For starters, from where you sit, give us an overview of 2022 and the first half of 2023.
To contextualise our conversation, we need to talk about the global developments including the pandemic and other issues that affected us, as a country, as an economy, and as a region, and their impact on the people, the enterprise, the government, and how ultimately we see the recovery initiatives to rebuild from the effects of such disruptions.
To single out, the pandemic didn’t spare any of us, not the institutions, not the individuals, and not the economy. The period 2022 to 2023 has been a period of recovery from the COVID-19 pandemic. But again, we also saw a period of rising inflation and high-interest rates emanating from largely, the global supply chain challenges, and the Russian-Ukraine war which had a big impact on most economies across the globe. This impacted the formal sector and the business community.
Generally speaking, livelihoods were not spared. We also had the effects of drought culminating in food inflation. All these issues brought in quite a good amount of disruption to the normal operations of our people and the business community.
On the positive, we are seeing increasing convergence towards regionalisation of the East African Community coming together and opening up different economies of the East African Region to harmonise policies and cultivate initiatives towards regional growth. We are seeing increased trading in the regional block and that is bringing in opportunities for Ugandan businesses and institutions. Those are largely the highlights of 2022 and the first half of 2023.
By and large, recovery is forming a very key component of the initiatives of the government, the economy, and of the enterprises within the economy.
How did or how is Housing Finance Bank taking advantage of these developments in the economy and the region?
The bank was not spared of the COVID-19 effects, the lockdown, the global supply challenges, and the rising inflation. All these aspects did variably affect us. However, the bank demonstrated resilience, and put into place, a variety of initiatives and strategies that have subsequently seen us emerge stronger. We were able to ride upon the initiatives driven by Government and the Central Bank to support our customers to levitate the effects and challenges. We got to work, engaged our customers, and remained focused on providing solutions, that speak to our very own customers’ needs. We remained focused on enabling our customers to walk through the challenges and get over the hurdles and that helped us remain buoyant amidst the turmoil and challenging times that prevailed at the time. As a result, we were able to grow in terms of our partnerships which culminated in a 36% growth in our deposits, to exceed UGX 1.1 trillion. We also witnessed 15% growth in our loans and advances proving that we are providing solutions that customers need; solutions that respond to their challenges. We also saw a 24% growth in our asset base. All this was a result of our resilience and tenacity, even during these challenging times.
Last year’s performance highlights us as one of the top-performing banks in this country. With UGX 58.9 billion in profits after tax, we are the 5th most profitable bank in the country, which is a good thing. We believe that, with the good platform we have built, we will be able to do more in 2023.
We are coming to the close of the first half of 2023. How is the bank performing so far? Are you on course to surpass the 2022 performance?
Housing Finance Bank is executing a 5-year strategy and 2023 is our first strategy year under the new plan. It is a year when we get to consolidate many of the initiates in the strategy. Given the trajectory we have had, I see that we are aiming at exceeding the 2022 performance. We are on a good pedestal to make 2023 the best year to date on our 5-year journey.
It is great that you say the bank has emerged from the Covid-19 and post-Covid-19 issues and is now growing steadily. Do you see the same growth being reflected on the side of your customers and their businesses? Is the growth mutual or one-sided?
Banks sometimes are perceived to be making gains amidst their customers’ challenges, but I can assure you, there is sustainability in our ecosystem. Sustainability is a big thing for us. A profitability that is one-sided is not sustainable. It can’t take any institution anywhere. At Housing Finance Bank, I am happy to say that our growth is shared with our customers. It is the customers’ growth, that is driving our own growth. Our strategy is built on delighting customers, creating a better experience and driving customer growth. One of our Customer Value Propositions is creating convenience, relevance, and affordability.
Amidst all the turmoil and uncertainties in the macros, we have been preoccupied with the kind of solutions we can create that will enable our customers to thrive in business, which in turn will enable us to stay in business as well. I am happy to say that, what you are witnessing at Housing Finance Bank is mutual growth for the customers and the Bank.
You spoke about convenience, affordability, and relevance, and of course, digitalisation is one of the key drivers of the three. Digitalisation also drives financial inclusion. How is the bank’s digitalisation journey evolving?
We are in an era where technology is redefining the banking landscape. Convenience is a key value proposition at Housing Finance Bank. We offer solutions that are not just affordable or relevant, but solutions that really address the aspect of convenience. We have been able to do that by tweaking our digital strategy. We have digitised the customer’s journey, end-to-end and we continue to implement initiatives that assure for our customers to transact from the comfort of their living rooms, without having to brave the traffic. I am pleased to tell you that to date, 80% of our transactions are happening digitally via alternate channels. We have customers who transact entirely from our internet, mobile banking solution and other alternate banking platforms. That said, the physical brick-and-mortar branches will remain for more specialised financial services and advice. Additionally, we are continually refining so that we consistently provide the convenience and satisfaction that customers require. We currently looking at predictive analytics so that we can be able to fast-track our delivery of solutions, even before customers ask for them.
