After the departure of Jimmy D. Mugerwa to Tullow Oil plc in London only in August, emerging reports indicate that Dfcu Bank is on the clandestine hunt for a new person to replace him as Chairman of the board of directors.

“We are looking for Mugerwa’s replacement and anytime we shall announce that person,” a top executive at the bank said on condition of anonymity for he is not authorised to speak to the press on such sensitive matters.

He added that the bank is looking for the person with integrity who can help it redeem its image that was tarnished after it was established it controversially acquired its rival Crane Bank Limited (CBL) in January 2017.

The new Chairman, if appointed will work hand -in-hand with the new Chief Executive Officer Mathias Katamba who only joined the bank in January 2019 after the resignation of Juma Kisaame whose reign at the helm of that institution would later create controversy due to bad business deals he signed as CEO of the bank.

The source further said the new Chairman will be tasked to normalize work relations between top managers of the bank who he says are antagonistic to each. It should be remembered that before Katamba was brought in from Housing Finance Bank, it was rumoured the then Chief of Business and Executive Director of Dfcu Bank William Sekabembe would take over from Kisaame.

The appointment of Katamba, according to insiders did go well with Sekabembe especially that he declined to take up the role of Managing Director at KCB Uganda in anticipation that he would succeed Kisaame. “He felt unappreciated by the board after Katamba was appointed,” a source said.

Now among others, the new Chairman being hunted will have to work hard to ensure that top managers at the bank work together to take it to higher levels.

Meanwhile, Mugerwa, the first Ugandan General Manager for oil company Tullow Oil Uganda was recalled to Tullow Oil PLC in London in a move analysts said was a result of the bad press Mugerwa had been attracting as Dfcu bank’s board chairman. This, according to insiders, had been tarnishing Tullow Oil’s international image.

Mugerwa got the job because of his experience as a top manager at Shell and his expertise in government relations, which Tullow needed badly.
Mugerwa who previously worked in Shell’s East Africa business where he was General Manager of Sales & Operations and served as Shell Kenya Country Chairman, a position he has held since October 2009, has however had a rough corporate ride both at Tullow and Dfcu.

Mugerwa was appointed Tullow Oil General Manager when the partners within the Lake Albert Graben were about to embark on a major oil development which would see Uganda enter the league of oil producing nations.

However, Mugerwa’s stewardship at Tullow Oil Uganda had not achieved much, with the farm down facing challenges as US $900 million oil block sale in Albertine Graben remains to be concluded due to tax disagreement between government and Tullow Oil as well as Total and CNOOC.

As chairman Dfcu bank, Mugerwa helped the bank to acquire Crane Bank Limited, which became controversial, leading to the resignation Kisaame after receiving assets of CBL at only Shs200 billion, paid in installments, without interest on top.

The investigation by the Auditor General and the probe by Uganda Parliament on the seven banks closed by the Bank of Uganda (BoU), unmasked Dfcu bank as a player in fraudulent transactions that led to the purchase of assets of Crane Bank Limited and Global Trust Bank Uganda in January 2017 and 2014 respectively.

The bad press that followed Dfcu and BoU left Mugerwa and other top bank managers open to professional criticism over their judgement and decisions taken.

Mugerwa also watched as Sebalu $ Lule Advocates misadvised the bank to transfer freehold land titles CBL/ Meera Investments Limited into its names after acquiring the former rival. Dfcu Bank is currently searching for other rental spaces in a bid to move some of its branch operations from the contested properties.

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Nairobi will this week host the EIB Eastern Africa SME and Microfinance Banking Forum.  The event, being held for the second time in the Kenyan capital, seeks to improve the economic and social impact of private sector financing supported by the lending arm of the European Union in East Africa (EA).

“Ensuring access to finance and increasing the impact of business investment is key for Kenya’s future. The European Investment Bank has proven technical and financial experience supporting successful private sector businesses in Africa. The EIB Eastern Africa SME and Microfinance Banking Forum is a unique opportunity for Kenyan finance and microfinance professionals and business leaders to share best-practice and contribute to economic and social development across East Africa. This week’s meeting builds on the strong track record of close cooperation between the EIB, the European Union and the Kenyan finance and business community; providing financing to help business growth and improve skills that expand the impact of responsible banking.” said Sheila M’Mbijjewe, Deputy Governor of the Central Bank of Kenya.

