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Thought Leadership

Amos Wekesa: Challenges that face the Ugandan tourism industry that the leadership must address

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On Thursday evening (April 4th 2019) at Sheraton Hotel, Uganda Tourism Board (UTB) old guards officially handed over office to the new guards.

While sitting at the back with fellow tour operators, I listened to different speeches. Some speeches were good, others just okay but looks like no one wanted to mention our challenges and potential solutions.

Amos Wekesa poses for a photo with Uganda Tourism Board’s incoming CEO, Lilly Ajarova. Wekesa, who has over 20 years in Uganda’s tourism industry has called for closer working relationships between government and the private sector, but most importantly, has called on government to continuously appoint competent teams to the political and technical leadership of the sector. Photo: Amos Wekesa

Like I have always said, tourism isn’t well understood and it’s fairly a new area for us all Ugandans, including myself. Am still a student of tourism and when I travel outside Uganda, I try to learn from people in mature tourism markets like Kenya, South Africa, Egypt, Botswana etc. It’s difficult to find competent and knowledgeable people with ability to transform tourism fast enough. The creation of professionals takes time and it’s easier in mature markets.

I tell many Ugandan operators that we are all still very small even when compared to those performing well in Kenya. In Kenya, you have very many tour operators whose annual turnover is above USD50m (UGX 187billion). One Kenyan tour operator recently told me: “Wekesa, this year we didn’t do very well; we only turned over USD68m (UGX254.4 billion). That guy has as many tour cars as half of all Ugandan tour operators combined.

A room at the recently expanded Brovad Sands Lodge in Kalangala District, Ssese Islands. Wekesa believes with more local investments in the sector, there will be invigorated demand for better sector management.

In Uganda, you will find a person who turns over just USD 120k (UGX449 million) annually will spend much of his or her time making people to think he has arrived (has made it). You don’t need much for people to think you have arrived in Uganda.

It’s very true that Uganda has massive potential and has achieved some steps and the future looks even brighter. The future looks brighter mainly because government and the general public seems more interested in the sector. Many young operators seem to have a long and better outlook to doing business and that can be seen through the vehicles they are purchasing, the accommodations they are building etc.

I think that most entrepreneurs in Uganda are starting to consider tourism as an option and I must say, local entrepreneurs are leading the way. People are cooperating more with a few pockets of people still stuck in the old ways but those will be forced to style up. Conditions will force them.

BEAUTIFUL: Part of Brovad Sands Lodge in Kalangala District, Ssese Islands. According to Wekesa, Uganda has a potential to earn USD12 billion annually, if all the cards were put on the table.

That said, what has been my personal observation over the many years I have been in tourism? What has been Uganda tourism board’s challenge over the last 20 years?

Tourism boards spur tourism business growth. The biggest constraint has been poor financing of the whole tourism sector but that is changing as we see very improved financing. In fact, if the money given by finance now is well utilized, Uganda’s tourism could create more meaningful opportunities than any other sector in Uganda.

Research on Uganda’s tourism potential shows that we could earn up to USD12 billion (UGX44.9 trillion) annually if we matched the right monies and competent teams at the Uganda Tourism Board. Good marketing could spur demand and hence investment would follow; people don’t invest out of emotions, they must see opportunities.

The other challenge of Uganda Tourism Board has been the quality of its board members. You will find a board with on 2 or 3 people who have actual investments in tourism; the majority will be representing different interests. Our challenge lies in balancing tribe, gender, ministries etc. Such boards don’t need people who have nothing to lose. They will discuss allowances and travel abroad as the most important thing. They end up spending so much time discussing none issues and that frustrates business people.

Uganda Lodges’ latest baby- Elephant Plains Lodge in Queen Elizabeth National Park. Amos Wekesa is the Founder and CEO of Uganda Lodges Ltd and Great Lakes Safaris Ltd. He is also the chairman of the Presidential Investors Round Table on Tourism

The other challenge over the last 20 years has been (am saying has been because we expect to see massive change) the attitude of those employed at UTB. There has been more internal fights than I have seen anywhere else which affects performance. At tourism exhibitions abroad, staff often arrived late and left early yet other countries had very committed government people.