Customers are already warming up to our alternate channels and we are seeing traffic and results.
Much as Housing Finance Bank rebranded sometime back to offer holistic financial solutions, we still know you as that go-to bank for housing solutions. How is the bank performing on this core mandate?
Our purpose is to transform livelihoods through home ownership and financial empowerment. The main focus of our work is therefore to drive financial empowerment of our people through our solutions and banking products and services that we offer. But most importantly, we purpose to see that every eligible Ugandan has a roof over their head.
Housing Finance Bank has experience of over 55 years in providing housing and mortgage financing. The composition of the balance sheet is that 50% is skewed to housing and mortgage financing. This vast experience in the sector enables us to offer affordable and relevant solutions.
We are entering into a number of partnerships and engagements with like-minded partners to come up with solutions that will help us to touch lives in that segment.
I can say that over the last year alone, we enabled over 1,500 families to become first-time homeowners. It looks a small number but to me, it is a very good base for us to continue enabling many homeowners to become first-time homeowners. We are in discussions with a number of developers both in residential and commercial mortgages. We are doing everything possible and within our means to reduce that housing deficit.
What is your current market share in the housing financing space?
Housing Finance Bank has been leading in the financing of housing sector developments for quite a long time. We do command about 60% market share of the residential housing space. I know many entities have also entered into this space but we still maintain a leading 60% market share- thanks to the various innovations we have come up with.
In terms of ownership, HFB is fully owned by Uganda’s workers, through the National Social Security Fund (NSSF) and 49.18% by the Government of Uganda and the National Housing and Construction Company. Do you feel the shareholders, especially NSSF which is quite liquid is giving you enough support to bridge this gap, especially in the middle of the pyramid where a majority of the workers are concentrated?
We have got very strong and supportive shareholders and I must say that Housing Finance Bank enjoys the support of these great institutional shareholders which is a very good starting point. Our unique shareholders provide certain opportunities for us in the construction space and do share in our purpose of making housing a top agenda at all levels.
So at the policy level, initiatives are being championed especially with engaging the government through the Ministry of Lands, Housing and Urban Development which plays a very important role in that space. They are passionate about housing and making it one of the top 4 agendas in the country.
Relatedly, NSSF provides a lot of support, especially in the availability of affordable funding that can be apportioned to the availability of affordable housing.
So, the aspect of funding further fosters the growth of, not just mortgages per se, but the availability of long-term funds that support long-term mortgage funding. As you are aware, banks get the money they lend from largely short-term deposits. So to access long-term funds to be able to extend mortgages of over 25 years, to people like first-time homeowners or people earning under UGX500,000- to allow them either to build incrementally or get housing loans, we need long-term funds. Therefore having a strategic shareholder like NSSF is certainly a plus. Even at the policy level, we need to continue having these conversations.
We are also seeing the government play a dominant role in the private sector as well as other initiatives such as the Parish Development Model, which is about improving livelihoods because it is not just enough to address shelter without addressing good livelihoods overall. We believe that all these initiatives from the shareholders’ perspective are well-aligned to our purpose as a bank.
Speaking about sustainability, and I know at a personal level, you are a big champion of sustainability, how are your stakeholders benefiting from your good performance?
The Sustainability agenda is very high on our radar as a Bank. At a strategic level, Sustainability is one of the key pillars that we foster and keenly pursue internally through initiatives that put perspective on how we can impact our people – staff, our processes, our systems, products, and channels; and externally, on how we impact our people (communities), and the planet (the environment). We are keen on how we drive profitability and sustainability. We have embarked on our certification process with the European Organization for Sustainable Development, and through embracing the requirements of the standards, we shall be able to reduce the carbon footprint internally and address gender mainstreaming in our lending, among other deliverables. For example, when you look at our lending business, much of it is collateralised yet only 20% of Ugandan property owners have titled property. It gets worse when you factor in lending to female-owned entities, most of whom do not have and or do not own or control properties on which they operate their business. So how we, as a financial institution, extend credit to enable women to access financing and be able to do business and pursue their entrepreneurial aspirations is an important aspect of our inclusive lending. So those are some of the aspects we are strongly focusing on to make a much more meaningful impact. We also have the youth who are entrepreneurial, but similarly, lack access to collateral. So, from a sustainability angle, we are pursuing partnerships and product innovations that will see us make a more meaningful impact in these vital segments.
We also have in place products and solutions that speak to our sustainability agenda such as alternative energy and energy efficient financial solutions.
We also have opportunities to partner with like-minded organisations, such as Kampala City Council Authority (KCCA) and National Forest Authority (NFA) to plant trees so that we can further contribute to sustainability in this country.
Does that mean, the same standards will be extended to the projects that you finance? Will you be requiring them to show a higher commitment to sustainability, especially the planet/environment?
