A senior lecturer at Makerere University has sued Bank of Uganda for using her artistic works on the Shs20,000 note without her consent. Sylvia Nabiteeko Katende, a senior lecturer at Makerere University’s Margaret Trowel School of Industrial Art in the Department of Sculpture and Drawing, says the sculpture on the left hand face of the Shs20,000 note is part of her artistic works, and that the Central Bank used it without her approval.
Karuhanga, Tabaro & Associates filed a suit on behalf of Nabiteeko in the High Court ten days before Christmas. The suit is valued at Shs1 bn and above. Bank of Uganda was expected to lodge its defence by New Year’s Eve.
The case is expected to delve into the murky debate of copyright, where establishing proof of ownership beyond reasonable doubt is never easy. The suit is also a stern test for Uganda’s copyright law, which has been the subject of dispute in Uganda’s arts and culture industry, and has on many instances been labeled weak.
Yet this case is bound to raise far more interesting questions about the manner under which the Central Bank hired the professionals to design the notes, throwing at the centre of the dispute a name that occupies a special place in Uganda’s recent history; General Elly Tumwine. That Tumwine is also a patron of Makerere University’s Margaret Trowel School of Industrial Art, makes this case the more fascinating.
Thursday, December 30, 2010
Saturday, December 11, 2010
Tullow denies WikiLeaks bribery revelations
Tullow has distanced itself from the revelations attributed to it over two Uganda ministers who allegedly received a bribe to push for ENI’s bid to buy Heritage Oil’s assets late last year. Tim O’Hanlon, Tullow’s Vice President for Africa, is said to have told the US ambassador to Uganda, Jerry Lanier, that Amama Mbabazi, the Minister of Security, and Hilary Onek, the Minister of Energy, received money from Italian oil firm, ENI, in a bid to buy Heritage Oil’s assets, according to documents released by whistleblower website, WikiLeaks.
However, O’Hanlon, now says that his private discussions on the issue were based on rumours circulating around Kampala, and that he has no reason to believe there was any truth in them. During the private conversation with Lanier, O’Hanlon said Mbabazi was ENI’s ‘patron’ in Uganda.
However, O’Hanlon, now says that his private discussions on the issue were based on rumours circulating around Kampala, and that he has no reason to believe there was any truth in them. During the private conversation with Lanier, O’Hanlon said Mbabazi was ENI’s ‘patron’ in Uganda.
Brokers in financial dilemma
When MBEA Brokerages Limited, Uganda’s oldest brokerage house, lost its licence at the start of July this year due to its failure to raise enough money to run its business, the firm’s financial problems was not an isolated case. More brokers continue to face wider problems of raising cash within Uganda, and many of them have run back to their shareholders for a rescue package.
Five firms made losses during the year 2009, according to the latest industry figures. ReNaissance Capital, the Zimbabwean firm, made the biggest net loss last year, losing a whopping Shs1.2 bn ($518,000). ReNaissance faced quite a difficult 2009 as it had its licence suspended for three months for failing to raise the minimum required capital of Shs 15 million. A few months later, the company blacklisted some of its top managers in what the market perceived as a punishment for dragging the business to the doldrums.
African Alliance, which is said to have the highest number of clients in the market, made the second highest loss for 2009, Shs655 million ($283,000).
Both ReNaissance Capital and African Alliance have a common problem beyond the net losses they each made last year; they are the two broker dealers that had, by 2009, spent more than one billion shillings of their reserves in order to keep their businesses alive. Reserves are very sensitive as they represent the last fallback position for a company short of cash.
While it is difficult to verify whether these numbers have changed for the better over the last couple of months, the bleak picture, nevertheless, is the strongest representation so far of the difficulties brokerage firms face while doing business in Uganda.
Some financial analysts, like those at MBEA Brokerages, blame the gloomy numbers to the impact of the global financial crisis, which saw many foreign investors pull their funds out of Uganda’s market in favour of safer havens abroad.
But one financial analyst says there is more to this story than just the global financial crisis. According to the analyst, who preferred to remain anonymous due to his close relationship with the industry, for a long time many brokers placed bets on certain counters like Uganda Clays Limited, driving the price to wild levels during the process. Thereafter the brokers would dump the shares at lucrative price, raking in some big bucks.
For a long time, many brokers easily got away with pushing up the value of the shares of some of these companies because many clients gave them the flexibility to determine the price during transactions. Brokers usually tell clients not to set a price limit during transactions, advising them instead to set a wider margin above the target price – something that the brokers have exploited to make off quick gains.