“Enabling a thriving private sector is essential to create jobs, unlock economic opportunities and improve social development. In recent years cooperation between African and European partners here in East Africa has enabled the European Investment Bank, the EU Bank, and EU supported technical assistance to strengthen the impact of tailor-made lending programmes. The two days of discussions this week will share lessons learnt from successful financing for businesses across the region and banking best practice.” said Ambassador Simon Mordue, Head of the European Union Delegation in Nairobi.

Sharing experience from EUR 1 billion private sector support in East Africa

Over the last decade the European Investment Bank has provided more than EUR 1 billion in East Africa for private sector investment across East Africa.

“Thousands of companies across East Africa have benefited from the close cooperation between African and European partners and the skills of more than 9,000 business finance professionals strengthened through dedicated training programmes. The European Investment Bank looks forward to intense discussions in Nairobi this week with microfinance and banking partners from four countries in the region to ensure even stronger impact of future private sector investment in the years ahead.” said Catherine Collin, Head of the European Investment Bank Regional Representation in East Africa.

The two-day EIB Eastern Africa SME and Microfinance Banking Forum, hosted by the European Investment Bank in partnership with the Trade and Development Bank and AFC Consultants, will enable international finance experts to share experience and best practice with leading regional banks and microfinance institutions.

Increasing access to finance by refugees and supporting vulnerable smallholders

During the EIB Eastern Africa SME and Microfinance Banking Forum regional banking experts will learn from recent innovative financing partnerships and discuss how successful schemes could be replicated.

This will include examining how refugee communities across Uganda are benefiting from banking services for the first time following  a successful training to ensure increased access to finance  refugee communities, organised  in cooperation with Centenary Bank and UNHCR.

Experience gained from the EIB’s first dedicated support for long-term agriculture investment in Kenya,  working with Equity Bank across the country will also be shared. The scheme launched earlier this year is helping agriculture companies to modernise and harness the full economic, employment and export potential of agriculture. The programme is enabling local currency financing for farmers and access to seven year loans.

Sharing local understanding and international best banking practice

This week’s event will bring together more than 110 regional banking, microfinance and business leaders, international finance experts and foreign Ambassadors to share experience and best practice. Local businesses will also get direct feedback to improve business plans and enhance their growth strategies.

The EIB supported 60 projects across Africa in 2018 with €3.3 billion in investment. €1.6 billion went to private companies in sectors such as telecommunication, energy and agriculture.

The EIB is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.

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By Gita Gopinath

The global economy is in a synchronized slowdown and we are, once again, downgrading growth for 2019 to 3 percent, its slowest pace since the global financial crisis. Growth continues to be weakened by rising trade barriers and increasing geopolitical tensions. We estimate that the US-China trade tensions will cumulatively reduce the level of global GDP by 0.8 percent by 2020. Growth is also being weighed down by country-specific factors in several emerging market economies, and by structural forces, such as low productivity growth and aging demographics in advanced economies.

In the October World Economic Outlook, we are projecting a modest improvement in global growth to 3.4 percent in 2020, another downward revision of 0.2 percent from our April projections. However, unlike the synchronized slowdown, this recovery is not broad-based and remains precarious.

The weakness in growth is driven by a sharp deterioration in manufacturing activity and global trade, with higher tariffs and prolonged trade policy uncertainty damaging investment and demand for capital goods. In addition, the automobile industry is contracting owing also to a variety of factors, such as disruptions from new emission standards in the euro area and China that have had durable effects. Overall, trade volume growth in the first half of 2019 has fallen to 1 percent, the weakest level since 2012.

In contrast to extremely weak manufacturing and trade, the services sector continues to hold up almost across the globe. This has kept labor markets buoyant and wage growth and consumption spending healthy in advanced economies. There are, however, some initial signs of softening in the services sector in the United States and euro area.

Monetary policy has played a significant role in supporting growth. In the absence of inflationary pressures and facing weakening activity, major central banks have appropriately eased to reduce downside risks to growth and to prevent de-anchoring of inflation expectations. In our assessment, in the absence of such monetary stimulus, global growth would be lower by 0.5 percentage points in both 2019 and 2020.