In the last 20 years, I have seen all tourism exhibitions abroad organized last minute including paying for the stand. Countries that succeed at these tourism fairs prepare for them at least 6 months in advance. That includes creating mailing lists of potential clients in source markets, preparing press for new products, choosing winning colours etc. Some countries will bring media who write about them just before tourism fairs hence attracting big business.

When we tried to do a tourism fair here in Uganda, everything was last minute and couldn’t borrow a leaf from Magical Kenya or Karibu in Tanzania that have stood the test of time. Kenya spends a whole year marketing the Magical Kenya brand and has brought a lot of opportunities to them. It has become an important fair for us as Ugandan operators to attend.

Why did ours fail? Even things like Martyr’s Day on 3rd June, you will only see people run around last minute. Why should Namugongo not attract people every week?

The other challenge has been a weak private sector. We haven’t been strong enough to demand better from the tourism government agencies. Since tourism is attracting big boys now, we shall see people demanding more because of the investments they put up. They won’t want empty accommodations.

The other challenge was the cold wars between agencies- Uganda Wildlife Authority and UTB. They fight over mandates; whose mandate became whose mandate!  The PS of Ministry of Tourism has done well in trying to address this. I once attended a meeting where bosses of these agencies were and I couldn’t believe the level of egos- very dangerous levels.

Tourism is a business and not politics. That requires commitment and focus from all those concerned including government agencies. We are competing with other countries for those spenders also called tourists; we must be switched on to achieve anything. We must put up proper fights against our competition.

That said, should the above be addressed, Uganda’s tourism will win for all of us.

Otherwise, congrats Lilly Ajarova and your team and we are here ready to advise and work for the good of Uganda.

All the best to you all who have served at UTB.

It’s a public office, you come and serve and move on.

Amos Wekesa is the Founder and CEO of Uganda Lodges Ltd and Great Lakes Safaris Ltd. He is also the chairman of the Presidential Investors Round Table on Tourism

Thought Leadership

OPINION: Social Media and the Role of Election Management Bodies

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Social media refers to the use of web-based mobile digital technologies to turn communication into highly interactive dialogue, and covers blogs and microblogs such as Twitter, content communities such as YouTube, social networking sites like Facebook and (cell-based) cross-platform instant messaging applications like WhatsApp Messenger.

During the past fifteen years, social media has changed every facet of communications; significant amount of information and communications work has migrated from conventional media platforms (print and electronic media) to digital social networks. Dynamic organisations and businesses have already tapped into the massive opportunities in digital media, and particularly, social media.

The Government of Uganda approved a Government Communication Strategy (2012) which guides ministries, departments and agencies (MDAs) on use social media to communicate government policies, programmes and activities. New (social) media is considered by Government as an effective platform in facilitating implementation of constitutional provisions relating to right of access to information.

To support the above, Uganda Communications Commission and sister regulatory authorities have formulated necessary (regulatory) framework to guide the use of new media, which helps service providers and users to curb potential excesses of digital technologies.

As a modern and progressive institution, the Electoral Commission has taken deliberate steps to integrate digital technologies in our organizational information and communication structure.

The Department of Public Relations and the Department of Information Technology have been particularly positioned to provide leadership in this integration, with satisfactory results.

The Commission has further provided for training of all field election officials with knowledge and skills to utilize social media in the course of their duties.

Electoral Commission Social Media Strategy

In 2015, the Electoral Commission adopted a social media strategy to guide the institution in utilizing new digital technologies and social media to reach increasing diverse audience, as outlined in the following indicators:

The official EC Twitter account @UgandaEC was activated and a hashtag #AskEC2016, became a channel for the voters to ask questions and raise concerns, a forum where queries about the electoral process could be addressed;

Justice Byabakama Mugenyi Simon, Chairperson, Electoral Commission speaking at the launch of a media campaign on polling stations reorganisation. He said the Commission would adopt new media technologies such as social media to carry out voter education especially amongst the youth.

