Business best hope for regional integration
Apr 05, 2009
THIS week, Kenyan-based Equity Bank officially launched its services inLast year, the bank acquired Uganda Microfinance Ltd whose 21 branches will serve as a useful launching pad for its ambitions to dominate the Ugandan market.
BY PAUL BUSHARIZI
THIS week, Kenyan-based Equity Bank officially launched its services inLast year, the bank acquired Uganda Microfinance Ltd whose 21 branches will serve as a useful launching pad for its ambitions to dominate the Ugandan market.
Equity Bank, which has retained its micro-finance roots even as it expands into higher-end finance, has about half of Kenya’s customer deposits and over the last five years, has seen its net profits double every year.
The Equity Bank model is based on the belief that everyone has a right to financial services and it has contrived to be the provider of that right. A model that was the foundation for many of our high-street banks centuries ago, but which they have forgone to chase the easier corporate business.
Its entrance into the Ugandan market will see greater emphasis on serving the unbankable masses – a high-street euphemism for people without formal employment. Assuming Equity Bank can sustain their business model and manage their growth, our banking industry will never be the same again.
Not to be outdone, Uganda’s Riley Packaging made a bid to take over the distressed Panpaper Mills in western Kenya.
Panpaper Mills, the largest producer of pulp and paper in the region, is staggering under the weight of more than sh4000b in debt and was recently put under receivership.
Riley – a joint venture between Mukwano Industries and the Mara Group, is a key client of Panpaper, therefore its interest in the firm is understandable.
When history is written, these cross border business interactions will show much greater return on investment than the taxes we pay to finance the East African Secretariat in Arusha.
In the history of the world, you will be hard pressed to find successful transnational unions built because far sighted politicians (an oxymoron if ever there was one) decided it should be so. You are more likely to find that the more sustainable ones were driven by businessmen with cross border interests.
Political unions like the Soviet Union and Yugoslavia have not passed the test of time but the European Union, which begun as the European Coal and Steel Community after the Second World War, has a better chance of living on.
It is obvious to anyone who comes from the border areas how cosmetic and sometimes redundant our political borders are. Tribes, even families, have found themselves separated by boundaries, which make little difference to their relationships because cross border visits are effected in total disregard of visa requirements.
But our blood ties can not generate sufficient momentum to erase these boundaries and forge larger states. You need bigger institutions that can seat across with governments and negotiate as equals. That is where business comes in.
The original East African Community (EAC) was based on exploitation of the region’s natural resources for British industry. Left to our own devices, we let petty differences come in the way and in the absence of sufficiently influential interests, we scuttled a good thing.
Maybe East African business, or more specifically Kenya Inc, has attained such size that it needs to break out of the confines of its home borders. We know that the Kenyan business lobby at the EAC negotiations is significant enough to influence policy.
But Kenya has no choice. South Africa Inc is beating determinedly on the region’s doors and out of pure self preservation, Kenyan business needs to respond.
Naturally nationalist muck rackers will raise their heads in defence of this or that indigenous industry, but the momentum by consumer demand and the regional reality means these will at best, be voices in the wilderness. And they should be.
East African businessmen should be allowed or even encouraged to expand out of their borders, exploit existing markets and develop regional economies of scale to the point that this will become a springboard into foreign markets.
Let us habour no illusions. It is only through mutual interests that transcend blood, cultural and religious ties, read business, that we will have a sustainable EAC.
We should salute these trailblazing entrepreneurs and governments should offer them support by way of better infrastructure, affordable financing and beneficial fiscal policies in order to accelerate East African integration.
pbusharizi@newvision.co.ug
THIS week, Kenyan-based Equity Bank officially launched its services inLast year, the bank acquired Uganda Microfinance Ltd whose 21 branches will serve as a useful launching pad for its ambitions to dominate the Ugandan market.
Equity Bank, which has retained its micro-finance roots even as it expands into higher-end finance, has about half of Kenya’s customer deposits and over the last five years, has seen its net profits double every year.
The Equity Bank model is based on the belief that everyone has a right to financial services and it has contrived to be the provider of that right. A model that was the foundation for many of our high-street banks centuries ago, but which they have forgone to chase the easier corporate business.
Its entrance into the Ugandan market will see greater emphasis on serving the unbankable masses – a high-street euphemism for people without formal employment. Assuming Equity Bank can sustain their business model and manage their growth, our banking industry will never be the same again.
Not to be outdone, Uganda’s Riley Packaging made a bid to take over the distressed Panpaper Mills in western Kenya.
Panpaper Mills, the largest producer of pulp and paper in the region, is staggering under the weight of more than sh4000b in debt and was recently put under receivership.
Riley – a joint venture between Mukwano Industries and the Mara Group, is a key client of Panpaper, therefore its interest in the firm is understandable.
When history is written, these cross border business interactions will show much greater return on investment than the taxes we pay to finance the East African Secretariat in Arusha.
In the history of the world, you will be hard pressed to find successful transnational unions built because far sighted politicians (an oxymoron if ever there was one) decided it should be so. You are more likely to find that the more sustainable ones were driven by businessmen with cross border interests.
Political unions like the Soviet Union and Yugoslavia have not passed the test of time but the European Union, which begun as the European Coal and Steel Community after the Second World War, has a better chance of living on.
It is obvious to anyone who comes from the border areas how cosmetic and sometimes redundant our political borders are. Tribes, even families, have found themselves separated by boundaries, which make little difference to their relationships because cross border visits are effected in total disregard of visa requirements.
But our blood ties can not generate sufficient momentum to erase these boundaries and forge larger states. You need bigger institutions that can seat across with governments and negotiate as equals. That is where business comes in.
The original East African Community (EAC) was based on exploitation of the region’s natural resources for British industry. Left to our own devices, we let petty differences come in the way and in the absence of sufficiently influential interests, we scuttled a good thing.
Maybe East African business, or more specifically Kenya Inc, has attained such size that it needs to break out of the confines of its home borders. We know that the Kenyan business lobby at the EAC negotiations is significant enough to influence policy.
But Kenya has no choice. South Africa Inc is beating determinedly on the region’s doors and out of pure self preservation, Kenyan business needs to respond.
Naturally nationalist muck rackers will raise their heads in defence of this or that indigenous industry, but the momentum by consumer demand and the regional reality means these will at best, be voices in the wilderness. And they should be.
East African businessmen should be allowed or even encouraged to expand out of their borders, exploit existing markets and develop regional economies of scale to the point that this will become a springboard into foreign markets.
Let us habour no illusions. It is only through mutual interests that transcend blood, cultural and religious ties, read business, that we will have a sustainable EAC.
We should salute these trailblazing entrepreneurs and governments should offer them support by way of better infrastructure, affordable financing and beneficial fiscal policies in order to accelerate East African integration.
pbusharizi@newvision.co.ug