WorldRemit, the cross-border digital payments service that provides international money transfer and remittance services, has published the findings of a multi-country study to determine the true cost of Christmas in 14 countries. The study mined data to showcase the average costs of traditional Christmas meals, decorations and gifts. WorldRemit currently sends from 50 countries to recipients in 130 countries, and operates in more than 5,000 money transfer corridors worldwide.

Of the 14 countries covered, data showed Rwandans are most impacted by the disparity between average household income and holiday costs, spending 708% of their monthly income and nearly 60% of their annual income on the holiday. Meanwhile, Ugandans spend 80% of their monthly income on festive costs.

Filipinos spend 257% of their monthly income but in the region, Christmas celebrations begin in September and extend into January, making it challenging for many families to afford the basic costs of Christmas. WorldRemit says without remittances into countries like the Philippines, celebrating Christmas would be near impossible.

More than 244 million people are classified as immigrants around the world and account for large percentages of populations in countries like the United States (14.4 pc of total population), UK (9 pc), Australia (30 pc) and Canada (21.5 pc).

The study covered the United States, United Kingdom, Canada, Australia, France, Philippines, Mexico, India, Kenya, Lebanon, Rwanda, Cameroon, Nigeria and Uganda.

During the holidays, immigrants and overseas foreign workers are often unable to celebrate with their families in-person, and find themselves working to support not only themselves, but also their families and communities back home.

Nonetheless, Christmas is one of the primary reasons immigrants and migrants send money back to their home country. Due to the high cost of coveted seasonal items, food, and the overall impact Covid-19 has had on supply chain and inflation, it has become even more vital for remittance senders to be able to support those dearest to them by helping make Christmas a reality for their loved ones.

For example, of the 14 countries observed that typically receive remittances, 10 spent more than 50 pc of their monthly household income on the holiday. A holiday that would be impossible without remittances, the season of giving becomes vital, where the world’s largest send markets typically only spend less than three percent of their annual income on the holiday.

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The A320 and similar sized aircraft would address the 100-200 seat gap in the fleet which will become critical as the airline expands its network into central and west Africa. Uganda Airlines current serves 11 destinations but as travel restarts, officials are looking to ramp up route development to reach the initial target 19 routes during the first phase.

Uganda Airlines Chief Executive Jenifer Musiime aboard the carrier’s A330 on static display at the Dubai Airshow

Speaking on the sidelines of the Dubai Airshow, where Uganda Airlines became the first African customer to sign up to Airbus’ Flight Hour Services covering the A330-800, interim chief executive Ms Jenifer Musiime, told 256BN confirmed that talks on near-term fleet growth with the European airframer had started.

A decision was tending towards the A320neo because of its’ range and ability to carry a full load out of Entebbe, which is a hot and high airport. Ms Musiime says that while the CRJ has the range to reach most of the destinations planned for the intra-African network, it was weight limited and would impose a trade-off between range and the number of passengers on board.

“We are already experiencing something like that on the Entebbe-Kinshasa route,” Musiime revealed.

Although the new-mint A220-300 also has the range to reach virtually all intercontinental destinations non-stop from Entebbe, it is not a candidate for now because its seating would max out 150 passengers in a two-class configuration. That would still leave a gap of 80 seats unaddressed between it and the 230-258 seat A330-800.

Uganda Airlines sees the larger A320 as a low-risk growth aircraft that provides the flexibility for substitution with the A330 on routes such as Mumbai during low season or frequency growth. The aircraft is also attractive because of the flexibility it provides for cabin-layout. The aircraft can accommodate lie-flat seats in the business class, or even premium-economy, which would permit product commonality between it and the A330.

Musiime did not indicate the number A320’s under consideration or the timeline for the acquisition but analysts believe a minimum of two would be required initially.

At the show, Musiime also signed cooperation agreements with Pakistan International Airlines and Sri Lanka Airways. The two tie-ups further underwrite the planned service to Mumbai by raising the potential for connecting traffic.