The Facebook page Electoral Commission Uganda was activated and gained followers who used the platform to raise inquiries and received responses. The Commission used the platform to post updates on the electoral process;

The Commission created a Whatsapp group (EC Media Center) for media personnel accredited to cover the 2016 General Elections. The platform facilitated timely updates on the electoral process, as well as prompt responses to press inquiries, and provision of necessary clarification and guidance;

The Commission hosts a functional website where information related to the electoral process (statistics, press releases and guidelines), administrative (jobs) and logistics matters (tenders), can be easily accessed by various stakeholders;  

The National Voters’ Register was uploaded on the website to facilitate easy  access for voters who have access to the internet using either smartphone or a desk top. The benefits of this innovation include online checking of (individual) voter’s registration status; availability of the Register for verification by interested stakeholders (parties, etc); free access to the Register hence saving costs on the part of stakeholders; increased voter/stakeholder participation in the cleaning process; and, enhanced transparency in the electoral process.

During the 2016 General Elections, the Commission used SMS to inform voters about their voting status and their respective polling stations. This was achieved by broadcasting the voters’ voting details for voters who had indicated their telephone numbers during the National ID registration exercise. The SMS service also enabled registered voters confirm the details of their polling stations from a mobile phone by texting his/her voter Id number to code 8228 to get a confirmation message of their registration status;

The Electoral Commission regional and district offices have been connected to the internet to enable use of web-based platforms for information and communication and stakeholder engagement;

This social media strategy was designed to particularly achieve the following:

Increase brand awareness among stakeholders, especially the youth and working middle class who often show little enthusiasm for electoral issues. Hence the Commission has adopted social media in order to reach this critical audience and interest them in participating in electoral activites;

Improve engagement with a wide range of stakeholders (political actors, the electorate, media, civil society, e.t.c), and a global audience that follows democracy, elections and governance issues in Uganda;

Engage audiences in real time and receive instant feedback on issues in the field during the electoral period. This enables the Commission to respond and manage issues and crisis;

Achieve sustainable, extensive publicity, sensitisation and stakeholder engagement at a fairly low cost. Social media is relatively inexpensive and accessible and enables cheap publishing and affordable access to information. This is critical as the Commission has  limited budget for communication and information dissemination;

Facilitate the conduct of peaceful campaigns by following candidates and supporters conduct, and correctly guiding on processes. The Commission is able to swiftly respond to complaints by candidates, agents and supporters;

Achieve an informed mass of stakeholders and a supportive electorate through promoting mass awareness on the electoral process;

Help in maintaining constitutional order in Uganda, through continuous stakeholder engagement before, during and after elections;

The role of the Election Management Body (EMB) in the social media matrix

Today, social media networks are a proven medium for enhancing and protecting brand reputation, improving customer service and managing crisis. These are postive aspects which EMBs critically need. In order to harness the power of social media, the Electoral Commission has observed and taken the following critical actions:

Hosting and maintaining updated, active and extensive online platforms, because this is where critical information, communication and regular stakeholder engagement has gone;

Being proactive in generating content and disseminating the same through the official social media accounts. It is a common practice for social media enthusiasts to cross-check facts against official accounts to verify the information before onward sharing. The EMB must be able to tell its story, and set the agenda for further discussion on the issue;

Training and equipping a dedicated communications team to manage the official social media platforms. This will ensure timely content generation, timely detection and interception of wrong information (fake news) and enable prompt dissemination of clarification where there is misunderstanding;

Partnering with relevant regulatory agencies (Media Council and Uganda Communications Commission) to develop regulations for responsible use of social media during elections. It is important to enhance awareness among media practitioners on their rights, roles and duties during the electoral process through an activity-specific code of conduct;

Challenges and Risks in the Use of Social Media by the Electoral Commission

While social media offers immense opportunities to EMBs to engage with their audiences and achieve wide range of benefits, the following limitations and risks need to be considered and managed:

Social networks are a proven medium for enhancing and protecting brand reputation, improving customer service and managing crisis. But they also have great potential for causing extensive damage and propagating falsehood (fake news), stirring controversy and igniting violence. EMBs, therefore, need to build capacity to mitigate the negative forces of social media.

New digital technologies have empowered the public to play an active role in the process of collecting, reporting, analyzing and disseminating news and information (also known as citizen journalism), with both positive and negative results. Social media has been used to disseminate wrong information about electoral processes, with the potential of sparking discontent and fuelling violence. In some cases, including Uganda (2016), governments have taken a decision to block access to social media. While such action helps to prevent escalation of tension and chaos, it has been criticised as violation of constitutional freedoms, mainly the right of access to information. Preventive actions by government and regulators have an effect on the final judgment of the overall conduct of the election.

