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Goldstar Insurance registers 18% premium growth

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Goldstar Managing Director and Chairman of the Insurance Consortium for Oil and Gas (ICOG) addresses the press recently. Goldstar is a member of ICOG- a co-insurance group currently made up of 14 locally licensed insurance companies that have raised over $200m (sh745b) aggregated insurance capacity in readiness for Uganda’s oil and gas industry.

Goldstar Insurance Ltd underwrote UGX3.7 billion more premiums in 2018, than it did in 2017, according to preliminary reports from the Insurance Regulatory Authority (IRA), the industry regulator.

The firm, part of the Ruparelia Group grew underwritten premiums from UGX20.8 billion in 2017 to UGX24.5 billion in 2018, a growth of 18%. At a growth rate of 18%, the company grew faster than the industry and was also among the fastest growing companies in 2018.

The insurance industry, according to IRA in 2018, underwrote UGX856 billion (USD227.8 million), up from UGX782.4 billion (USD208.2 million) underwritten in 2017- a 17.5% growth rate.

Goldstar also slightly increased its market share from 4.1% in 2017 to 4.3% in 2018.

This is a remarkable recovery from the 2017 performance when the firm registered a -8.45% reduction in premiums from UGX22.7 billion to UGX 20.8 billion.

Goldstar insurance is the 5th biggest general insurance company, with 4.3% market share and is one of the only 9 insurance firms, out of 21 that were profitable in 2018. It is also one of only 6 firms that underwrote more than UGX20 billion in premiums in 2018.

The company is now in the top 5 biggest insurance companies by premiums. The other leading four are: Jubilee Insurance Company and UAP General Insurance Company in the first and second positions, while Sanlam General Insurance Ltd and Britam Insurance Company are in the third and fourth positions respectively.  

Although Goldstar’s 2018 underwriting profit slightly reduced from UGX2 billion in 2017 to UGX1.46 billion in 2018, the company remained the 5th most profitable insurance firm in 2018.

Goldstar is one of the only 9 insurance firms, out of 21 that were profitable in 2018 and is also among the only 6 firms that underwrote more than UGX20 billion in premiums. 

Goldstar is an ISO 9001:2008 certified company with several awards such as the International Award for Excellence & Leadership – Global Trade Leaders Club (2017), Best Insurance Company Uganda 2015 by the International Finance Magazine and the World Finance Global Insurance Award for 2013 & 2014. 

Goldstar is also part of the Insurance Consortium for Oil and Gas (ICOG), a co-insurance group currently made up of 14 locally licensed insurance companies that have raised over $200m (sh745b) aggregated insurance capacity in readiness for  Uganda’s oil and gas industry.

Azim Tharani, the Goldstar Managing Director, chairs ICOG.

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Finance

EXCLUSIVE: Oberthur, the French money printer named in BoU currency scandal is serving a 30-months World Bank ban over corruption

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SCANDAL AFTER SCANDAL: Bank of Uganda Governor, Professor Emmanuel Tumusiime Mutebile and his Deputy, Dr. Louis Kasekende have increasingly come under public scrutiny with scandal after scandal in the last 3 years- the latest being the mismanagement of currency printing with a possibility of several billions missing.

Oberthur Technologies SA (Oberthur), the French digital security company at the centre of what is now unfolding to be a currency printing scandal is serving a 2.5 year ban by the World Bank and its partner agencies over corruption related scandals.

According to a report by The Independent Magazine, in Kampala, it is Oberthur who chartered the Kuehne & Nagel cargo plane but failed to guarantee the contractual exclusivity owed to Bank of Uganda. Additional reports and police sources however, indicate investigations have now been widened to include printing of “non-official but genuine currency notes” which could only have been done, by Oberthur.

This further raises questions whether BoU did enough due diligence about Oberthur before awarding them the deal to print the country’s currency notes or if indeed BoU deliberately awarded the deal to Oberthur, well aware of their reputational gaps, which it sought to take advantage of.

Government spokesperson, Ofwono Opondo addresses media on June 14th regarding the BoU currency notes scandal. His version of events, has now come under question following a Uganda Police press conference today

According to investigations by CEO East Africa Magazine, under a deal reached in November 2017, with World Bank Group, Oberthur cannot participate in any World Bank funded project until May 2020, over what World Bank calls “corrupt and collusive practices under the Identification System for Enhancing Access to Services Project (IDEA), a project designed to establish a secure, accurate and reliable national ID system in the People’s Republic of Bangladesh.”

The sanction according to a November 30th 2017 statement from World Bank, was “part of a Negotiated Resolution Agreement (NRA) following the company’s acknowledgment of improper payments to a sub-contractor and collusive misconduct to obtain and modify bid specifications to narrow competition and secure the award of the contract.

Oberthur voluntarily acknowledged the misconduct and promised to “carry out corrective action, including an internal investigation, while holding individuals connected with the misconduct accountable,” according to the World Bank statement.