The airline has so far been shunned by its peers in the region such as Air Tanzania, Kenya Airways and Rwandair, who have refused to enter interline agreements with it. Industry analysts says this could be the result of a wait and see attitude given relative youth of the airline and the fact that is yet to embark on the IATA Operational Safety Audit -IOSA, a critical endorsement for safe operations by the industry.

Uganda Airlines launched its first intercontinental service to Dubai on October 4 and now awaits approvals to commence services to London, Mumbai, Guangzhou and Shanghai. To feed the service, the airline needs new connections to central and west Africa which will need aircraft with sufficient capacity for passengers and cargo.

The Dubai Airshow opened on November 14, to a massive 255 order for Airbus aircraft by Indigo Partners, signaling the rising optimism about prospects for an air transport industry that has been battered by the Covid-19 pandemic. Additional orders for 16 A220’s by Nigeria’s Ibom Air, 20 A320 and A321 neo’s by Jazeera Air and 111 eleven aircraft order by Air Lease Corporation covering the A220, A320/A321, A330 and A350 freighters, saw Airbus’s order tally at the show soar past 400 orders and commitments.

Airbus’ US rival Boeing had by Tuesday logged 82 orders including a pair of B737-Max and a single unit each for the B787 and Boeing 767 by Air Tanzania. The 767 will be a dedicated freighter while the 787 will join the existing fleet of two Dreamliners.

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East African Medical Vitals (EAMV) operates a state-of-the-art manufacturing plant in the Namanve Industrial Park on the outskirts of central Kampala and recently hosted several top officials from the Ministry of Health on a familiarization tour. Current production stands at 5000 pairs per hour, and the factory runs on a 24-hour basis. This capacity is to be doubled by mid next year.

Ben Kavuya, the EAMV Executive Chairman said, “The initiative to construct and bring into operation this manufacturing plant was borne by the need, as is seen in healthcare systems all over our continent. It was to stop the unnecessary and preventable injury and death many of our people suffer simply because something as basic as a pair of gloves was not available. We are here to take care of those basics, and we have the capacity to do so.”

The Health team was led by the Minister, Dr. Jane Ruth Aceng and included Dr. Diana Atwiine, the Permanent Secretary, alongside Commissioner Dr. Charles Olaro (Curative Services), Dr. Jackson Amone (Clinical Services) and Dr. Neville Okuma (Pharmaceutical and Natural Medicine). Dr. David Nahamya, Secretary to the National Drug Authority (NDA), was also part of the team.

EAMV officials told the visitors the facility is in a position to supply a wide range of consumables for the small clinic to the largest referral hospital. This will help boost the continent’s medical care capacity, save the lives and improve the working environment of our health staff. The company is already several government medical facilities.

The visitors witnessed first-hand the production of the gloves, manufactured in both surgical and examination variants, and saw the extensive testing, packaging, and waste management facilities in place.

EAMV officials said their gloves are of the highest standard, latex, non-sterile, powder-free, hand-specific, and in a variety of sizes. They guarantee a perfect, comfortable fit and ensure that both the medical personnel and the patients are safe and secure. The gloves also possess high tensile properties and will withstand extensive use during lengthy medical procedures.

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Bancassurance (life assurance and other insurance products sold through banking institutions), contributed 8.2 pc of the industry’s total business with Stanbic Bank Uganda taking up a fifth of the market.

In the period April-June 2021 (Q2), bancassurance recorded a 54 pc growth led by Stanbic Bank which consolidated its market-share to 21.2 pc from 19.1 between January and March.

In 2020, the bancassurance sector produced UGX32 bn (full year volume) compared to UGX49.3 bn (almost $14 million) in the first half of 2021 which represents a 54.24 pc growth, according to the latest report published by the regulator.