Social media communication is characterised by anonymity, which compromises the authenticity of online communication and engagement. Social media is vulnerable to abuse and EMBs are often victims of pseudo accounts, which can mislead audiences, spark violence and damage institutional and national reputation;

Effective social media use requires extensive network coverage across Uganda; while phone and internet usage has been on the rise since 2000, the entire country is not covered. According to the Uganda Communication Sector Performance Report (June 2018) mobile phone access in Uganda stands at 56.1% while internet penetration is at 47.7%. Despite its immense influence, social media has limited access and use, and may not provide the ultimate solution to our information and communication needs.

It is observed that social media users always refer to national radio and television broadcasters to confirm the accuracy of information received. Hence, radio, television and the newspaper, remain trusted sources for accurate information, and should not be sidelined during planning and budgeting process.

Conclusion

This workshop provides a useful platform to share valuable knowledge and skills that will contribute to the improvement of our election management function through proven practices in strategic planning and effective communication through the use of social media.

It is evident that in order to maintain and increase positive brand visibility, EMBs need to embrace the changing media environment, and adopt policies and systems that facilitate integration of new media in the communications function and overall operations system.

We need to build the capacity of election management bodies to exploit the immense, fast and extensive power of social media. The irreversible growth of social networks has created a training need for organisations, and funds have to be provided to train and equip officials in web-based communication in order (for institutions) to make the best out of social media.

The author is the Spokesperson of Electoral Commission.

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The CEO 100

CEO OF THE MONTH: A tale of Fabian Kasi’s 9 years at Centenary Bank and the making of Uganda’s 2nd largest bank

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Fabian Kasi, under whose 9 years of leadership, Centenary Bank, has emerged as Uganda's second largest bank with 11.3 percent market share

Centenary Bank’s soft-spoken Managing Director, Fabian Kasi, this August, starts his 10th year at Centenary Bank- 10 years of impressive growth, whichever way you look at it.

Kasi, was among the first crop of indigenous CEOs to head the top 10 banks in the late 2000s- previously, a preserve of foreigners- mainly Kenyans. At the time, he became CEO in 2010, he was one of only three Ugandan CEOS of the top 10 banks- the other being Juma Kisaame (dfcu) and Nicholas Okwir (Housing Finance Bank).

Thanks to him and other good performing Ugandan CEOs, who broke the glass ceiling, today there are five Ugandan CEOs of the top 10 banks, but perhaps more importantly, the top three banks are all led by Ugandans.

Other than Centenary Bank, the No.2 bank, Stanbic Bank, Uganda’s largest bank is headed by Harvard alumni Patrick Mweheire and dfcu Bank, in the 3rd position is headed by Mathias Katamba.

Just like Kasi, Katamba is also a home-grown CEO, who rose through the ranks and different banks.

Unlike the two other banks, Centenary Bank is also majority Ugandan owned- 70.1%.  The Registered Trustees of 19 Catholic Dioceses in Uganda (38.5%), the Registered Trustees of the Uganda Episcopal Conference (31.3%) and 4 other Ugandan individuals own 0.4%.

ALSO READ: Money men: The 8 gentlemen who control 77% of Uganda’s banking industry https://www.ceo.co.ug/money-men-the-8-gentlemen-who-control-77-of-ugandas-banking-industry/

Prof. John Ddumba Ssentamu, the economist board Chairman of the bank, for now over 10 years, has superintended the bank’s growth.

The remaining shares are owned by SIDI- Solidarite’ Internationale pour le Development et l’Investissement (International Solidarity for Development and Investment) based in France that owns 11.6% and STICHTING HIVOS-TRIODOS FONDS, an investment fund, specializing in investing in microfinance and trade finance, managed by Triodos Investment Management in the Netherlands, owns 18.3%.

From fourth to the second largest bank in Uganda  

During the 9 years of Fabian’s reign the number of customers, has grown by 63.4% from 1,003,295 that he inherited in 2010 to 1,639,602 customers at the end of 2018- a compounded annual growth rate (CAGR) of 5.6%.

