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Two KPMG partners resign in South Africa, face disciplinary charges

By
Our Reporter
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KPMG-South Africa

KPMG South Africa said on Saturday two of its partners have resigned after facing disciplinary charges over failure to disclose financial interests in connection to VBS Mutual Bank, which was placed under curatorship.
The company said in a statement partners Sipho Malaba and Dumi Tshuma tendered their resignations on Friday, which have been accepted.
KPMG said the disciplinary charges against Malaba and Tshuma were “connected to VBS bank and include, but are not limited to, failure by the partners to comply with the firm’s policies and procedures regarding the disclosure of relevant financial interests.”
The South African Reserve Bank in March placed small lender VBS under curatorship because of liquidity issues.
KPMG said when VBS went into curatorship; information arose in relation to the partners that prompted the firm to launch an independent investigation. The investigation was ongoing and further action would be taken as appropriate, it said.
“This has been a very disappointing episode for KPMG. There can be no tolerance, however, of any conduct that compromises our reputation and we have moved decisively to deal with the situation,” KPMG South Africa chief executive Nhlamulo Dlomu said.
KPMG did not provide further details. It is one of several international companies facing questions about its work for the Gupta brothers, who have been accused of using their links with former President Jacob Zuma to secure lucrative tenders.
The Guptas and Zuma have denied any wrongdoing, and the accusations are part of judicial inquiry into “state capture”.
A number of companies have said they would drop KPMG as their auditor.
The same audit firm is facing resistance in Uganda over whether it should be contracted to audit Bank of Uganda (BoU) in relation to the takeover of Crane Bank Limited. The firm was two weeks ago shortlisted among firms to be contracted to carry out the forensic audit but KPMG among others have come under opposition over conflict of interest as the firm has before worked for BoU.
Three firms shortlisted for the impending Bank of Uganda (BOU) investigations over the sale of Crane Bank may have to pull out the process if the investigations are to be considered credible.
The five firms shortlisted are KPMG, Pricewaterhouse Coopers (PwC), Deloitte and Touch. However, it should be noted that KPMG and Pricewaterhouse Coopers worked with defunct Crane Bank as its auditors.

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Judges, registrars equipped with skills on arbitration process

By
Our Reporter
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EACJ judicial officers

The East African Court of Justice (EACJ) Judges and Registrars have completed training on arbitration in Nairobi-Kenya to equip them with knowledge mainly to handle commercial disputes.
The training facilitated by the Chartered Institute of Arbitrators, Kenya covered issues on arbitration process, such as arbitration practice, drafting and decision making in settling disputes.
The President of EACJ, His Lordship Justice Dr Emmanuel Ugirashebuja, said that was a need to improve on the knowledge and skills of the Judges in arbitration jurisdiction and practices within the region. He further said: “We need to have an open mind to learn a lot and to change the Judge/Lawyer mind set to the arbitrator mind set, in order to be effective arbitrators.”
Justice Ugirashebuja, emphasized that, the EACJ will continue engaging the Institute in such training programs to enhance its capacity building.
EACJ has arbitration jurisdiction and provides arbitration services without payment of any fees.
The Court has so far handled two arbitration disputes and as the Common Market Protocol implementation process continues, several disputes are likely to arise, hence the residents of the Community may bring the matters to the Court for interpretation and settlement.
The Chairman of the Chartered Institute of Arbitrators, Mr Calvin Nyachoti said that, it is very important to equip the regional Courts with the arbitration knowledge, so that Litigants should not take such disputes outside East Africa and Africa as whole, which is very costly. He also added that arbitration is faster than Court litigation because a case in court can take more years compared to arbitration.
Mr Nyachoti, commended the commitment of the EACJ in continuously engaging in arbitration trainings, to improve the Judges knowledge on arbitration. He said that there is no doubt this will benefit the residents of the Community as the court continues to receive various disputes on arbitration.
He encouraged the Court noting that most of the East African Partner States have adopted arbitration as a dispute settlement mechanism with in their respective jurisdictions, these include the Republic of Kenya, Rwanda, Uganda and United Republic of Tanzania.
Mr Nyachoti also commended the judges for taking the training as the arbitration knowledge and skills will enable them fully join the arbitration fellowships in their respective countries once they complete their tenure at the EACJ.
He further said that, early this year in February, the Institute engaged the COMESA Court of Justice in training the Judges in arbitration practices and will also engage the African Court of Human and Peoples’ Rights in May 2018.
Arbitration is the process of settling disputes that arise from commercial agreements; the matters are handled in private unlike litigation where a case is handled in public Courts.

