Company (TPCC) plans to review its marketing strategies to improve distribution and sales of its products in the country and beyond. TPCC Managing Director Alfonso Rodriguez told a news conference in Dar es Salaam over the weekend that it was aimed at coping up with ever rising competition in the market. He said that the company organises dinner gala annually during which agents and distributors meet with other members of the firm’s staff to share views and experiences. “Our goal is to improve the performance of our business in the market,” he said. He said last year, the firm’s market share dropped by 20 per cent. “We are keen to recover the lost market share,” he stressed. He further said that the Dar es Salaam based cement firm saw its net income dwindling by over one third to 19bn/- in the first six months that ended last June in 2013. Mr Rodriguez underscored that the poor results were attributed to unregulated imports mostly from Pakistan as well as power blues following the collapse of the manufacturer’s electric transformer that cut the number of operational mills from five to three. He noted that the firm’s plans to build its own power plant to reduce blues during the production process while boosting the cement production. Mr Rodriguez applauded the government’s move against importation of untaxed cement that is selling cheaply in the market, subjecting the local manufacturers to unfair competition. TPCC Sales and Marketing Director, Ekwabi Majigo said that the emergence of new manufacturers in the cement industry would make the firm come up with new business strategies in order to remain at the top of strong and giant producers of cement in the country.

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