The number of branches has also grown from 48 in 2011 to 73 at the end of 2018, backed up by 179 ATMS at 132 locations across the country.

Fabian has also embraced digital banking and has over the last 5 years invested heavily in digital banking with a view to decongest the banking halls and ATMS- which is perhaps one of the bank’s greatest undoings.

Beatrice Lugalambi, the good-natured General Manager, Business Development and Marketing, who arrived at the bank in 2011, a year after Fabian Kasi, is one of the brains behind the bank’s aggressive marketing and brand presence. She has put her nearly two decades of banking, behind some of the industry’s biggest marketing campaigns.

In October 2015, the bank launched its flagship Centemobile banking platform that enables clients to transact and access banking services on their mobile phones, whenever and wherever they are, as long as there is network coverage. The platform by end of 2018, had 701,801 registered customers of which 144,192 were active with 1,268,833 transactions by end of December 2018- accounting for 30.1% of the bank’s transactions.  

The bank also closed 2018 with 2,404 registered banking agents all over the country.

ALSO READ: Earnings of CEOs and Executive Directors of 23 of 24 of Uganda’s banks: https://www.ceo.co.ug/exclusive-earnings-of-ceos-and-executive-directors-of-23-of-24-of-ugandas-banks/

These innovations and an aggressive expansion strategy, has seen customer deposits grow 4 times or 261.8% from UGX630.8 billion in 2010 to UGX2.3 trillion in 2018- an annual compounded growth rate of 16.4%.

Growth in deposits, has facilitated a 261.8% growth in lending from UGX395.8 billion to UGX1.53 trillion in the same period- allowing the bank whose 75% of income is derived from interest income, to grow by 200.4%, from UGX189.1 billion in 2010 to UGX568.2 billion at the end of last year.                                                                                                                Profitability over the 9 years has also grown by nearly four times or 266.1%, from UGX29.4 billion in 2010, to UGX110 billion in 2016, declining minimally to UGX100.1 billion in 2017 and closing 2018 at UGX107.6 billion. Overall, profits have grown by an average 15.5% annually- above the industry average.               

Centenary Bank’s profits have grown by an average 15.5% annually over the 9 years

The bank’s asset base has as a result also grown by nearly 4 times or 292.8%, from UGX807.2 billion in 2010 to UGX3.2 trillion in 2018- an annual CAGR of 16.4%.

This impressive growth, led by an all Ugandan trio- Fabian, together with Simon Kagugube, the Executive Director and Prof. John Ddumba Ssentamu the board chairman for the 9 years, has seen Centenary Bank move from the fourth largest bank by assets- UGX807.2bn and 7.12% market share in 2010 to the second largest bank with UGX3.2 trillion and 11.3% market share at the end of 2018.

To put this into perspective, by end of 2018, Centenary bank was larger than the Ugandan asset base of 11 banks at the bottom of the chain combined i.e. Ecobank, United Bank for Africa, Tropical Bank, Exim Bank (Formerly Imperial), NC Bank, Guaranty Trust Bank, Finance Trust Bank, Bank of India, Commercial Bank of Africa, Cairo International Bank and ABC Capital Bank.

The 11 banks together had UGX2.6 trillion in assets.

The bank’s board of directors. Eight of the eleven board members are Ugandan, breaking the stereotype that Ugandans can’t lead big growth. Centenary Bank is one of the few majority Ugandan owned and led banks.

The bank has also jumped from the fourth biggest deposit taker- UGX630.8bn and 7.82% market share in 2010, to become the second biggest deposit taker, receiving UGX2.28 trillion and 11.7% of industry deposits at the end of 2018.    

At the end of 2018, Centenary, had also grown from being the fifth biggest lender with UGX395.8bn loan book and 7.32% market share in 2010 to become Uganda’s second biggest lender with UGX1.52 trillion lent out, translating into 12% market share.

As a result, the bank has also moved from being the fourth most profitable bank- UGX29.3bn and 10.3% market share in 2010 to the second most profitable bank with UGX107.6 billion or 14.3% of industry profitability.

But who is Fabian Kasi?

Fabian has been a banker almost all of his working life.

