UBA Uganda to be capitalised to boost investment in country
Founder of the Tony Elumelu foundation and Board Chairman United Bank of Africa (UBA) Mr Tony Elumelu (R) shakes hands with Dr Ben Mbonyi during a meeting with Ugandan entrepreneurs at the Serena Hotel on Tuesday. PHOTO BY RACHEL MABALA
What you need to know:
Record. The bank has been making losses since its entry into Uganda in 2008.
KAMPALA. The chairman of Pan-African banking group United Bank for Africa (UBA), Nigerian billionaire investor Tony Elumelu, has said they are looking to deploy more resources into the Ugandan subsidiary.
Mr Elumelu, whose Heirs Holdings owns a significant stake in UBA, said the group will recapitalise the subsidiary to enhance its capacity in financing development initiatives in the region.
Speaking to Daily Monitor after holding talks with the President Museveni at State House Entebbe on Tuesday, Mr Elumelu revealed that they also discussed many investment opportunities including infrastructure development.
“It was a useful meeting and the President has encouraged us to invest more,” he said, adding: “UBA will add more money to this country so that it can help Small and Medium Enterprises and invest more in agriculture and infrastructure.”
He was, however, non-committal on how much they were going to inject in the bank but said it was “sizeable” and were waiting for clearance from the central bank of Nigeria to release the resources.
Since its entry into the Ugandan market, UBA has been making losses. In the latest 2015 financial results, the bank suffered yet another loss.
The bank incurred an after-tax loss of Shs4.3 billion in 2015, up from Shs4b in 2014. Out of the 25 banks in Uganda, UBA was one of three banks that recorded a fall in customer deposits in 2015. As a result of the continued losses since its entry into the Ugandan market in 2008, the bank has accumulated losses of Shs53b up from Shs49 billion in 2014.
Accumulated losses often tend to have an effect on the capital of the bank. The constant losses deplete the capital and often requires shareholders to step in and save the day.
According to Bank of Uganda regulations, commercial banks are expected to hold no less than Shs25 billion in core capital.
UBA is operating slightly above that with core capital of Shs25.7 billion.
Any additional capital from the shareholders will give the bank better manoeuver in terms of lending.
Mr Elumelu said he informed the President and Central Bank Governor of the group board approval to boost the operating capital of its East African subsidiaries, including UBA Uganda.
“This move will strengthen their capacity to explore and finance emerging opportunities in the entire region. East Africa is a good investment destination for the UBA Group,” Mr Elumelu said.
Mr Elumelu, in December 2014, launched a $100 million (Shs330 billion) 10-year fund to finance entrepreneurs by a minimum of $5,000 (Shs16.7 million) and $10,000 (Shs33.4 million).
Tony O Elumelu, Nigerian Billionaire investor
He is an economist by training, an entrepreneur and philanthropist.
Footprint. He is the founder and chairman of Heirs Holding, a privately held investment firm with interests in the power, oil and gas, financial services and real estate sectors across Africa. He is also chairman of Transcorp, Nigeria’s largest listed conglomerate that has business interests in the agribusiness, hospitality and energy sector including Sea drill Nigeria Limited.