Stanbic Bank attracted UGX10.4 bn in total gross premiums for the period April-June 2021. Absa Uganda came in second with UGX9.6 bn; Centernary (UGX8.7 bn); Post Bank (UGX3.8 bn); dfcu Bank (UGX3 bn); Orient Bank (UGX2.7 bn) and Housing Finance bank (UGX2.3 bn).

The bank, which was one of the first to acquire a bancassurance license, also out-earned its competitors, raking in UGX1.91 bn representing 24.4 pc of all bancassurance commissions paid to banks for the period under review. Stanbic also dominated bancassurance business for Non-life (Genera linsurance) product lines generating UGX3.5 bn which is equivalent to 28 pc of total industry volumes.

Looking ahead, Singh Dogo, Stanbic Bank Uganda’s Head of Bancassurance said focus will be on gaining market leadership for the Life insurance business where the lender enjoys 12 pc market share equivalent to UGX6.9 bn but two percentage points behind the top spot holder.

He said the bank’s good performance in the second quarter was driven by growth in general insurance and credit life business as well as short-term insurance covers for clients. “These are stable, and our projection is that they will continue to grow on account of their unique positioning to address customer coverage needs coupled with our assured fast claims service,” he said.

Dogo said Stanbic’s bancassurance efforts will continue to focus on expanding dominance in individual life products with value propositions on essential services such as education, medical, and life insurance policies.

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Currently involving 19 commercial banks, three years after formal operations began, the Shared Agent Banking System (SABS), has cumulatively processed 4.6 million transactions valued at UGX 5.14 trillion (about $ 1.4 billion).

It has enabled customers a greater access to affordable financial services with the ability to choose from a range of service providers. However due to the novelty of the project, Financial Sector Deepening (FSD) Uganda, the initiators of the project, had to contend with intense scrutiny during the early discussions with stakeholders, but as a driver for increased financial inclusion, this was an idea FSD Uganda could not afford to let go. The rapid uptake has proven them right. ‘Making Elephants Dance’ is the title of the FSD Uganda case study that details the story behind agent banking in Uganda.

According to Rashmi Pilllai, the FSD Uganda Executive Director, “The Shared Agent Banking System (SABS) in Uganda is the first of its kind on the African continent. We, at FSD Uganda are proud to have supported this idea since its inception. SABS was designed to address three key constraints in the market, increase the density of interoperable cash-deposit and withdrawal agents, especially in rural areas; secondly increase market competition on product, price, and customer satisfaction, and thirdly address the financial sector gaps of a digital economy.”

The inclusive finance landscape in Uganda is characterised by higher activity rates for mobile money compared to formal bank usage. According to the report, mobile money operators contributed significantly to formal financial inclusion as 56 pc of the adult population used mobile money. Only 11 pc of the adult population used banks and microfinance deposit-taking institutions.

The relative ease of registering for a mobile money account compared to a formal financial institution account partially contributed to the stark difference in uptake of mobile money compared to that of the formal financial accounts. Furthermore, there was a significant difference in the proliferation of mobile money agents compared to the access points of the formal financial institutions. However, it is worth noting here that end-users mostly used mobile money services for inter-personal transfers.

As of 2017, 76 pc of the Ugandan population resided in rural areas. This distribution of the population impacts the levels of access to formal financial services access points. An analysis of the proximity of financial access points for Ugandan residents in 2017 shows that most mobile money agents (62 pc) were within one kilometre of their homes while most banks (43 pc) were more than five kilometres from their homes.

Uganda already had a highly mature mobile money market with around 60,000-70,000 unique mobile money agents. There were and still are more mobile wallet customers in Uganda than bank account holders. If all 24 banks (at the time of setting up the shared agent banking network) invested in building their platforms and rolling out their agent banking services, the cost-of-service delivery would not be feasible for a country with only 18 million adults. Most importantly, it would not be a viable competitive offering by one industry – the banking industry – against the telecommunications industry.