Under the terms of the NRA, Oberthur will not be eligible for any World Bank-financed contracts for the length of the sanction.  

The banning of Oberthur also disqualifies it from also participating in other projects funded by several Multilateral Development Banks (MDBs) party to the Agreement of Mutual Recognition of Debarments that was signed on April 9, 2010. 

Yann Delabrière the Idemia CEO. Idemia is the mother company of Oberthur, which is serving a 30 months ban from participating in World Bank funded projects over corruption.

The MDBs are: the African Development Bank Group, the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank Group and World Bank Group. The above MDBs are also members to the International Financial Institutions Anti-Corruption Task Force and the Uniform Framework for Preventing and Combating Fraud and Corruption.

Did Oberthur collude with BoU officials to print extra currency notes?

This discovery now raises serious reputation issues with the French firm, especially amidst, a Uganda Police statement, that police is now looking into allegations that there was unauthorised printing of currency notes.

The statement by Uganda Police spokesperson, Fred Enanga, sharply contrasts that made by the government spokesperson and Executive Director of the government’s Uganda Media Centre, Ofwono Opondo on June 14th 2019. Although Opondo confirmed there was a currency related investigation going on, he refuted media reports from an anonymous whistle-blower that UGX90 billion had been ordered, printed and imported into the country via the now infamous ‘money plane,’ and diverted by Bank of Uganda officials.

Lt. Col. Edith Nakalema, the head of the Statehouse Anti-Corruption Unit (ACU)

In a media interview yesterday, June 17th 2019 with Daily Monitor,  Lt. Col. Edith Nakalema, the head of the Statehouse Anti-Corruption Unit (ACU) also denied there was any money missing, only for Enanga to drop a bombshell- minutes later at a press conference. 

Enanga, told media that the case regarding what he called “irregularities surrounding a consignment of monies that were printed and the related supply chain” will now be “effectively supervised by the Director of Criminal investigations, i.e. AIGP Akullo Grace” who is “proceeding with lines of questioning on how the banking process supported the printing of the bank notes, whether there was any wrong doing on the part of the bank or not.”

He did not say why, Lt. Col. Edith Nakalema who was the initial lead person on the case has been removed from supervising the case.

Enanga said that several statements have been taken from “directors, managers and employees, with knowledge on the whole documentation process” with a view to “knowing how the need for the printing of the notes arose, who initiated the request, whether there was approval from the board, the amounts involved, serial numbers of the notes that were printed and how the none official but genuine notes could have arose.”

He hwoever did not mention much about the said “none-official but genuine notes.”

Some of the BoU officials from whom statements have been taken, according to Enanga, include the director for banking, director legal and auditors. Also additional statements were taken from ENHAS, Uganda Revenue Authority (URA) customs officials and that “further arrangements to get statements from lawyers of UN and the business persons mentioned in the story” were ongoing.

Uganda Police Spokesperson, Fred Enanga

Daily Monitor, a leading independent daily has now reported that that a police raid on the home of six senior officials of Bank of Uganda has “recovered documents which suggest printing of unauthorised notes.”

Mixed statements from government agencies: who is fooling who?

Since the scandal broke, there has been multiple statements from several arms of government involved in the scandal- either as suspects or investigators.

Lt. Col. Edith Nakalema’s State House Anti-Corruption Unit which made the first statement called it a “special investigation on a matter pertaining to the Bank’s procurement and supply chain activities” while a statement by Bank of Uganda Governor, issued hours after Nakalema’s called it “an anomaly in the inventory of the expected consignment.”

A few hours later, Ofwono Opondo, the government spokesperson, was on record saying there was no money missing as alleged by the initial whistle-blower, but rather, there as a case of unauthorised cargo on the supposed-to-be exclusive chartered currency plane.

The next day, Uganda Revenue Authority which had been severally mentioned in previous statements, issued a sharply worded statement of their own, saying that: “It is not the responsibility of URA customs to concern itself in logistical arrangements of importers or exporters” and urged Bank of Uganda not to drag URA into logistical contractual failures or mistakes of BOU and their service provider.”

Meanwhile, it was reported today on NBSTV that Bank of Uganda has rejected an apology from the owners of the plane that suspiciously carried unidentified cargo on a chartered flight by the Central Bank pending investigations into what went wrong.

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World Bank’s IFC considering USD70 million loan to Umeme

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The International Finance Corporation (IFC) the largest global development institution and a member of the World Bank Group, has reported, they are considering lending up to USD 70 million (UGX263.2 billion) to Umeme Limited.

Umeme workers carry out new installations. To date, Umeme has invested $627m (UGX2.4 trillion), but plans to invest USD450 million in capex over the next 6 years and up to USD1.5 billion in 10 years so as to create a robust enough distribution network to last the country for another 20 years. The planned IFC USD70 million is therefore a major boost.

Umeme is Uganda’s largest power distributor.