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Ecobank to help SMEs reap from intra Africa trade

By
Our Reporter
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Ecobank logo

Ecobank Group, which has an affiliate in Uganda, continues to expand the Emerald Ecobank Business Club on the continent, aimed at widening opportunities for its Small and Medium Enterprises (SMEs) customers by creating direct linkages between businesses operation in 33 African markets with over 12.8 million customers.

The Emerald Ecobank Business Club is designed also to enable members get access to direct networking platforms, market information as well as business advisory services from the Ecobank, associated partners, external trade facilitation and preferential banking among others.

The Club will focus on bolstering intra-Africa trade leveraging on the Bank’s presence in 33 African markets enabling SMEs to leverage on Ecobank’s customer book to authenticate and vet trading partners across the continent.

The new Business Club is also a wider strategy by the bank to grow SME sector by offering direct linkages and a seamless base of transaction for businesses across the continent.
The, target, according to officials, is to empower our SME customers by availing networking opportunities across the network of 33 African countries to help them grow.

The initiative comes at the time when most SMEs across Africa face capacity challenges either in terms of technical knowledge on how businesses operate across the continent or in terms of access to opportunities to forge partnership. Official say Emerald Ecobank Business Club members will enjoy easy networking opportunities and exposure to different markets.

Further, the Emerald Ecobank Business Club will help facilitate the interaction amongst emerging SMEs in Africa, but also facilitate integration with the larger businesses across the continent, enabling members to benefit by being part of a like-minded community.
Though SMEs are willing to expand into the wider African Market they lack adequate platforms to network and understand potential partners a factor that have made most businesses cautious and unwilling to partner, officials say.
Under the initiative, SMEs will also be able to leverage on the Ecobank Mobile App which has four million downloads so far. The platform will benefit small businesses along border communities that have in the past had to transact in cash and constantly trade currencies subjecting them to exchange losses.
They will also enable SMEs tap into new opportunities and deepen intra-Africa trade which currently stands at 14 per cent accounting for 18 per cent of African exports.
The launch of the Club comes on the back of the Africa Continental Free Trade Area (CFTA) agreement which signed by 44 African countries last month and expected to create a US $6.7 trillion market by the year 2030.
Across Africa, small and medium sized enterprises are singled out as the key drivers for job creation, wealth generation and social-economic growth and development.
The club is already operational in Ghana, Nigeria, and Cote D’Ivoire, Kenya among others with plans to launch in the entire East African region in the next two months and all of Ecobank’s 33 markets by 2020. Ecobank also has representative bureaus in China, Dubai and the UK.

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Angella Katatumba is not our representative in Uganda-Pakistan

By
Geoffery Serugo
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Angella Katatumba.

The High Commission for the Islamic Republic of Pakistan based in Nairobi has dismissed Angelina Katatumba as the Consular in Uganda describing her as fake.
In a public notice, the Commission says ever since Bonny Katatumba died, their government has never appointed any representative to Uganda as a Consulate.

“The High Commission for the Islamic Republic of Pakistan in Nairobi presents its complaints to the Ministry of Foreign Affairs, Uganda and all the Diplomatic Mission/Consulates/Honorary Consulates in Uganda and has the honour to refer to the latter’s Note verbal of even number dated October 25, 2017. The so-called Honorary Consulate of the Islamic Republic of Pakistan in Uganda is still operating illegally in Uganda. It had actually been ceased to function with the demise of our Honorary Consul Mr Bonny Katatumba , Government of Pakistan has not yet appointed a new Honorary Consul in Uganda.” The complaint to Ministry of Foreign Affairs Uganda reads.

The High Commission further warns the Ugandan authorities especially Immigration officials not to honour any documents purportedly issued in the name of the Consulate.
“This High Commission has further honour to inform the Honorary Consulate of Pakistan currently operating in Uganda under Angelina Katatumba is fake and fictitious and has no legal authority at all”

The Diplomatic Note

Ms. Katatumba, has been falsifying that she is Acting Consul of Pakistan to Uganda, ever since the demise of her father was on Thursday morning in the company of visiting Jamaican artiste commonly known as Kuzi Kz, beaten at Chicken Tonight outlet in Kabalagala.

In camera footage, Ms Katatumba is seen haggling with KFC staff identified as Manager Olubrwoth Ochoka, watchman Dennis Okirot and John Kaddu, a waiter.
But the incident had not gone without criticism and many were asking why the diplomat and heiress of the Katatumba Business Empire didn’t have her security detail given the odd hours at which she was travelling. But now the denial by the High Commission in Nairobi unmasks her as being no diplomat.

