Connect with us

Leader board

Local Business

Naive Interventionism: How Bank of Uganda led to the Death of Crane Bank?

Published

on

Crane Bank

Get 50% off all your Safeboda rides. Click here to download the app

.  

By Tracie Mugisha

In October 2016, the Ugandan citizenry was pelted to shock by a Bank of Uganda announcement. They had taken over Crane Bank and immediately ordered for the suspension of the top management. What followed next were massive withdrawals as thousands of clients rushed to get hold of their deposits. The second-order effects of takeover were beyond expectations. Suddenly Bank of Uganda was trapped by its decisions.

In Economics, a term was derived; “iatrogenics” popularized by Nassim K Taleb the probability Guru and writer of Black Swan. Iatrogenics is simply a term used to describe harm that is done by the healer which is what the Central Bank did to Crane Bank.

From the start of the year, the bank had been posting profits. However, the effects of its written off Non-performing loans had caused some sort of liquidity crisis. The Central Bank hounded the owners of Crane Bank to recapitalize within a month or else face receivership. Sudhir Ruparelia, one of the owners requested that he be allowed at least 3 months to recapitalize. This was rejected by the Central Bank. He then requested that the Central Bank bails him out and he attaches his real estate properties to save the bank. Once again, BOU rejected this proposal.

In July, Crane Bank was stopped from offering any loans, letters of credit, bank guarantees just to mention but a few. As a result, the business community that always frequented the bank begun to shift house. They withdrew their money and opened accounts in other banks. It is no surprise that in the same month, despite having posted profits from the start of the year, the bank posted a loss having suffered all these effects. Then the rumours of businessmen withdrawing their money begun to circulate. Surely something was amiss at Crane Bank. Before long, the rumours were maturing on Social Media. Now, even the normal clients begun to withdraw their little money. Finally the bank was put under receivership further sinking it into an abyss of no-return. It was a black-hole for a Crane Bank.

On the day of the take-over thousands of the bank’s clients could be seen leaving the bank with bundles of cash. The Central Bank’s interventions had sunk Crane Bank.

But did the Central Bank really have to act? Did it realize that its naive interventionism was instead harming the bank and the economy at large?

In complex systems, small errors should be left to correct themselves. These small errors are ways in which complex systems achieve self-stability. Yet the Central Bank intervened in order to correct these small errors. And on top of this, broke the number one rule of Common Sense which states; “the law cannot be a substitute for common sense.”

Now Crane Bank is in a worse situation that it was. No investor would love to take on an already soiled entity. The customers have transferred to other banks and Crane Bank will need much more injections, thrice what it originally needed to recover. Already, tax payers have lost UGX 200 billion that has been injected by Government to save the bank. Still, the Central Bank doesn’t realize that its naive interventionism has also cost tax payers over 200 billion and will continue to cost them even more.

What was so hard about letting Crane Bank recapitalize over 3 months? Was it the only bank that was in such a dire situation? In hindsight, the Central Bank may have to eat a humble pie and accept its faults in failing to adjust its policies to the realities of the economy. It will also have to accept that the death of Crane Bank was entirely its responsibility. And one can only hope that in future they will learn to go slow on their naive interventionism. The blood of Crane Bank is marked on Bank of Uganda’s hands.

Note: Tracie Mugisha is a writer with CampusEye.ug.

(Visited 344 time, 1 visit today)

Local Business

aYo Uganda celebrates one million customers

Published

on

By

Get 50% off all your Safeboda rides. Click here to download the app

.  

aYo Uganda has hit one million customers in less than 2 years of existence in Uganda. With a joint venture between MTN and MMI Holdings, aYo was formulated to have a strong focus on delivering micro-insurance solutions across the African continent.

While addressing the media at Kati- kati Restaurant, the Chief Executive Officer aYo Uganda, Edwin Kwesiga, noted that this milestone cements the fact that aYo is the fastest growing micro-insurance company in the country today.

“We are happy to announce that our customer base has grown to 1 million. This means we have been able to build trust in our valued customers, we have always been committed to serve and provide our customers with innovative products” he said.