He started as a Banking Officer at Bank of Uganda in 1992. After eight years, he briefly worked as a Director of Finance & Administration at Finca Uganda, a global microfinance organisation, before heading out to Rwanda’s Banque Commerciale du Rwanda (BCR) as CFO.

LEFT-RIGHT: Mr Kamal Budhabhatti, Chief Executive Officer, Craft Silicon and Fabian Kasi, at the April 2018 launch of CenteMobile Loans, a self-service opt-in product, that allows customers to borrow up UGX 2 million instantly. The service was developed in partnership with Craft Silicon. Centenary Bank is the leading micro-lender. By the end of 2018, 94,035 customers had accessed CenteMobile Loans.

After just 9 months in Rwanda, he was appointed the Managing Director for Finca a job he held for 8 years and 3 months.

He was appointed Centenary Bank Managing Director in August 2010.

He holds a Bachelor’s degree in Commerce and Accounting from Makerere University, as well as an MBA from the University of New Castle in the UK.

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Thought Leadership

OPINION: There’s much more benefits to offshoring than merely tax avoidance

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Businessman, Patrick Bitature whose name has featured in the over 200,000 Mauritius Leaks

Yesterday, July 23rd, one of the leading dailies in Uganda, run a screaming headline, “Leaked papers reveal Bitature offshore links.”

Now, Patrick Bitature, is one of Uganda’s leading businessmen, founder and CEO of Simba Group- a conglomerate of East African companies spanning telecommunications, real estate, power generation, agro-business, oil and gas, tourism and social enterprise, so such a headline is bound to attract every reader’s attention.

In the newspaper story, it was alleged that Electromaxx, an energy firm in which Mr. Bitature, is a major shareholder, had “benefited from an energy investment structured in Mauritius, which according to tax analysts, smacked of “a deliberate aggressive tax planning” to benefit from the Double Taxation Agreement (DTA) between the Indian Ocean island nation and Uganda.”

In an early anti-climax, the authors went on to mention in their story that: “There is nothing criminal in a business person or entity exploring tax payment in a jurisdiction where it is least, technically called tax avoidance.”

Having sucked out the legal juice out of their own, story, they went for the moralist angle, and regurgitated a March 16, 2015 report, by Oxfam International, a global NGO which argued that tax avoidance, while legal, had an indirect impact of widening income inequality as “wealthy individuals and multinational corporations pay the least tax by establishing offshore firms in tax havens while the poor choke on taxes in countries of citizenship.”

The story itself, is draw from what has now come to be known as the Mauritius Leaks- a hoard of about 200,000 confidential client documents leaked from the Mauritius office of the Bermuda-based offshore law firm Conyers Dill & Pearman that is said to paint a little bit more detail on businesses from all over the world that hired the law firm to help them offshore some or all of their operations and processes in Mauritius.

The leaks are part of an investigation by International Consortium of Investigative Journalists (ICIJ) and 54 journalists from 18 countries, including Uganda.

Mauritius’ minister of financial services of good governance Dharmendar Sesungkur, who oversees the country’s offshore sector, in a statement to ICIJ denied any wrongdoing and said that independent organizations, including the World Bank, recognized that “Mauritius is a cooperative and clean jurisdiction that has made significant progress in adhering to international standards.”

The screaming headline aside, that at a first reading, suggests some mega corporate scandal, on closer reading, reveals an author who has fallen hook line and sinker for the syndicated NGO world view, albeit imbalanced, that offshoring, solely exists for purposes of tax avoidance.

Speaking of moralism, I would have expected so bit of “fixing the log in one’s eye, before going for the speck in the neighbor’s.”  

For those who may not know, the Monitor Publications, which publishes the newspaper in question, was at 31st December 2018, 83.3% owned by Nation Media Group (NMG), itself 44.66% owned by Aga Khan Fund for Economic Development, S.A (AKFED) a company incorporated in Switzerland the 4th biggest tax haven, after Bermuda, Cayman Islands and Netherlands on Oxfam’s 2015 list of 15 biggest corporate tax havens.

Mauritius is No.14 on the same list.

AKFED which is wholly owned by The Aga Khan Development Network (AKDN), also registered in Switzerland, operates a network of more than 90 separate project companies all over the world, with revenues of USD4.3 billion in 2017!