Advanced economies continue to slow towards their lower long-term potential. Growth has been downgraded to 1.7 percent for 2019 (compared to 2.3 percent in 2018) and it is projected to stay at this level in 2020. Strong labor market conditions and policy stimulus are helping to offset the negative impact from weaker external demand for these economies.

Growth in emerging market and developing economies has also been revised down to 3.9 percent for 2019 (compared to 4.5 percent in 2018) owing in part to trade and domestic policy uncertainties, and to a structural slowdown in China.

The uptick in global growth for 2020 is driven by emerging market and developing economies that are projected to experience a growth rebound to 4.6 percent. About half of this rebound is driven by recoveries or shallower recessions in stressed emerging markets, such as Argentina, Iran, and Turkey, and the rest by recoveries in countries where growth slowed significantly in 2019 relative to 2018, such as Brazil, India, Mexico, Russia, and Saudi Arabia. There is, however, considerable uncertainty surrounding these recoveries, especially when major economies like the United States, Japan, and China are expected to slow further into 2020.

Escalating risks

In addition, there are several downside risks to growth. Heightened trade and geopolitical tensions, including Brexit-related risks, could further disrupt economic activity, and derail an already fragile recovery in emerging market economies and the euro area. This could lead to an abrupt shift in risk sentiment, financial disruptions, and a reversal in capital flows to emerging market economies. In advanced economies, low inflation could become entrenched and constrain monetary policy space further into the future, limiting its effectiveness.

Policies to reignite growth

To rejuvenate growth, policymakers must undo the trade barriers put in place with durable agreements, rein in geopolitical tensions, and reduce domestic policy uncertainty. Such actions can help boost confidence and reinvigorate investment, manufacturing, and trade. In this regard, we look forward to more details on the recent tentative deal reached between China and the United States. We welcome any steps to de-escalate tensions and to roll back recent trade measures, particularly if they can provide a path towards a comprehensive and lasting deal.

To fend off other risks to growth and to raise potential output, economic policy should support activity in a more balanced manner. Monetary policy cannot be the only game in town. It should be coupled with fiscal support where fiscal space is available, and policy is not already too expansionary. Countries like Germany and the Netherlands should take advantage of low borrowing rates to invest in social and infrastructure capital, even from a pure cost-benefit perspective. If growth were to deteriorate more severely, an internationally coordinated fiscal response, tailored to country circumstances, may be required.

While monetary easing has supported growth, it is essential that effective macroprudential regulation be deployed today to prevent mispricing of risk and excessive buildup of financial vulnerabilities.

For sustainable growth, it is important that countries undertake structural reforms to boost productivity, improve resilience, and lower inequality. Reforms in emerging market and developing economies are also more effective when good governance is already in place.

The global outlook remains precarious with a synchronized slowdown and uncertain recovery. At 3 percent growth, there is no room for policy mistakes and an urgent need for policymakers to support growth. The global trading system needs to be improved, not abandoned. Countries need to work together because multilateralism remains the only solution to tackling major issues, such as risks from climate change, cybersecurity risks, tax avoidance and tax evasion, and the opportunities and challenges of emerging financial technologies.

The writer is IMF Chief Economist

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Africa’s telecommunication giant, MTN-Uganda has emerged as the biggest tax payers according to the latest ratings by the tax collector, Uganda Revenue Authority. Sources within URA can reveal.

The latest list of Uganda’s largest tax payers obtained from sources within has placed MTN Uganda on top with a whooping Shs682.4 billion for financial year 2018/2019. Airtel Uganda came second with Shs535.9 billion while fuel giants Vivo Energy came inthe third place with Shs398.9 billion.

In the fourth place is Nile Breweries Limited on fourth with She394.8 billion closely followed by Bank of Uganda in fifth position with Shs390.4 billion.

Nile Breweries competitor, Uganda Breweries Limited had Shs308.4 billion and Total Uganda Shs300.6 billion.

Also on the list are Umeme Limited, Tororo Cement, Kakira Sugar Limited and Bidco Uganda limited topping up the top 11 tax payers list.

Others include Crown Beverages, Nile Energy, Century Bottling company and Centenary Development Bank Limited. MTN has maintained its lead for several years.

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