Uganda spearheads establishment of cross-border African investment bank
Mar 22, 2024
“It focuses on initiatives that require time to grow and if we could unlock our ability to mobilise patient capital, we shall be able to execute many projects like the Standard Gauge Railway,” Mbabazi said.
Edith Nakalema (L), State House Investors Protection Unit head welcoming some of the delegates at the offices in Kampala. (PPU Photos/Miriam Namutebi)
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The State House Investors Protection Unit and the National Planning Authority (NPA) have brainstormed on the establishment of an indigenous patient capital and cross-border African investment bank.
The meeting at the State House Investors Protection Unit Offices in Kampala on March 21, 2024, came hot on the heels of the President’s directive to the unit to see how NPA can work with the private sector (TRAVACO) and the financial sector to realise the dream of setting up the indigenous patient capital and cross-border African investment bank among interested African countries like Tanzania.
Unit head Col. Edith Nakalema expressed gratitude to NPA, the Trans-Africa Value Corridor (TRAVACO) Ltd, and other partners for spearheading the establishment of the two initiatives.
“I'm so happy for Dr Beenunula Eyenunula that the vision you started is becoming a reality,” she said.
Col. Nakalema also informed the meeting that President Yoweri Museveni is willing to support the idea to ensure that it works out.
NPA chairperson Prof. Pamela MbabazI said the indigenous patient capital refers to a long-term financial investment where sustainable growth is prioritised alongside financial returns.
“It focuses on initiatives that require time to grow and if we could unlock our ability to mobilise patient capital, we shall be able to execute many projects like the Standard Gauge Railway,” Mbabazi said, adding that while Uganda has a wide range of investment opportunities that could lead to the development of the country, it still faces the problem of funding and this project will help to address these financing gaps.
Strengthening the private sector
Mbabazi further revealed that the capital is expected to also help to strengthen the private sector which is key in driving the socio-economic transformation of the country. She said the sector is being frustrated by among others, high interest rates and limited funding.
“Some of the key objectives of establishing this indigenous patient capital is to strengthen the private sector.
Countries like Singapore, Malaysia, Botswana, Rwanda, and Kenya have strengthened the private sector to drive their economic development,” she said.
“We should mobilise capital, we need to fund our development projects.”
More seed capital needed for the bank
National Social Security Fund (NSSF) managing director Patrick Ayota said the idea of mobilising patient capital is a crucial one and it has helped several countries like China and Singapore to economically develop.
He also noted that the seed capital of $5m (about shillings 19.4 billion) needed to kickstart the establishment is very little, and it should be mobilised by the stakeholders to achieve the vision.
Trust needed
Bank of Uganda executive director in charge of supervision Tumubweine Twinemanzi said the idea is a good one but for it to be successful, stakeholders need to first instill trust among investors willing to rally behind it.
“The concept is very fantastic but it's a seed that needs to be planted somewhere and as we look at its establishment, we must till the land too.”
TRAVACO chief executive officer Dr Beenunula Eyenunula said the project is aimed at dealing with the barriers such as capital deficits and infrastructure gaps that hinder the development of Uganda's economy.
“Asia managed to break out of poverty through indigenous patient capital. To create the capital, we need to use asset management practices to create cash flow proceeds within six months. The minimum capital required is $5m,” Eyenunula said.
“You need a certain capital you control if you want to benefit from various projects like the SGR. The African Investment Holding Ltd (Bank) can help to create indigenous patient capital,” he said.
Asset management is key
Maj. (Rtd). Gertrude Njuba advised that as the people behind the project, they need to do more work in the area of asset management to ensure that they convince the government to rally behind them.
“This is the type of funding we need to have because many countries have developed through such projects,” Njuba, one of the brains behind the initiative, said.
Former general duties minister in the Office of the Prime Minister, Prof. Tarsis Kabwegyere also supported the project and urged that as stakeholders, they should use such brainstorming meetings to learn how to be secure from neo-colonialists through such independent initiatives.
He also advised that the Government should support some Ugandans to go to countries like China for benchmarking purposes to see how they were able to achieve their development goals.
“Whatever you do, do it for your country and development,” Kabwegyere said.
Former Attorney General Fred Ruhindi advised that discipline is key if Uganda is to achieve the milestone of setting up an Indigenous Patient Capital and Cross-border African Investment Bank.
“Let us help these people because we can help them do what they want to do. We can achieve what China achieved if we have discipline.”
The meeting was also attended by the Bank of Uganda deputy governor Dr Michael Atingi-Ego, Works Ministry permanent secretary Bageya Waiswa, and Jumia founder Ron Kawamara, among others.
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