In Uganda, other than Monitor Publications Ltd, AKFED either, wholly or partially owns companies such as Bujagali Energy Ltd, Kampala Pharmaceuticals Industries Ltd, Leather Industries of Uganda Ltd, Uganda Fishnet Manufacturers Ltd and West Nile Rural Electrification Company.

Others AKFED companies are: Diamond Jubilee Investment Trust Uganda Ltd, Diamond Trust Bank Uganda Ltd, Diamond Trust Properties Uganda Ltd, and The Jubilee Insurance Company of Uganda Ltd, Jubilee Investments Company Ltd and Tourism Promotion Services which owns the Serena Hotels chain.

I would have expected someone to first explain a little bit of detail on the USD$4.3 billion log, before we get to Bitature’s USD5 million speck!!

Beyond tax avoidance; the importance of offshore financial centres

Enough of this whataboutism.

Pardon me if I went on and on about AKFED, but I am simply trying to demonstrate that beyond the overzealousness with tax avoidance- as the biggest motivator of offshoring, there are many other reasons; call them benefits, why businesses could choose to offshore some or all of their operations.

A detailed and balanced look at offshoring would do justice to everybody.

In fact, AKDN and AKFED on their website, try to offer an insight on why they chose to be headquartered in Switzerland, regardless of the fact that they have very little actual business going on there.

Kampala Serena Hotel, part of AKFED’s Tourism Promotion Services (TPS)

“Switzerland is also the location for a number of activities, including the coordination of development programmes within AKDN and with international partners,” the group explains, adding: “The Aga Khan Fund for Economic Development’s (AKFED) Industrial Promotion Services (IPS) in Switzerland acts as a focal point and technical clearing house for Industrial Promotion Services (IPS) companies.”

In the above explanation, lies one of the major reasons for offshoring, because, offshore financial centers allow companies or investment funds to operate internationally without having to put up with the several different sets of rules in the various jurisdictions where they operate and, in the process incurring more costs of operating.

Of course there are numerous other benefits such as access to cheaper financing, guarantees of more economic stability e.t.c.

But away from the well documented benefits of offshoring, there seems to be a general misrepresentation, fanned by especially the purveyors of these leaks, NGOs and activist journalism that these countries that have been collectively branded as tax havens are some sort of dubious and corrupt hellholes where businesses or individuals, wishing to conceal their businesses dealings are given a red carpeted welcome.  

To the contrary, most, if not all these countries have some of the best global corporate governance, transparency, competitiveness and ease of doing business rankings- which is why they are a popular destination of the world’s biggest corporates.

Let’s take Mauritius for example; in the 2019 Ease of Doing Business Report by World Bank, Mauritius is ranked in the 20th Position and is the only African country in the top 20- Uganda is the 127th.

In the World Economic Forum’s Global Competitiveness Report 2018, Mauritius is ranked No. 49 (again the only African Country in the top 50) – Uganda is in a distant 117th position.

Mauritius is ranked as No.6 globally, by PricewaterhouseCoopers and the World Bank Group in their Paying Taxes 2019 Survey, which investigates and compares the ease of paying taxes in 190 country tax regimes.

On the Corruption Perceptions Index 2018, Mauritius is in the 51st position and along with Seychelles, Botswana, Capeverde, Rwanda and Namibia, they are the only African countries in the top 60 least corrupt countries; Uganda is the 149th.

Do we now begin to understand why, if given choice and with the supporting legal framework, it would be every business’ dream to be domiciled in a country like Mauritius or Switzerland where things seem to be working?

I do believe, rather than whine about how more and more Ugandan businesses are choosing to register in the so-called tax havens, attention should be refocused on addressing key issues constantly raised by the private sector such as high tax rates, low tax morale, corruption, access to affordable financing, inadequate infrastructure, government bureaucracy etc. 

We should probably be planning on sending our policy makers to Mauritius for some hard lessons on how to make economies work.   

All said and done, if there is any wrong doing established, it should also be punished. However, I do believe that fairness demands that a little more investigations by competent authorities be done, before the screaming headlines.

The writer, is Executive Editor, CEO East Africa Magazine.

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