With high demand during the glory years when share prices grew to unbelievable levels, brokers made some good money along the way on top of the 2% transaction advisory fees. Some say that some brokers colluded with top institutional investors to drive up share prices with a promise of a win-win situation.
However, the year 2009 turned out to be quite different. There was subdued demand on the stock market, and the National Social Security Fund, the largest investor on the market, suspended its participation after Parliament lodged investigations into some of the fund’s investment decisions.
Just as an example that Uganda’s market is still far from the boom years when share prices of companies like Uganda Clays Limited and New Vision Limited grew in leaps and bounds, the USE’s quarterly bulletin for July – Sept 2010, indicates that trading results in the third quarter posted a decline in performance with the total turnover dropping to Shs3.9 bn ($1.6 million) from the previous quarter’s Shs8.6 bn ($3.7 million), while volume recorded a 65% drop, declining from 67.7 million shares in the second quarter to 23.1 million.
Dyer and Blair made a net loss of Shs 185.6 million ($80,000) in 2009, although the company retains quite a substantial amount of reserves. The company’s image came under attack in 2008 after investors grew frustrated in the way the firm had handled their returns after the sale of Safaricom shares to the public was oversubscribed. The firm is said to have lost a number of customers along the way, something which might have manifested in the company’s 2009 figures.
Crested Stocks did not perform any better either; the company recorded a net loss of Shs72.7 million ($31000) and has drawn about Shs192 million ($83000) of its reserves. Crested Stocks is the company that was entrusted with clients from MBEA Brokerages Limited after the latter’s license was withheld in June this year.
Equity Stock Brokers had the smallest amount of net loss, Shs 21 million ($9000), although the firm’s thin net capital, of just Shs50 million ($21,000) as at June 2010, means that it is in need of a quick cash injection. Ideally, Equity Stock Brokers could turn to its reserves but the amount there, just Shs1.2 million ($518) as at end of 2009, is not substantial.
With the so called big firms facing trouble, there has been a shift in power of the brokers now with the bragging rights. Baroda Capital Markets, a broker within Bank of Baroda, was the most profitable company in 2009, raking in a modest net profit of Shs14.7 million ($6200). Although, Baroda Stock Brokers largely depends on the Bank of Baroda counter to make money, and those who know it say the firm is not as solidly structured as African Alliance.
Crane Financial Services, a subsidiary of Meera Investments under the Ruparelia Group, comes closely at second position after recording a net profit of Shs9 million. However, Crane Financial Services is more solid than any of the other firms, boasting of the highest amount of net capital and reserves in the industry. The firm has close to Shs 500 million ($216,000) in net capital and Shs315 million ($136,000) in reserves.
At least four brokerage houses have either written to their shareholders for a bailout package or have already received it. According to exclusive information gathered by Striking Deals, African Alliance is to receive a Shs1 bn capital injection soon. ReNaissance Capital has over the last two years received about Shs3.5 bn ($1.5 million) from its shareholders, with many signs pointing to more money coming in. Crested Stocks has so far been capitalized by Shs220 million ($95,000), while the Board of Directors at Equity Brokers have agreed to pump in Shs100 million ($43,000) in the business, with Shs80 million ($34500) already injected.
So why are these brokers receiving more capital injections in a market with no brisk business? Some experts say that brokers have been blinded by the faith that Uganda’s financial market industry is set for a fundamental change when the pension industry is finally liberalized. “They are putting on this image that they are ready,” says one market expert.
The liberalization of the pension industry, however, is being held back by the slow progress on enacting the law to govern the sector. And there is no clear deadline as to when the pension industry will be opened up.
So, that the mighty brokers are finding it difficult to remain profitable in Kampala should be a concern to clients dealing in stocks. Faced with such huge financial dilemma, many of the brokers will find it tempting to engage in some risky ventures that could eventually impact on earnings on the customers’ money and on the entire image of the market, say some experts.
Another financial expert who did not want to be named due to the close relationship with players in the market pointed out that the biggest problem for the brokers is that they do not have major shareholders to inject money in the business. “They (brokers) mainly depend on trades on the market, and if the volumes are low it means they are affected,” he said.
Five firms made losses during the year 2009, according to the latest industry figures. ReNaissance Capital, the Zimbabwean firm, made the biggest net loss last year, losing a whopping Shs1.2 bn ($518,000). ReNaissance faced quite a difficult 2009 as it had its licence suspended for three months for failing to raise the minimum required capital of Shs 15 million. A few months later, the company blacklisted some of its top managers in what the market perceived as a punishment for dragging the business to the doldrums.
