How Standard Chartered Bank has benefited EA economies

The report adds that since the Bank’s indirect impacts touch upon labour intensive and sometimes informal sectors, it can work together with its clients in these sectors to increase the magnitude of these indirect effects. Finally, its digital (including mobile) banking products as well as its community activities can further contribute to this end. In turn, inclusive growth could expand its future client base.

Albert Saltson,the Bank’s Chief Executive Officer said the Bank will continue to seek ways to deepen its relationships in East Africa and Uganda in particular – such as through its banking ecosystem capabilities, banking the buyers and suppliers of their international corporate clients.

“This, together with the significant financing we provide to small and medium enterprises (SMEs) through our Business Banking and Commercial Banking segments, allows entrepreneurs to flourish and supports economic growth and job creation,” Saltson said, adding,“Over and above job creation, trade and economic growth, we are proud of our contribution to the core infrastructure development and knowledge building in Uganda and we are optimistic of our even greater contribution in the future.”

In terms of social corporate responsibility, Saltson said that they have drilled boreholes, planted trees, built and equipped schools, restored sight of people, promoted sports and more.

Speaking at the launch of the report in Kampala on March 21, the Deputy Governor of Bank of Uganda, Louis Kasekende, said the results of the socio-economic impact assessment add to the knowledge of the economy and provide important insights into the way in which the banking industry affects the economy.

Quoting the report, Kasekende said the value added and employment are not only generated in the businesses which directly borrow from banks, but also by the businesses which supply goods and services to the direct borrowers and through the demand generated by the spending of all those who receive wages and salaries in the businesses which benefit, directly or indirectly, from bank lending.

“Nearly two thirds of the impact of Stanchart operations on GDP takes the form of salaries. In terms of supporting employment, the Bank’s operations in Uganda have their largest impact on the agricultural sector, which accounts for 46 percent of all of the jobs supported,” Kasekende said.

He added that one of the salient implications of the report findings for public policy is that “we must be very careful to avoid implementing any measures which might curtail the volume of bank lending to the business community, as any reduction in lending could have significant negative effects on output and employment.”

Commenting on matters interest rates charged to different segments of customers, Kasekende said, in general, the medium and large scale; formal sector enterprises have easy access to cheap bank credit because they have established track records of profitability, well managed and run according to strict commercial principles, prepare detailed financial accounts and can often provide guarantees from affiliates abroad.

“…hence credit risk is low and the transactions cost incurred by the bank per unit of loan value is also low,” he said.

He said the reverse is true for the informal and small businesses, the reason interest rates partly remain high in the market.

“Banks in Uganda which have a large retail clientele of small scale borrowers incur much higher operating costs and must, therefore, charge higher lending rates than banks which focus on a relatively small base of large and medium scale corporate borrowers,” Kasekende said.

Going forward, the report suggests that the Bank should continue to invest in the region by increasing regional commerce so as to enhance the region’s growth and further cement its own position in these markets.

“The Bank can further improve manufacturing since value-added and employment impacts arise in the manufacturing sector,” the report reads in part.