In a disclosure posted on their website, IFC said they plan to raise a senior loan for up to USD 30 million from IFC’s own account, and up to USD40 million to be mobilized from other lenders- altogether USD 70 million.

IFC said in the disclosure that the debt financing will be used to support “Umeme’s next 6-year (2019-2024) capital expenditure program, which will mainly focus on: network upgrades to enable load growth and additional connections to support uptake of new generation, safety/reliability enhancements, and implementation of smart meters to continue improving collections and reducing commercial losses.”

“The Project will support the growing demand for electricity in Uganda, and contribute to ongoing efforts to increase access to electricity. This will help fulfil the Government of Uganda’s efforts to improve electrification rate from the current 27% to 60% by 2027, and complement the significant growth (almost double) in generation capacity expected by 2020 (from 183MW Isimba and 600MW Karuma dams, and small solar/hydros),” said IFC in their disclosure.

“In addition, the Project has potentially significant indirect and induced effects on value added and employment as Umeme’s network expansion plan focuses on zones with high electricity demand and economic growth potential. Finally, it will improve resilience of the main distribution network in Uganda and reduce losses, through adoption of advanced smart technologies, adequate maintenance and upgrade of ageing assets,” added IFC.

IFC further said that by availing more affordable commercial and institutional financing, which is not readily available in the Ugandan market, Umeme will be enabled to “increase the average maturity of its loans and free up cash flow for Capex.”

President Museveni launches commercial operations of the Soroti Fruit Factory, on the outskirts of Soroti town recently. Uganda had reinvigorated her industrialisation strategy and is relying on reliable and stable power from Umeme and other distributors to power this drive. According to IFC, the USD70 million loan to Umeme will support the growing demand for electricity in Uganda, and contribute to ongoing efforts to increase access to electricity and directly and indirect induce jobs and economic growth.

“IFC’s involvement and proposed structure will also provide comfort to existing commercial lenders to potentially increase their commitment to Umeme,” said IFC.

This disclosure, coming at the same time as government’s confirmation last week that it will renew Umeme’s 20-year concession comes in handy and is a growing show of confidence in the power distributor.  

The financing, if approved will bring, the total amount of lending to Umeme by IFC to USD185 million over the last 10 years. Umeme, which has previously been hailed by the World Bank as “by far the most successful Public Private Partnership “in the previous past has attracted up to USD 265 million in funding from the International Finance Corporation (IFC), Standard Chartered Bank, and Stanbic. 

In a recent interview with CEO East Africa, Patrick Bitature the Umeme board chairman, said Umeme will need to invest up to USD450 million in capital expenditure (CAPEX) alone. He however added that to create a robust enough distribution network to last the country for over 20 years, Umeme will need to invest between USD1 billion and USD1.5 billion over the next  five to ten years.

To date, Umeme has invested $627m (UGX2.4 trillion) into doubling the distribution network to over 34,000km from the 16,000km it inherited and grown customer connections by more than 4 times- from the 290,000 inherited to 1,291,811 by end of 2018.

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BoU Currency Scandal- URA tells BOU: “Don’t drag us into your mess”

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Amidst the raging scandal in which the Statehouse anti-corruption unit is investigating how illegitimate cargo, found itself on a chartered plane carrying new BoU banknotes, the Ugadna Revenue Authority (URA) whose customs officials cleared the cargo have said they did nothing wrong and instead asked BoU to own up their mess.

Full statement by Dickson Kateshumbwa, the URA Commissioner Customs, in verbatim:

In April this year, URA Entebbe Customs was informed by BOU of an impending import of Currency and requested to facilitate quick clearance. A private chartered plane arrived and as normal practice for sensitive cargo Customs facilitated clearance of the currency at the tarmac in presence of BOU Officials, BOU Security, Aviation Security, Police and other security agencies.

The consignment was offloaded, inspected and loaded on BOU vehicles and taken to Kampala under heavy security escort.

The same plane contained other cargo which belonged to various individuals / companies / organizations. As per normal customs clearance procedure, this cargo was offloaded into the licensed bonds at the airport and subsequently the owners made customs declarations, paid applicable taxes and Customs physically verified each consignment to ascertain accuracy and consistency with the declaration and released the goods to the owners.

Each consignment had its individual airway bill. Customs was not party to the airline charter arrangements between BOU, the airline and the other owners of the goods. It is not the responsibility of Customs to concern itself in logistical arrangements of importers or exporters. Our duty is to ensure that imported cargo through the airport is received and tallied with the cargo manifest, verified and is cleared in line with the Customs Laws as established under the East African Customs Management Act (EACCMA).

In this particular consignment like all others, our Customs staff followed the procedures to the dot and we can account for the cargo cleared fully. URA has provided the details of the information required by the investigators and we are available to offer any clarification if required.  

URA should not be dragged into logistical contractual failures or mistakes of BOU and their service provider.

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