As the agent banking industry was new and there was a limited understanding of the potential risk in the initial period, the Bank of Uganda (BoU) took a conservative approach. The regulator set out a host of requirements which collectively constrained the ability of financial institutions to obtain viable agents for their network and exacerbated provider concerns for agent exclusivity. These stringent requirements undermined the ability of banks to effectively compete with mobile money. The regulator was, however, intentional about creating an enabling environment for agent banking and financial inclusion.

The Uganda Bankers’ Association (UBA) then presented the concept of a shared agent network within the existing agent banking framework. BoU subsequently approved the concept and paved the way for its implementation.

This involved investing in the shared set up and infrastructural rails upon which each of the participating banks would compete on product, price, and customer satisfaction. The result was the establishment of a new legal entity, the Agent Banking Company (ABC) of Uganda, a joint venture between the UBA and Eclectics International, a technology company.

The introduction of agent banking guidelines in 2016 helped create a near-level environment for banks and mobile money operators. Banks could now use agent networks to offer financial products and services. Using agent networks allowed the banks to deepen their penetration across the country and enhance service to existing clients by increasing CICO points and agent service points. Banks were also eager to innovate to compete with mobile money operators.

Stakeholders from the world over have expressed interest in Uganda’s unique experience in establishing the shared agent banking network, its operational framework, the challenges experienced, lessons learned, and plans.

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Moses Mugerwa the Operations Manager said, “We are waiving off our commission for the Bolt Base drivers. We shall do this by giving them a 20% commission refund bonus on each trip they complete, the amount they earn as a bonus will be used to settle their commission for every trip they complete. To better their earnings, we previously launched 0% commission for boda bodas.

We have additionally decided to extend the duration for not charging commission from boda boda riders. This means, during this time, we are waiving off commission for both the Bolt Base drivers and boda boda riders. This is aimed at kick-starting drivers after the lockdown during which they have not been working and boosting their economic welfare that we are aware was affected.”

The company is also offering discounts to riders in order to encourage travel in a safe and socially distanced manner. While Bolt believes it’s still safer to stay home, these discounts to riders are intended to make those essential trips more affordable and thereby increase trip requests for drivers and increase their overall take home earnings. Bolt Uganda always compensates and adds the discounted amounts to driver earnings. The discounts are sent to the driver’s registered mobile wallet.

Bolt Uganda further cautions drivers not to collect more than the discounted trip fare from customers. Should customers report that drivers have dishonored the discounted fare and collected the full fare instead; their account will be suspended.

On Covid-19 safety, Bolt has urged its partners to remain vigilant and be at the forefront in the fight against the disease. “As our partner, it is your mandate to remain Covid-19 safe and see to it that the lives of your passengers are safe. Be sure to wear your mask at all times, have hand sanitizer with you and not carry more passengers beyond the accepted number stipulated by the government,” Mugerwa said.

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Small, but agile firms like Xente Uganda are ready to jump in as enablers. Xente is a financial technology (fintech) company; one of an increasing number dotted all over Africa taking advantage of advances in digital technology.

Digital payments are seen as a vital component of cross-border commerce in the years to come where the merchant and customer agree to accept a virtual payment for the purchases of goods or services.

Fintechs are going to play a significant role towards making AcFTA work for the simple reason that digital transactions are more seamless and free up precious time. This in turn means more trade and business opportunities.

About the time the idea for ACFTA was being debated, people like Allan Rwakatungu, founder of Xente Uganda were already thinking practically along the same lines. “I realized that in order for us to be more competitive, our businesses needed to join the digital economy in order to have a playing field equal to what our counterparts have in the west. If we remain in our small little dukas (small shops) accepting cash, there is no way we are going to be competitive on the global scale.”

To test the waters in 2012, he started a digital sports entertainment platform before launching xente four years later. Essentially, xente is a payments, financial services and e-commerce app for consumers and businesses. It allows businesses to automate payments.  “I am not going to say it’s like a bank account. It’s a digital account. We offer corporate accounts and digital payment solutions for businesses.”