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Kabaka implores gov’t to organize LC I elections

By
Geoffery Serugo
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Kabaka Ronald Muwenda Mutebi II

The Kabaka of Buganda Ronald Muwenda Mutebi II has urged the government to organise local council elections in a bid to tackle the security challenges in the country.

Speaking at Villa Maria Catholic Parish in Masaka, the Kabaka noted that government had failed to organize Local Council (LC I) leadership for over 16 years citing lack of funds, but hastened to add that LC are basis of security in the country.

Kabaka Mutebi, who was in Villa Maria for his 63rd birthday celebrations, was received by among other dignitaries Katikiro Charles Peter Mayiga and entertained by various cultural troupes.

“We have witnessed the killings of people in Masaka among other areas where attackers issue notices days before they raid, kill and inflict grievance harm to victims, I condole all who have lost their loved ones,” the Kabaka told hundreds of people gathered.

The Kabaka’s statement comes in awake of rampant kidnaps, torture and killing of victims, including that of Susan Magara, who was killed after her family failed to raise a US$1 million ransom to have her freed.

In the recent past there have also been other indiscriminate killings including the serial murders of women in Entebbe and Wakiso districts.

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Plan International lauds Kadaga for supporting girl child

By
Isaiah Mwebaze
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Kadaga exchanges gifts with Plan International officials

Plan International Country Chairman Joshua Liswood has commended the Speaker of Parliament Rebecca Kadaga for her continued support towards the empowerment of the girl child in Uganda.

“You are the role model of these young girls. They are inspired by you and the strength and conviction of these young girls is fantastic; we want to appreciate your great effort,” Liswood saidas he paid a courtesy call on Kadaga on Friday, 13 April 2018.

According to Plan International Director Rashid Javed, this year the organisation would be focusing on awareness of the girl child in leadership positions. “We want to take the girl leadership to the next level,” Javed said.

On her part Speaker Kadaga said that there was need to address the rampant drug and alcohol abuse in schools.

“We would like to partner with you in terms of awareness and sensitization on the drug and alcoholism abuse especially in schools, and establish support systems within the schools,” she said.

Kadaga also pleaded that Plan International includes a water plant in all schools that have over 400 students, and pledged continued support to the organisation’s efforts aimed at in retention of children in school.

Plan International has presence eight districts to promote children’s rights and equality for girls. They include Kamuli, Tororo, Kampala, Lira, Gulu, Alebtong, Buyende and Adjumani districts.

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Gov’t won’t take over UMEME – UEDCL official

By
George Mangula
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UEDCL boss Joseph Katera addressing journalists in Kampala on Friday

The government will not take over the operations of electricity distributor UMEME soon, the CEO of Uganda Electricity Distribution Company (UEDCL), Joseph Katera has said, dashing the hopes of some Members of Parliament (MPs) were hoping for a change on grounds that the distributor’s current electricity charges are too high for consumers.

According to Mr Katera, even if government was ready technically and operationally, it currently does not have the money to run the activities that UMEME is implementing as the distributor moves into the last seven years of the 20-year concession it signed with government in March, 2005.

“If government is to take over from UMEME, we need to spend US $100m annually, which government can afford right now,” Mr. Katera said during a symposium organised by UMEME at Lake Victoria Serena Hotel, Kigo to update the MPs on the Natural Resources Committee.

Further, Mr. Katera said the concession signed between UMEME and government has a buyout clause of over US$330m, which money would be costly to government. He said, UMEME, being a private company listed on the Uganda Securities Exchange (USE) and Nairobi Securities Exchange (NSE) is best placed to run the distribution of electricity in the country as it can easily raise funds in case of further investments in the network.

Speaking at the symposium the Chairperson of the Committee Alex Byarugaba said it was important that UMEME updates the legislators on its operations so that they make informed decisions. “This is our meeting and we are here to listen and learn, much as we shall ask some questions,” he said.

UMEME CEO Selestino Babungi says company is investing in new technology to reduce technical costs further

In his speech UMEME CEO Celestino Babungi said they have invested heavily since 2005 improving efficiency of collection of fees from 80 per cent during UEB reign to the current 100 per cent. He said the company has also worked to bring down losses from 38 per cent in 2009 to 17 per cent as of 2017. With technical losses plummeting to 10 per cent while commercial losses stand at 7 per cent. Currently, he said, losses stand at 16.9 per cent.

