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Emma Mugisha, Executive Director and Head of Business Banking at Stanbic Bank Uganda, believes that mobile money is a huge growth market: after all, Uganda has over 30 million people using this form of payment.

The pandemic has accelerated his bank’s agenda to partner with fintechs and other companies to help them digitize the market. Stanbic has invested heavily in enabling customers to use USSD (Unstructured Supplementary Service Data) for mobile banking.

USSD is a global system of mobile communication protocol used to send text messages. It’s a popular way to transact in many African countries, where many have phones but no internet.

Mugisha says USSD is a more popular digital channel in Uganda as few Ugandans have smartphones and some prefer to use phones with this system.

As Uganda’s largest commercial bank in terms of assets and branch network, Stanbic has played a vital role in the development of the country’s economy in recent years.

South Africa-based Standard Bank Group established its presence in Uganda in the early 1990s, but became the country’s largest lender in February 2002, when it acquired 90% of the shares of Uganda Commercial Bank, a public bank with 65 branches. It was renamed Stanbic Uganda Bank.

As Uganda’s economy continues to digitalise, Stanbic has also ventured into agency banking – where a fintech offers its customers a service, which is provided and managed by a bank that acts as an “agent of this service. Although Stanbic’s branch network is an important customer touchpoint, Mugisha says about 95% of his bank’s transactions are through alternative and non-branch channels.

“We are seeing that our customers have shifted more to digital channels as well as banking agents,” says Mugisha.. “Agent banking is also a very popular channel for our customers, especially for small transactions, while larger businesses are comfortable with internet banking.”

Lead Arranger for MTN’s IPO

Last October, Stanbic was the lead arranger for MTN Uganda’s IPO, the largest in the country’s history. The telecom operator offered 4.5 billion shares in Uganda’s relatively undeveloped capital markets.

Although the transaction was not as fully underwritten as the bank had expected, Mugisha says the deal “shows us the depth of the market as well as the continued education on the benefits of capital markets that we need to do. to convey to the public as well as the existing market.

Nonetheless, bringing such a large deal to market was a “proud and important moment” for her, as the telecom operator is one of the bank’s largest customers. The IPO allowed ordinary Ugandans to buy shares of MTN, opening the door to thousands of retail investors who otherwise have little access to stock exchanges.

“To invest in the stock market, you had to go through the whole process, find a broker, etc., but now the market is on your phone and you get small bites [numbers of] shares; this makes the number of participants much larger. It was interesting at the time to see even security guards, teachers, all kinds of people buying MTN shares,” she says.

Rwandan optimism

It is not just the telecom sector that Mugisha believes will drive the growth of Uganda’s economy in the years to come.

In February, Total and China National Offshore Oil Corporation (CNOOC) announced a $10 billion investment in the Lake Albert project, which includes the development of oilfields, processing facilities and a network of heated pipelines. electrically.

Mugisha says this is a very important project for Uganda and believes it will spur economic growth over the next five years.

She adds that agriculture is currently the biggest employer in Uganda and that the sector will continue to grow.

“We are the food basket of our region,” she adds. “We may be landlocked, but we are land-bound, as we sit in the middle of a huge hinterland of landlocked countries.”

All imports from South Sudan generally pass through Uganda; the eastern part of the Congo is closer to Mombasa than to the Atlantic; and Rwanda’s trade also passed through Uganda until there was a political rift between the two countries.

In January, Uganda and Rwanda reopened their land border post after it had been closed for three years.

“We also have many manufacturers in Uganda who also sell agricultural products in Rwanda,” she says.

Back to school

Education is a key sector for Stanbic, which counts approximately 17,000 Ugandan schools among its customers. During the lockdown, the bank invested around $5 million in education.

“Over 60% of our population are very young children. So out of the total population of 40 million, you probably have 17 million learners who have been impacted for two years.

The education sector also not only supports agriculture through schools that purchase food, but also many micro-enterprises that depend on the sector.

Banks have provided loans to school owners and given them interest holidays, to help schools recover from the pandemic and improve cash flow.

“Of course you have sectors like tourism and other sectors that have also been affected, but the education system – because it meets the needs of so many Ugandans – was the one we decided to focus on. as an economy to support,” she says. .

Reaching Ugandan farmers

In Uganda, around 40% of the adult population is unbanked. Telecom companies like MTN are helping financial services deepen on the continent and for banks like Stanbic, this presents several challenges and opportunities.

“In the past we looked at salaried customers or formal businesses, and Uganda being a very informal market, we lost a big percentage of a potential customer base that we probably could have served.”

But reaching people in the informal market can be costly. To be able to do this economically, the bank has set up a digital wallet called FlexiPay to support its ambitions to reach the last mile.

It has also supported Uganda Savings and Loans Societies (SACCOs), made up of small businesses, local banks and agricultural cooperatives, through the Economic Enterprise Recovery Fund (EERF).

Many Ugandans have dipped into their savings during the pandemic, so Stanbic has supported them, partnering with several development organizations and providing cheaper financing for small businesses, while taking additional risks, according to Mugisha. She says Stanbic has provided about $25 million in loans to SACCOs and the amount is growing.

“We would like to increase this fund to $100 million, if we can find as many participants as possible.”

The fund focuses on three key areas, including cheaper financing, “so that the end user can retain some margin in their business and grow their business.”

The second is digitization: “By linking this to FlexiPay for the end user, we are also helping SACCOs to digitize. If they don’t have an enterprise resource planning system, they partner with three fintechs that can provide software to help them run their business. It also helps us to better assess their creditworthiness. »

In partnership with the International Labor Organization (ILO) and other employment-related organizations, Stanbic also offers training on the management of SACCOs and their members.

“So far, we have digitized and trained nearly 100 SACCOs. We also get partners who are willing to give us grants that will help us do this, because otherwise it can be quite expensive.

We realized that once you have a good proposal, you’re not short of partners who can come in,” she says.

Stanbic also has another initiative to help the sector, called OneFarm, which aims to reach and support farmers through buyers (companies that buy agricultural products) or agricultural processors.

For example, the bank is working on a project with Uganda Breweries for their barley growers as well as grain traders from the Uganda Grain Council.

In a country like Uganda, where a significant proportion of the adult population is unbanked, Stanbic’s initiatives in the SACCO sector and elsewhere promoting greater financial inclusion can go a long way.