“I would like to thank our Customers, the Government and the Regulator, as well as partners for their loyalty and contribution to the growth of the aYo brand over this one year.” Kwesiga further noted.

aYo Uganda plans to make insurance relevant, accessible and easy to use thereby adding value to improve the lives of all Ugandans.

aYo Uganda, opened its doors to the Ugandan market in January 2017 with 2 products namely aYo Recharge with care and aYo Send with care. aYo Recharge with Care offers MTN pre-paid customers an easy way to get FREE hospital or life cover whenever you load MTN airtime. Adding aYo Send with Care to the MTN Mobile Money transfers means that, in the unfortunate event of your passing or should you be hospitalized for a night or more due to an accident, aYo will pay triple the amount you sent to your recipients into you MTN Mobile Money account in form of cover.

(Visited 344 time, 1 visit today)
Continue Reading

Local Business

Airtel Uganda, Kwese TV partner to launch mobile TV

Published

on

By

Airtel Uganda Managing Director Mr. V.G. Somasekhar addresses guests during a business breakfast held recently

Airtel Uganda Managing director Mr. V.G. Somasekhar

Airtel Uganda has partnered with Kwese TV, a provider of decoder TV services in Uganda, to launch Mobile TV services.

Get 50% off all your Safeboda rides. Click here to download the app

.  

Dubbed Kwese Iflix, it offers subscribers a chance to watch TV on-the-go regardless of location, time or whether or not they have an active TV package.

Commenting about the partnership, Airtel Uganda Managing Director Mr. V.G. Somasekhar noted that with a stable and reliable internet connection, anything is possible. “With countrywide 3G broadband, reliable 4G connection and affordable data bundles, we are bringing opportunities and passions closer to Ugandans. Thanks to our partnership with Kweseiflix Ugandans can have full time access to football during the exciting World Cup season,” he noted.

Airtel Uganda is providing a unique proposition to its customers, where one subscription gives them access to both Airtel’s discounted data bundles as well as content from Kwese Iflix (Two in one subscription through airtel money).

Kwese Iflix’s amazing content offers include; live coverage for the 2018 FIFA World Cup Russia – and much more on Kwese Iflix’s world class platform with the best international, regional and local content programs, to stream or even download.

(Visited 344 time, 1 visit today)
Continue Reading

Local Business

UBA unveils solution to allow customers access bank services via Facebook

Published

on

By

Johnson Agoreyo, Managing Director/CEO, UBA Uganda

Johnson Agoreyo, the Managing Director UBA Uganda addresses guests during the launch of Leo.

By Our Reporter

Get 50% off all your Safeboda rides. Click here to download the app

.  

United Bank for Africa (UBA) has unveiled a digital solution dubbed Leo, a chatbot that enables customers use their Facebook accounts to carry out key banking transactions. This was during a ceremony held at their Head Offices on Tuesday.

According to Johnson Agoreyo, Managing Director/CEO, UBA Uganda, this product offering was developed to match customer’s lifestyles since more people are spending more time on social media.

“The formulation of this product is consistent with the bank’s customer-first philosophy, where we are doing things not the way we like but exactly what the customers want, where they want it, and in the exact platform they want. Therefore, we at UBA have collaborated with Facebook to come up with this. In future, Leo will show up on other platforms,” he said.

He further explained that Leo is a very interactive and easy to use  platform which will offer more convenience in how customers interact with the bank.

With Leo, customers are able to open new accounts, carry out money transfers and airtime top-up among others right on their mobile phones.

Gloriaus Byaruhanga, the Head, Digital Banking, UBA Uganda, emphasized that the platform is secure, noting that “the security with this platform is that for every transaction, an OTP (One Time Password) is generated to the phone number that is registered on the account.”

She also explained that to use the chat banking platform, a customer just needs to log in to Facebook Messenger and open up chat with Leo, who then takes over the conversation by telling the customer what steps to take.

The bank is continuously innovating and developing strategies aimed at making banking seamless and effortless for millions of its existing and potential customers, while also ensuring utmost safety of their transactions.

(Visited 344 time, 1 visit today)
Continue Reading

Yop Polls

Bigeyeug TV

Facebook

HOT RIGHT NOW