Members of the Secondary Materials and Recycled Textiles Association (SMART) in the US are rejoicing after they were told that a proposed ban on secondhand clothing (Mivumba) imports from the U.S. by Uganda and other four members of the East African Community (EAC) will not be implemented as originally planned.
Uganda, Tanzania, Uganda and Burundi have now officially announced their decision to roll back the ban. Kenya announced their decision to back off from the ban in 2017, following protests from SMART. The decision by the EAC states means the Americans will continue to earn dollars from the region, a big percentage of the population depends on secondhand clothing.
SMART, trade associations, acts on behalf of its numerous small and medium-sized member companies who use, convert and recycle pre-and post-consumer textiles, including used clothing.
In March 2017, SMART filed a petition and delivered testimony during a related hearing asking the U.S. government to conduct an out-of-cycle review of the African Growth and Opportunity Act (AGOA) beneficiary status of Kenya, Tanzania, Rwanda and Uganda and request the suspension of duty-free status for all currently eligible apparel imports from the EAC countries.
The countries at the time argued that they would do so as a measure to boost their own local industries that would later on create jobs for the fast-growing population, especially the youth who are the majority. Uganda would do so via her Buy Uganda Build Uganda (BUBU) Policy which encourages Ugandans to consume locally-made products.
The decision forced SMART to file a petition to the US government. The U.S. government officials are said to have worked hard behind-the-scenes to convince the EAC countries to drop off the proposed ban, paving the way for the secondhand textiles industry worldwide.
The proposed ban sparked international controversy regarding the textile industry’s role in Africa, as no ban or increased duties were slated to occur on imports from China, the region’s largest source of clothing imports. Whereas EAC heads of state were initially concerned U.S. secondhand textiles would disrupt their countries’ own textile industries, SMART representatives argued new and secondhand apparel industries coexist independently in numerous developed and developing countries, including the United States’ own thrift store and new retail establishments.
The decision not to effect the ban means more than 190,000 jobs within the United States alone being preserved, as the total exports to the EAC represents roughly 22 percent of the U.S. industry’s total exports. The EAC members have announced they will focus on other measures to develop their textile and apparel industry.
Meanwhile, The U.S. government has suspended duty-free treatment for all AGOA-eligible apparel products from Rwanda in 60 days, a decision welcomed by SMART representatives, who lauded President Donald Trump to suspend the benefits, instead of termination of Rwanda’s status as an AGOA beneficiary. They said this would allow for continued engagement with the aim of restoring market access and thereby bringing Rwanda into compliance with the AGOA eligibility requirements.

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Latest information reveals that governments of Norway and Dutch could have exerted pressure on some individuals at Bank of Uganda to give Crane Bank Limited to DFCU group.
The two countries whose companies own majority shares in DFCU are said to have used a top executive at the central bank to seal the deal that saw Shs200 billion paid for CBL. The Shs200 billion is said to have been for liabilities. Interestingly, no price was named for CBL and this could mean that the CBL was given out for free.
Last week DFCU bank announced Shs127.6 billion as profits for financial year 2017-2017. However, what is shocking is no substantial of that money will remain in Uganda to develop the economy as most of it will siphoned out of the country for foreigners to share it.
The Shs127.6 billion can tarmac 150 kilometers of a road at a cost of Shs800 million per kilometer or can build over 1000 modern primary schools.
But the revelation that majority shareholders of DFCU are foreigners leaves Uganda questioning why it risky to have major investments in the hands of foreigners who at the end of the day, pocket almost all profits exiting them to their countries.

Uganda is known for being kind to investors but shouldn’t the country have a seal on how much percentage they should give to foreign companies like Rwanda does? Some shares should be left for locals and these could check on the siphoning of all cash to foreign lands like it is the case with DFCU.
DFCU is partly owned by the Commonwealth Development Corporation (CDC) a British government-owned company, together with other foreign multinationals like Rabo Development from the Netherlands and NorFinance from Norway who are shareholders in Arise B.V together with Norfund, a Norwegian government owned Private Equity firm and FMO, the Dutch Development Bank.
Last year, a company called Arise BV was formed after the companies, Norfund, Norfinance FMO, and Rabobank, all of which had shares in different commercial banks in Sub Saharan Africa, transferred their shares to form one company, Arise BV.
Arise B.V is now the majority owner of DFCU Bank, which on January 27, 2016, acquired Crane Bank Limited from Bank of Uganda where it had been under receivership.
Arise BV, which has its headquarters in the Netherlands became majority shareholder in DFCU, (owns 57.81 per cent of shares), just three months after the latter acquired Crane Bank’s assets.
Arise BV claims to aspire to “build strong locally owned financial service providers (FSPs),” and to help “people in Sub Saharan Africa to empower themselves by getting bank accounts and take loans and hence build a better life for their families.”

In April last year, four firms wholly and partially owned by the governments of Norway and Netherlands pooled resources and formed a giant, and named it Arise B.V.
After taking CBL, DFCU had an increase of nearly Shs100 billion in interest income largely from loans and advances taken over from CBL. Interestingly, this is the very year when the prime lending rates were being reduced by all banks in line with reduction in CBR. Although CBL had been declared by BoU at its takeover, as none performing, but an astonishing increase of Shs118 billion by DFCU from CBL customer base means that this must have been from the write back of the purported Non-Performing Assets (NPA) taken over from CBL.
According to extracts of the DFCU bank published statement, there was a windfall increase in income of Shs216 billion. This increment comes after DFCU acquired the Shs200 billion CBL from BoU payable over a period of five years and this has been referred as Bargain Purchase. This profit means that DFCU made Shs92 billion mainly from increased number of branches and staff taken over from CBL.
CBL had loans and advances to a tune of Shs1.1 trillion but some of these loans are being approved as NPA. However, this could be some of the reasons DFCU is make abnormal profits because of the securities.

The bank’s credit to customers rose to Shs1.3 trillion in 2017, up from Shs834.8 billion in 2016.More, customer deposits rose to Shs1.98 trillion from Shs1.13 trillion received a year earlier. That was attributed partly to the acquision of Crane Bank.
BoU transferred the liabilities (including deposits) of Crane Bank to DFCU Bank in 2017.
The leaked agreement between Bank of Uganda and DFCU indicated that the external owned bank got Crane Bank with assets valued at Shs1.3 trillion for just Shs200 billion (payment for liabilities).
The Agreement did not state the amounts of money paid by DFCU as a net purchase price; or the payment terms for monies, or the assets (outside branches) that DFCU was taking over.
DFCU Shareholding percentages
Arise BV 58.71 per cent
CDC Group of the United Kingdom 9.97 per cent
National Social Security Fund (Uganda) 7.69 per cent
Kimberlite Frontier Africa Naster Fund 6.15 per cent
2 undisclosed Institutional Investors 3.22 per cent
SSB-Conrad N. Hilton Foundation 0.98 per cent
Vanderbilt University 0.87 per cent
Blakeney Management 0.63 per cent

Retail investors 11.19 per cent
BoU staff retirement benefit scheme is 0.59 per cent

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