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Banks see a positive outlook this New Year

Uganda’s economy is slowly opening up amidst coronavirus pandemic, rising hope for the banking industry’s quick recovery. The Independent’s Isaac Khisa caught up with the Absa Bank Uganda Managing Director, Mumba Kalifungwa, and shares the industry’s projected performance and the future outlook.

What do you make of Uganda’s banking industry amidst the coronavirus pandemic?

The banking industry can be looked at in two spheres – regulatory environment and financial institutions. In terms of regulation, the Bank of Uganda (BoU) has been very responsive to the pandemic having stepped in during the very early stages, with almost the same speed as the government. They have provided guidelines to sustain the banking industry and the economy.  From the financial institutions perspective; the industry is very healthy and quite competitive.

What is Absa Uganda doing to help revive Ugandan businesses and the economy as COVID-19 continues to cause havoc in the country and indeed the world?

One of the lessons learnt as Absa in relation to COVID-19 is to stress- test our business continuity plans and understand how to withstand the storm. We had these in the past but they had not been tested to a full extent. COVID-19 was therefore, a real life scenario to test our business resilience.  As Absa, I must say that the response in terms of agility, fluidity, recalibration of our plans, was quite robust and it enabled us to successfully navigate the terrain within the shortest time possible.

For instance, at the height of the lockdown, we had to scale down operations in all our branches and thus drive the use of technology to continue serving our customers.  We had to embrace E-meetings using tools like MS Team which had never been thought of prior to the pandemic.

Following the BoU guidelines we provided credit relief measures to our customers and restructuring some credit facilities in accordance with the client’s needs. With the increased need to cope with the new normal especially by SMEs, we enhanced financial literacy awareness through the Absa SME Academy in partnership with International Finance Corporation to support business sustainability.

The pandemic has also pushed us to leverage the strength of digital technology and innovate to provide even greater convenience to our customers. We introduced new digital enhancements like the pioneer Contactless Debit Cards on the market, an online foreign exchange app called NovoFX to facilitate online foreign currency trading at an individual level.  We have also unveiled virtual contact centers – Chat bot and Chat Banking to respond to customers’ inquiries and banking needs any time anywhere.

Absa seems to be determined to continue extending credit to SMEs yet they are still struggling. Why is it so?

We have continued to lend to SME’s because they are critical to the growth of Uganda’s economy. This is the reason we run the Absa SME Academy to boost the capacity of SME’s in terms of financial literacy and ability to develop bankable businesses ideas that have potential to grow. Our purpose as an institution is to bring possibility to life for our customers.

Our offering to the SME segment is broad. We are able to give unsecured loans of up to Shs 100million, Business online banking, and MySME Management tool. We also have an Enterprise Supply Development initiative that links SMEs to large corporates to grow their businesses.

How is the pandemic going to change the way banks conduct business?

As a result of COVID-19, there have been changes in the way we relate with our customers and employees making a shift from predominantly face-to-face interactions to virtual. Concepts such as working from home are now the norm and not the exception. I believe this is here to stay and we will see even further acceleration of digitalization.  I also anticipate a more demanding and sensitive customer in terms of services that they receive from the banking industry going forward.

How is the banking industry, specifically Absa, dealing with issues of cyber security which is synonymous with digitalisation?

It is indeed true that the more one carries out transactions online, the more they are susceptible to fraudsters and therefore need protection.  In addition to continuous cyber security awareness to our customers, we have policies and procedures in place as a bank and constantly enhance our risk protection. We also have collaborations at an industry level under the Uganda Bankers Association where we are developing concerted responses to address cybercrime.

There has been a general perception among the public that Absa is a bank for the corporates. What is your response to this?

We are a bank that serves all spheres of the population – personal, corporate and SMEs. No matter your profile, we have products and solutions to meet your needs. Our culture has also evolved and I believe that in order to remain competitive, we must tailor solutions to all market segments. That is what customers expect from banks today.

We are constantly innovating and creating solutions that meet the ever changing needs of our customers. This is part of our strategy and we will be introducing new and exciting offerings in the coming year.

How was the year 2020 for Absa and generally the banking industry?

2020 was a challenging year for the banking industry especially taking into account the economic impact of the pandemic. We expect to record an increase in Non-Performing Loans (NPLs), flat growth in revenue, and a reduction in profits in comparison to the previous year.

What is your prediction for this New Year 2021?

2021 is expected to be a year of recovery and my view is that we should be in position to bounce back to where we were prior to the pandemic. Yes, there is a rise in COVID-19 cases around the globe including Uganda, but with the news of positive vaccine trials in the UK, US and other countries the future is very promising. Our Ugandan economy has remained resilient and once the world opens up for business, we should be in position to record faster growth.

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