UMEME officials argue that technical losses can not completely be eliminated from the network since the conductors through which electricity flows have resistance. Analysts say the can be minimized below 10 per cent.

Mr. Babungi said UMEME has invested billions of shillings in modern technologies such as transformers, larger conductors and others to minimize technical losses. MPs said US $400m is paid by government for a percentage unit, but others said this figure has come down.

Commercial losses arise mainly from power used by consumers and not paid for due to illegal connections and vandalism. UMEME has addressed the challenge through the introduction of prepared metering and use of aerial bound cables, according to the company officials.

According to Babungi, UMEME targets to reduce electricity losses to 14.7 per cent in 2018. Katera on the other hand said US $2.65 billion is needed on the side of government to invest in the transmission and distribution network from 2018-2022.

He said government was fast racking the construction of the 600MW Karuma hydropower dam and 183MW Isimba power dam for cheaper generation to reduce the burden on the electricity tariff in the medium term.

The UMEME CEO meanwhile, has urged MPs to sensitize their voters on the impact of power thefts. He specifically lauded legislators from the Elgon region for helping the company reduce commercial losses through sensitization of the residents ‘stealing power’ that was costing the company billions of shillings in losses.

The MPs on the other hand said power is needed in the country for industrialization as well as domestic consumption. They added that their voters are not happy with the current power prices, even as industrial and commercial consumers use 65 percent of the power generated in the country.

 

 

 

 

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Arsenal 2-2 draw excites NSSF’s boss Richard Byarugaba

By
George Mangula
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NSSF Managing Director Richard Byarugaba

Thousands of Arsenal FC fans in Uganda were yesterday brought  back to life as the English Club came from 2-0 down to draw 2-2 with CSKA Moskav, in effect storming the semi-finals of the UEFA Europa League played in Russia.

One of the fans who was mesmerized by the Arsenal comeback is none other than the Managing Director of the National Social Security Fund (NSSF), Richard Byarugaba, who had a stint in England.

“When they (CSKA Moskav) scored two (goals), I knew we (Arsenal FC) were gone,” Byarugaba  said as he chatted with a colleague while having breakfast during a corporate function at the Lake Victoria Hotel Serena, Kigo.

His colleague interjected saying Arsenal FC fans in Uganda are the most enduring, given the poor performance of the club in the recent years. “I have always told ladies who are looking for husbands to go for Arsenal FC fans. They are the most enduring. I can’t handle that,” he said.

Journalists who were around could not believe that Mr Byarugaba, who manages one of the largest pension funds in Africa, is a football fan. But anyway many learnt that Byarugaba enjoys sports and is the Corporate League patron.

Nonetheless journalists have wished him good luck. “I wish him and his club Arsenal good luck,” a journalist said.

Arsenal can only play in the UEFA Champions League next season if it wins the Europa Cup.

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EAC single currency: EALA committees collect views from member countries

By
Our Reporter and Agencies
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Ugandan currency

The campaign to reform currencies in the East African Community (EAC) is still on as the regional parliament, the East African Legislative Assembly (EALA), prepares laws for setting up major institutions.

Reports indicate that EALA committees have begun collecting views and suggestions on the East Africa Monetary Institute (EAMI) Bill, 2017 and the Statistics Bureau Bill, 2017, which had earlier passed through the first and second readings. The bills are part of those that will drive the EA Monetary Union, which was first slated for 2012.

The Monetary Institute Bill seeks to set up EAMI as an agency to initially perform the role of a regional central bank. It will be expected to craft policies required to back a single currency. Kenya has requested to host the institute.

On the hand, the EA Statistics Bureau Bill is expected to create a regional body similar to European Union’s Eurostat, responsible for gathering data to guide decision making within the EAC Monetary Union.

EALA’s Committee on Communications and Trade is currently engaging with stakeholders on the regional Statistics Bureau Bill while its General Purpose Committee is handling views on the EAC Monetary Institute Bill.

The East African ministers, including Uganda’s minister for East African Community Affairs Dr Kirunda Kivejinja, are among the stakeholders on queue to exchange views with the EALA committees.

“The Council of Ministers for EAC is thus expected to meet with the committees to thrash out key matters on both Bills,” EALA says in a statement.

Others, which must be established to pave way for a regional currency, include the East African Financial Services and the East African Surveillance, Compliance and Enforcement Commission.

The East African Monetary Union protocol lays the framework for a monetary union within 10 years during which the partner States will progressively converge their currencies into a single currency for the bloc.