Although currently only operating in Uganda, Rwakatungu says they have plans to expand to other markets, “We have a vision at xente, I believe so much in this vision to bring all African businesses into the global digital economy. Every day when we wake up, we take small steps towards that vision, but there is still a lot of work to do.”

He concedes that it may sound like a cliché, but Xente’s future growth depends on their customers and the reliability of services. “Our major asset is the customers. What are the major problems that they have and what solutions we are able to offer them. I always focus the team on that. Our mission at xente is to deliver happiness to our customers. We wake up every day to deliver value to them, correctly and with integrity to ensure their data is safe, make sure their money is safe and that the transactions are fast. By doing so, this helps to safeguard our platform and ultimately our business,” he said.

The other important factor that affects the business is regulation. Last year, the National Payments Systems Act 2020 became law and introduced some challenges for local fintechs. They now fall directly under the oversight of Bank of Uganda, the financial regulator.

Rwakatungu said, “Regulation is the trickiest thing to scale. We have a risk management strategy in place and this is one of the reasons why we welcome regulation. It might be difficult but we welcome it because it provides you with a framework under which to operate. Regulation also helps you safeguard your customers’ interests, their data and information and their money.”

He said, “However the most immediate impact of the National Payment Systems Act 2020 is that it has slowed down product launch. Now you have to do a lot of compliance stuff. You don’t just come up with a product then send it off to the market. Now you have to satisfy the central bank. Compliance is a lot of paperwork that needs to be done and most of it is manual. The manual requirements needed to comply also mean that you have to put capital aside that you cannot touch.”

He agreed to a certain extent that the new regulatory environment may inhibit fintech development in Uganda, but added, “They have left the sandbox out there. So if you want try out something very quickly in the market, the sandbox is an open for that.”

In brief, the sandbox provision allows fintechs to test new applications live but without endangering the overall system in place.

Through the Financial Technologies Service Providers Association (FITSPA) in Uganda which was founded in 2017, Rwakatungu and his colleagues expressed their views and concerns in the drafting of the new national payments law. Perhaps not all their contributions met acceptance but he said, “FITSPA allows us to come together as an industry and advance our common objectives. We work together including the regulator, partners and corporates to develop our financial system as whole,’ he said.

Allan Rwakatungu is not afraid to dream big. “Digital is Africa’s opportunity to leap frog into the future. Just like we leapfrogged from no phones to mobile phones, we can utilize digital from almost no finance to the most modern finance infrastructure platforms, products the world has ever seen. We should take this opportunity and run with it.”

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The procurement is part of a one-billion dollar rehabilitation  programme across the 1100km-long railway network. The programme will be implemented over the course of the next five years intandem with resource flows.

Sections of the network especially along the old Busoga line and the 333km Kampala-Kasese sector were vandalised after a pause in operations there more than 20 years ago. Additional rolling stock including passenger and cargo wagons will also be procured.

Stanley Ssendegeya, the managing director at URC says the four new engines would support operations along the existing Kampala-Naivasha sector as work commences to restore the rest of the network. Focus will be on improving safety, speed and weight tolerances of the network.

Among works envisaged is the replacement of rails and ballasting of the Tororo-Gulu-Pakwach line. Built shortly after Uganda attained independence in 1962, the tracks along the 500km-long line are largely in place. The line was however build without ballast, which imposed speed and weight limitations.  The European U ion has lent Uganda USD57.3 million for the works along this sector.

Another tranche of USD 402 million will be spent on strengthening the Kampala-Malaba sector through line replacement, adjustments to the line’s geometry along curves and construction of a new bridge at Naigombwa across the Mpologoma river. Unlike the existing narrow bridge which interchangeably serves both road and rail traffic, the new bridge will separate traffic.