African Alliance, which is said to have the highest number of clients in the market, made the second highest loss for 2009, Shs655 million ($283,000).
Both ReNaissance Capital and African Alliance have a common problem beyond the net losses they each made last year; they are the two broker dealers that had, by 2009, spent more than one billion shillings of their reserves in order to keep their businesses alive. Reserves are very sensitive as they represent the last fallback position for a company short of cash.
While it is difficult to verify whether these numbers have changed for the better over the last couple of months, the bleak picture, nevertheless, is the strongest representation so far of the difficulties brokerage firms face while doing business in Uganda.
Some financial analysts, like those at MBEA Brokerages, blame the gloomy numbers to the impact of the global financial crisis, which saw many foreign investors pull their funds out of Uganda’s market in favour of safer havens abroad.
But one financial analyst says there is more to this story than just the global financial crisis. According to the analyst, who preferred to remain anonymous due to his close relationship with the industry, for a long time many brokers placed bets on certain counters like Uganda Clays Limited, driving the price to wild levels during the process. Thereafter the brokers would dump the shares at lucrative price, raking in some big bucks.
For a long time, many brokers easily got away with pushing up the value of the shares of some of these companies because many clients gave them the flexibility to determine the price during transactions. Brokers usually tell clients not to set a price limit during transactions, advising them instead to set a wider margin above the target price – something that the brokers have exploited to make off quick gains.
With high demand during the glory years when share prices grew to unbelievable levels, brokers made some good money along the way on top of the 2% transaction advisory fees. Some say that some brokers colluded with top institutional investors to drive up share prices with a promise of a win-win situation.
However, the year 2009 turned out to be quite different. There was subdued demand on the stock market, and the National Social Security Fund, the largest investor on the market, suspended its participation after Parliament lodged investigations into some of the fund’s investment decisions.
Just as an example that Uganda’s market is still far from the boom years when share prices of companies like Uganda Clays Limited and New Vision Limited grew in leaps and bounds, the USE’s quarterly bulletin for July – Sept 2010, indicates that trading results in the third quarter posted a decline in performance with the total turnover dropping to Shs3.9 bn ($1.6 million) from the previous quarter’s Shs8.6 bn ($3.7 million), while volume recorded a 65% drop, declining from 67.7 million shares in the second quarter to 23.1 million.
Dyer and Blair made a net loss of Shs 185.6 million ($80,000) in 2009, although the company retains quite a substantial amount of reserves. The company’s image came under attack in 2008 after investors grew frustrated in the way the firm had handled their returns after the sale of Safaricom shares to the public was oversubscribed. The firm is said to have lost a number of customers along the way, something which might have manifested in the company’s 2009 figures.
Crested Stocks did not perform any better either; the company recorded a net loss of Shs72.7 million ($31000) and has drawn about Shs192 million ($83000) of its reserves. Crested Stocks is the company that was entrusted with clients from MBEA Brokerages Limited after the latter’s license was withheld in June this year.
Equity Stock Brokers had the smallest amount of net loss, Shs 21 million ($9000), although the firm’s thin net capital, of just Shs50 million ($21,000) as at June 2010, means that it is in need of a quick cash injection. Ideally, Equity Stock Brokers could turn to its reserves but the amount there, just Shs1.2 million ($518) as at end of 2009, is not substantial.
With the so called big firms facing trouble, there has been a shift in power of the brokers now with the bragging rights. Baroda Capital Markets, a broker within Bank of Baroda, was the most profitable company in 2009, raking in a modest net profit of Shs14.7 million ($6200). Although, Baroda Stock Brokers largely depends on the Bank of Baroda counter to make money, and those who know it say the firm is not as solidly structured as African Alliance.
Crane Financial Services, a subsidiary of Meera Investments under the Ruparelia Group, comes closely at second position after recording a net profit of Shs9 million. However, Crane Financial Services is more solid than any of the other firms, boasting of the highest amount of net capital and reserves in the industry. The firm has close to Shs 500 million ($216,000) in net capital and Shs315 million ($136,000) in reserves.
At least four brokerage houses have either written to their shareholders for a bailout package or have already received it. According to exclusive information gathered by Striking Deals, African Alliance is to receive a Shs1 bn capital injection soon. ReNaissance Capital has over the last two years received about Shs3.5 bn ($1.5 million) from its shareholders, with many signs pointing to more money coming in. Crested Stocks has so far been capitalized by Shs220 million ($95,000), while the Board of Directors at Equity Brokers have agreed to pump in Shs100 million ($43,000) in the business, with Shs80 million ($34500) already injected.