However, Uganda, Kenya, Tanzania, Rwanda, Burundi and South Sudan must meet specific targets on public debt management, inflation, foreign reserves and fiscal deficit by 2021 to pave the way for the single currency.

The Member States are required to keep their debt-to-GDP ratio at no more than 50 per cent and maintain fiscal deficit at not more than three per cent of the GDP.

They must also keep overall inflation at eight per cent and hold foreign exchange reserves worth 4.5 months of imports.

The EAC single currency, if established, will help ease trade among member countries, which is not the case now as businessmen who transact across national borders have exchange their national currencies into US dollars.

Currently Uganda, Kenya, and Tanzania currencies are denominated in Shillings while Rwanda and Burundi use Rwandan Francs and Burundian Francs respectively. South Sudan uses South Sudanese Pound a medium of exchange. The Kenyan Shilling is the strongest in the region.

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Fiscal rules: Make them easy to love and hard to cheat

By
Guest Writer
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Xavier Debrun

By Xavier Debrun et al

Rules to contain lavish government deficits are most effective if countries design them to be simple, flexible, and enforceable in the face of changing economic circumstances.

A new analysis of the fiscal rules in over 90 countries, based on their experiences, finds that the rules put in the place over the last three decades often were too complex, overly rigid, and difficult to enforce.

Fiscal rules set the course for a government’s responsible fiscal policy. For example, a government can decide to limit its annual borrowing to 3 percent of the economy’s total income, as is the case in many European countries. Rules can help prioritize among the many demands on the budget, chart a predictable path for government policy, and keep public debt in safe territory.

The analysis shows that better-designed rules can help avoid excessive deficits, which hinder sustainable public finances. This reassures financial markets and investors, and, as a result, countries that comply with their fiscal rules can borrow more cheaply. Countries with excessive deficits and lax rules have higher borrowing costs because investors see them as more of a risk.

By demonstrating a government’s commitment to well-managed public finances, fiscal rules can create room in the budget to finance policies that promote growth, enhance the economy’s resilience to adverse shocks, and reduce excessive income inequality.

Past as prologue: lessons for rule design

Some key features have proved to enhance the rules’ effectiveness in the past:

  • Broad coverage, meaning that the rule should cover most, if not all of the budget, reducing possible loopholes.
  • A design that encourages countries to save money in good economic times, for instance by preventing large expenditure increases, which can absorb all revenue windfalls.
  • Limits on fiscal aggregates that are based on sound economic principles. For instance, governments should not set the debt ceiling too high to foster fiscal responsibility. But the debt ceiling should not be too low either, to enable desirable policies, such as filling public infrastructure gaps or offsetting the economic impact of large shocks.
  • Precise exceptions to let the budget accommodate unexpected events, like natural disasters.

Also, successful fiscal rules need political buy-in, as well as supporting institutions that enhance fiscal transparency and accountability—such as fiscal councils, which governments establish to act as public watch dogs to evaluate fiscal policy. Most European countries have, for instance, set up fiscal councils in recent years.

In the past decade, substantial reforms have led to a second-generation of rules. These are: first, more flexible, for example with new and better-defined exceptions; and second, easier to enforce, for example, by adding correction mechanisms that foresee what the government should do when they break the rule. Jamaica and Grenada have introduced correction mechanisms in 2014 and 2015.

However, we find that these innovations have made the rules more complicated to operate with no discernible impact on compliance yet.

Three principles for future reforms

To address these shortcomings, our analysis provides three principles to guide the design of new rules and the reform of old ones:

  • Make sure that the package of rules is consistent, parsimonious, and guarantees debt sustainability . Fiscal rules should include both a debt rule to set the course of medium-term fiscal policy, and a small number of operational rules that guide annual budget decisions, such as an expenditure rule or a budget balance rule. Reforms should ensure that these rules are not redundant and do not send conflicting signals.
  • Create incentives for better compliance with rules.We find that governments comply with their rules about half of the time. To encourage governments to follow the rules, compliance should bring more tangible benefits, and there should be stronger costs for noncompliers. Although financial sanctions are often not credible, recent efforts to raise reputation and political costs seem more promising, notably through the role of fiscal councils that monitor and expose to the public possible mismanagement of public funds.
  • Allow for adequate flexibility without sacrificing simplicity too much . Rules that permit some deviations from targets in response to economic shocks, such as the budget balance rule, are often complicated and hard to implement. Expenditure rules may provide a better balance between flexibility and simplicity

The Writer works with the IMF

 

 

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