Yes. We are revising our policies to make sustainability stronger. We won’t be able to finance projects, or ventures that degrade our environment. We shall not finance housing projects in protected areas for example. It is a deal breaker. Protecting our environment is something that we are passionate about.
You did mention that this 2023, the bank is firmly on its 5-year strategy. Given the progress so far, would you say you are on course to meet the strategic objectives? Looking ahead, what are some of the things that you have your hands on that we can expect in the coming days?
One of the things we have our eyes and hands on is bridging the 2.4 million housing deficit. We have already started key engagements with various like-minded institutions that will see us evolve and offer better solutions to our customers. The strong engagements should also enable us to support further developments in the housing sector. We are looking for interventions that will address both the demand and supply side because it is not just enough to supply loans. We are also looking at how to stimulate supply at all levels of the market, especially the middle and lower segments, such that there are both housing products as well as financing solutions for someone earning UGX500,000 as well as a boda-boda rider.
The digitization of the bank is also another key pillar for us- not just because it enhances the customer experience and convenience through self-service but because it is also key for financial inclusion, as it allows us to cut down the cost of delivery and therefore translate that into increased penetration and reduced cost of finance. We want to have more empowered customers, that can initiate transactions and conclude them remotely. These are some of the things we are focusing on in our strategy and impact our customers positively.
Housing Finance Bank has in its history experienced the fastest growth in the last 5 years, which also happens to be the time you have been in charge of the bank. What is the story behind the story of this growth? What do you attribute it to?
It is really about our obsessive focus on customers. We have done certain things, I must say thankfully well, and one of them is working as a team. Team cohesion and unity of purpose have been very key for us. Internally, we focused on staff as our people are a very big aspect of how we can do things differently.
Externally, we have maintained our focus on the customer. Daily we continue to challenge ourselves on what we can do differently for the customer. That is why we are so much into leveraging technology to delight the customer and improve efficiency and convenience while reducing the cost of service and finance to us and the customer. I believe the customer has then rewarded us with the growth that you see.
All the above are part and parcel of our relentless execution of our strategy.
As per the Auditor General’s reports, Housing Finance Bank is one of a few government-owned parastatals that are performing well- both in governance and profitability. Are there some lessons and insights that you have learned on how to run a successful government business that your peers in other government agencies and businesses can learn from? Does the government have any business being in business?
I want to dispel the fallacy that government institutions cannot do well. I want to dispel the notion that government institutions are or should be laid-back, laissez-faire, bureaucratic and non-competitive. I know that with the right leadership, government institutions can excel, and in some economies, they surpass private sector entities. Yes, the private sector is good but I can assure you that government institutions and parastatals can do very well.
One of the major aspects of running a successful government business is governance and leadership. We have had a very experienced and supportive board, in terms of good corporate governance, holding us to the highest standards of accountability, especially on strategy execution.
Then the second pillar is having a strategy in place and executing it to the letter. Many government institutions often have very good strategies but there are gaps in strategy execution, monitoring and holding each other accountable. Strategy ownership and execution is a discipline. Again this is where the firmness of the board is key. I believe that having the firmness to execute a strategy is a very good discipline. I also believe that it is important to have the right people with the right skills and attitude, motivating and rewarding them for a good job done, and holding them accountable where they fail. The people also need to be continuously sharpened to respond to the changing environments and evolving stakeholder needs. Then there must be strategy ownership at all levels and then empowered to act.
These aspects can drive performance and sustainability in every organisation⏤ both for profit-making and non-profit-making government organisations. If these issues are allowed to prevail, government organisations can work 100% efficiently.
Then, every organisation must have its value beliefs- the culture that defines how they will behave in pursuit of their strategy. The organisation has to set limits on what it can and can’t do as it pursues its strategy.
As a person, as a leader; what would you say is your leadership style? How do you manage to keep sane in the fast and furious lane that leadership of such a large institution can sometimes get?
Well, the most important thing is first recognising that you are working with people⏤ who like you, have their strengths and weaknesses, and have aspirations as well as their highs and lows. And all these are always on the move. This then challenges you to daily challenge yourself to lead better than you did yesterday. So I am always asking myself, how do I keep on improving, seeing and working towards a better tomorrow than yesterday-Kaizen. I also earlier mentioned the need to focus on people. My people are a very biggest concern- teamwork, their welfare and maintaining oneness.
Perhaps even more important, is something I call, the “Attitude of Gratitude”. Man is not an island; we all work with people. You have to recognise your people and have that inbuilt in your systems. As leaders, we have to embrace and purpose to thank the people that we work with every day. Can we embrace an attitude of gratitude for our people; even if they are paid to do what they are doing? After all, we all are paid to do what we are doing. Gratitude from a leader, from a line manager; every day, and all the time can indeed create phenomenal results.
Lastly, I also find time to exercise, although I sometimes fail in my routine. I also get time off the weekend for farming as well as attending family and social gatherings. Spending a day at the farm comes in handy to restore some semblance of sanity, amidst the bustling activities that come with the territory.