So why are these brokers receiving more capital injections in a market with no brisk business? Some experts say that brokers have been blinded by the faith that Uganda’s financial market industry is set for a fundamental change when the pension industry is finally liberalized. “They are putting on this image that they are ready,” says one market expert.
The liberalization of the pension industry, however, is being held back by the slow progress on enacting the law to govern the sector. And there is no clear deadline as to when the pension industry will be opened up.
So, that the mighty brokers are finding it difficult to remain profitable in Kampala should be a concern to clients dealing in stocks. Faced with such huge financial dilemma, many of the brokers will find it tempting to engage in some risky ventures that could eventually impact on earnings on the customers’ money and on the entire image of the market, say some experts.
Another financial expert who did not want to be named due to the close relationship with players in the market pointed out that the biggest problem for the brokers is that they do not have major shareholders to inject money in the business. “They (brokers) mainly depend on trades on the market, and if the volumes are low it means they are affected,” he said.
Tuesday, April 13, 2010
Tamoil To Sign $300 Million Final Investment Decision Next Week
Officials of Tamoil East Africa Limited, and members from Kenya and Uganda are to meet in Kampala on April 19, and probably sign the Final Investment Decision (FID). The FID remains the only missing paper work that is needed for construction on the pipeline to begin. The pipeline will go through nine districts in Uganda. In the picture is Habib Kagimu, the Chairman of Tamoil.
However, Striking Deals can reveal that there is high tension between top officials of the Libya backed Tamoil and Uganda’s Energy Minister, Hilary Onek, over the latter’s comments that Tamoil had failed to start work and was offering petty excuses for the delay.
Tamoil has also revised the cost of the project from the $78.2 million that it quoted when it bid for the project in 2006 to $300 million.
Wednesday, April 7, 2010
Cobalt Firm Looking At Kilembe Mines Limited For Its Survival
Kasese Cobalt Company Limited is banking on the revival of a neglected government parastatal, which has been out of business for more than 30 years, for its survival.
Kasese Cobalt Company Limited has three years to close shop. The company is weighed down by huge amounts of debt, and the cobalt that it produces is not profitable at all to keep the business running.
However, officials at the company believe that the reopening of Kilembe Mines Limited could give it a new lease of life.
Government is seeking to enter into a joint venture with a private company to reopen Kilembe Mines Limited. Any investor wishing to take over the company has to buy more than 51% of the shares in the company, according to one of the requirements, while the option of the investor taking up full ownership of the company at a future date remains a strong possibility. Government wants Kilembe opened within two years.
However the dangers that the toxic waste that could arise out of Kilembe, if it resumes production, have boosted hope within Kasese Cobalt Company Limited of being contracted to manage this toxic waste.
Kilembe Mines Limited is no stranger to destroying the environment. During its peak years in the late seventies, Kilembe Mines Limited dumped waste material just outside its premises. This toxic waste later on formed an acid trail that finally flowed into Lake George, contaminating the lake. Also, huge chunks of the green vegetation in places such as Queen Elizabeth National Park were wiped out due to this toxic waste.
Using funds from different players, Kasese Cobalt Company Limited has since 1999 built a 12,500 cubic metre acid pond into which the remaining acid trail from Kilembe’s dumped wastes flows. In buying time, Kasese Cobalt also wants to boost its production of cobalt.
Kasese Cobalt Company Limited has three years to close shop. The company is weighed down by huge amounts of debt, and the cobalt that it produces is not profitable at all to keep the business running.
However, officials at the company believe that the reopening of Kilembe Mines Limited could give it a new lease of life.
Government is seeking to enter into a joint venture with a private company to reopen Kilembe Mines Limited. Any investor wishing to take over the company has to buy more than 51% of the shares in the company, according to one of the requirements, while the option of the investor taking up full ownership of the company at a future date remains a strong possibility. Government wants Kilembe opened within two years.
However the dangers that the toxic waste that could arise out of Kilembe, if it resumes production, have boosted hope within Kasese Cobalt Company Limited of being contracted to manage this toxic waste.
Kilembe Mines Limited is no stranger to destroying the environment. During its peak years in the late seventies, Kilembe Mines Limited dumped waste material just outside its premises. This toxic waste later on formed an acid trail that finally flowed into Lake George, contaminating the lake. Also, huge chunks of the green vegetation in places such as Queen Elizabeth National Park were wiped out due to this toxic waste.