Both Kenya and Uganda are reinvesting in the metre-gauge because it will be needed to move parts and equipment during the extension of the Standard Gauge Railway SGR, westward to Kampala. In Uganda sections such as the Busoga loop-line will reconnect the eastern agricultural belt to markets.

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The money is also going to the training of 100,000 healthcare workers to contain the Covid-19 pandemic specifically by contact tracing. Africa CDC is undertaking these Covid-19 response measures in partnership with the African Field Epidemiology Network (AFENET).

Over the next four months, an estimated 10 million people will be tested in a campaign dubbed the Partnership to Accelerate COVID-19 Testing (PACT). The Foundation is one of several partners involved in this initiative.

Mastercard Foundation President and CEO, Reeta Roy said of the initiative, “We are impressed by the swift pan-African response to COVID-19 led by Africa CDC and regional organizations.  They have created a clear plan and targets to deliver a robust health response and save lives. The Mastercard Foundation stands with the Africa CDC and calls on other funders to support this excellent plan. Fighting this pandemic requires all of us to coordinate our efforts and work together.”

As part of the initiative, PACT also plans next week to launch a continent-wide procurement, storage, and distribution platform for health commodities needed in the Covid-19 response.

Dr. John Nkengasong, director, Africa CDC said, “It’s an opportunity to unlock the supply chain management for the commodities that we need to fight COVID-19.”

According to Foundation officials, under the Mastercard Foundation COVID-19 Recovery and Resilience Program, the non-profit is stepping up its work on the continent to address the pandemic alongside partners and communities.

Dr Nkengasong said, “There is only one formula to fight Covid-19 in Africa and that is the PACT initiative. The daily figures show clearly that the pandemic is still on the rise, and to defeat it Africa needs greater cooperation with everybody, including the governments, the community, the media, and the development partners. We need to equip, deploy and train more healthcare workers as quickly as possible, and we expect that there will be more cooperation and solidarity through PACT.”

The Mastercard Foundation is an international non-governmental organization established by Mastercard in 2006. The foundation develops programs primarily in education, employment and agriculture fields.

Among other activities in the Mastercard Foundation COVID-19 Recovery and Resilience Program for Africa is expanding access to financial services for micro, small, and medium enterprises, which will enable businesses to withstand the economic effects of COVID-19. These programs will explore options for digitizing their businesses, and potentially contribute to public health response through the production and distribution of critically-needed health care products and equipment.

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The lowest level since the indicative rate was introduced at 13pc in July 2011, the move is intended to raise the appetite for credit and encourage investors to sustain production.

BoU says the Covid-19 pandemic has triggered a sharp contraction in domestic economic activity as a result of disruptions to the global supply chain, travel restrictions, measures to limit contact between persons, and the sudden decline in demand.

“Consumer-facing sectors have been severely affected by social distancing measures and heightened uncertainty, while the manufacturing sector has declined on account of disruptions to the inflow of raw materials. Economic activity in the trade sector has also been weighed down by the decline in external demand and supply chain disruptions, while service sectors such as finance, insurance, and information and communications are affected by the general stall in business activity and investment,” BoU said.

The Bank projects that as a result, the economy slow down drastically during H2 of the current financial year with GDP growth projected to shrink from the initial estimates of 6-6.5pc to 3 – 4pc for the full year. The lender of final resort further sees higher downside risks to the economic growth outlook in the near term with economic activity expected to remain subdued until the pandemic is over. GDP growth is only expected to start a gradual recovery during H2 in fiscal 2020/21.

The local unit also suffered a 2.2pc slippage against the greenback between February and March as the USD appreciated against major currencies. The central bank which has been propping up the local unit to smoothen the volatility in the domestic foreign exchange market also sees the negative fallout from the crisis piling pressure on Uganda’s external position as a result of steeper capital outflows amidst dampened international trade, tourism, workers’ remittances, foreign direct investment and loan disbursement. That is expected to add more pressure to the exchange rate.

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