Using funds from different players, Kasese Cobalt Company Limited has since 1999 built a 12,500 cubic metre acid pond into which the remaining acid trail from Kilembe’s dumped wastes flows. In buying time, Kasese Cobalt also wants to boost its production of cobalt.
Friday, April 2, 2010
Two Ugandan Managers Leave Top Foreign Firms
Two Ugandan nationals holding high positions in some of the largest foreign companies in the country have stepped aside. Charles Nalyaali, the Managing Director at Kenya’s Equity Bank, and Francis Kazinduki, the Chief Technical Officer at South Africa’s MTN Uganda, the largest company in Uganda, have left their positions amidst unclear circumstances.
The departure of Nalyaali, the founder of Uganda Microfinance Limited, the company that Equity Bank bought in 2008, had raised tension within the market over Ugandan nationals being sidelined from top positions in foreign companies. Equity Bank today came out to publicly explain that Nalyaali had attained the normal retirement age as stipulated in the bank’s policy.
Nalyaali’s position remains vacant. Equity Bank is now calling for application forms.
For Kazinduki, who has been at MTN for about a decade, his departure remains unclear. Kazinduki is said to be replaced by a Lebanese.
The departure of Nalyaali, the founder of Uganda Microfinance Limited, the company that Equity Bank bought in 2008, had raised tension within the market over Ugandan nationals being sidelined from top positions in foreign companies. Equity Bank today came out to publicly explain that Nalyaali had attained the normal retirement age as stipulated in the bank’s policy.
Nalyaali’s position remains vacant. Equity Bank is now calling for application forms.
For Kazinduki, who has been at MTN for about a decade, his departure remains unclear. Kazinduki is said to be replaced by a Lebanese.
Thursday, April 1, 2010
Global Trust Bank Receives $12.5 million. But Not All Is Well!
Finally, Global Trust Bank, owned by Nigeria’s Industrial and General Insurance Company, has received a new lease of life – a Shs 25 billion (about $12.5 million) bailout package from its shareholders.
The company recently released a press release which pointed out that the fresh capital is meant to “shore up the company’s capital base and competitively position it for business growth.” The press release further adds that “the injection of capital into the bank by our shareholders is a measure of their commitment to the enterprise as well as a restatement of their firm belief that Global Trust Bank has a great future.”
What the press release does not say is the bank’s financial dilemma, where huge loans and advances have gone bad, while the banks’ reserve capital fund had almost been stripped bare throughout the first three quarters of last year. This has led to a lot of speculation within the industry about the bank’s financial health.
The bank, in its first full year of operation in Uganda, is expected to announce a loss in the region of $1.5 - $3 million for 2009 when it finally releases its financial statement anytime from now. That announcement is expected to come under sharp focus by shareholders of National Insurance Corporation, Global Trust Bank’s sister company. NIC had benchmarked its profitability for 2010 on the strong synergies it has with Global Trust Bank.
Welcome to STRIKING DEALS with Jeff Mbanga
Today marks a very important day for me. It is the day I begin blogging on financial matters within Uganda, and those outside but have an effect on Uganda. It is an idea that I have thought over for a long time.
Let me welcome you to Striking Deals with Jeff Mbanga.
Part of the reason for starting this blog is to make meaning of the numerous deals happening in Uganda and abroad that never get splashed on the front pages of our newspapers here.
From this blog, you will also get to read some of the scoops about the deals being negotiated. Enjoy!
Who is Jeff Mbanga?
I am a financial journalist. I am currently the Business Editor at The Observer newspaper, a bi-weekly newspaper in Uganda that has built a reputation of breaking stories and taking on a no-holds barred approach to its editorial work.
My most important award so far is the Kikonyongo Capital Markets Journalist of the Year, 2008, where I was chosen by a team of experienced media practitioners contracted by the Capital Markets Authority, the industry regulator.
Let me welcome you to Striking Deals with Jeff Mbanga.
Part of the reason for starting this blog is to make meaning of the numerous deals happening in Uganda and abroad that never get splashed on the front pages of our newspapers here.
From this blog, you will also get to read some of the scoops about the deals being negotiated. Enjoy!
Who is Jeff Mbanga?
I am a financial journalist. I am currently the Business Editor at The Observer newspaper, a bi-weekly newspaper in Uganda that has built a reputation of breaking stories and taking on a no-holds barred approach to its editorial work.
My most important award so far is the Kikonyongo Capital Markets Journalist of the Year, 2008, where I was chosen by a team of experienced media practitioners contracted by the Capital Markets Authority, the industry regulator.
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