Our banking industry lacks honesty with customers

By Ben Ssebuguzi

Customer communication refers to the process through which a business can share valuable information with customers to create a good customer experience. It is a good customer retention strategy because it creates honesty and integrity between the customer and the service provider. 

The irony with many of our so-called banks is that they are performing below the belt. Sandra (not her real name) is one of the industrious, innovative young girls in business based in Kampala who has defied the odds to start a business and sustain it for about 5 years, something not very common with many Ugandan startups where few start-ups can celebrate their first anniversary. According to Shakib Nsubuga, an expert in the SME sector,  75% of businesses die in their first year. 

Sandra is one of the resilient ladies who continued to make good turnover even when many were complaining about the brunt of covid 19. She is able to pay for her business premises and where she stays on top of taking care of ageing parents. Surprisingly she doesn’t beg men because she is a devoted born-again Christian in Phaneero.In her enterprise, she juggles selling children new and second-hand clothes on top of being a designer of unique fabrics some of which she knits with a needle to come up with a rare product which she sells to her higher-end customers and those abroad like The US through using internet or e-business.

 She is a budding powerful exporter which helps us earn foreign currency as a country and with a higher prospect of employing more Ugandans. With the higher need for working capital, I advised her to start establishing a rapport with banks if she wants to have reliable capital to grow her business to greater heights and build a bright future. I used my connection in Finca Bank, ntinda branch for a small business loan of Shs 3m only. As an economist and President Yoweri Museveni envoy in the community, I wanted to see her soaring in the sky like an eagle by standing as a guarantor for her so that I could be part of her success journey. 

She visited the bank and was advised to open up an account first which she did with higher hopes, As a guarantor I signed some loan papers and follow-up visits to her business and her home to ascertain her eligibility for the loan were made. I learnt that the credit officer told her to produce her trading licence or TIN to be available during his next visit after two days. 

To cut the story short, it is now about 2 weeks of fruitless waiting for even an email or phone call to update their potential customer. To my assessment stock in her business was worth about Shs 12m which would quickly qualify her. Stunningly there is no progress and the credit officer hasn’t gotten to her back now after about two weeks. Where is the genuine heart of the credit officer? Do our banks have a client charter to guide their relationship with customers?

The Umbrella Association of Banks, The Uganda Banks Association (UBA)  and the Bank of Uganda should do their best to guide their members on her to improve their services to clients in order to increase confidence in the financial sector to facilitate the growth of private sector. Currently, some of our banks over-promise and under-deliver which has led to the frustration of many Micro Small and Medium enterprises which is hampering job creation. 

During the captivating dialogues at the Uganda-EU high-level Business summit held at Munyonyo recently, it was discovered that one of the challenges of SMEs was the access to finance among others. The Sustainable Business for Uganda fund (SB4U), a financial facility from the EU for Ugandan entrepreneurs will go a long way in solving some of the challenges faced by small businesses in Uganda.

Access to Financial services remains a primary impediment to the growth and competitiveness of Uganda’s economy. In order to reduce that challenge, the government of Uganda under the National Chairman of NRM and President of Uganda undertook different financing measures like the Women’s Entrepreneurship Fund, Emyooga and Parish Development model where over Shs 1trillion has been injected in the later to reduce those  capital needs 

Additionally, the manager of the Office of the National Chairman, Hajjat Hadijjah Uzeiye Namyalo has also been very pivotal in addressing the capital needs of many underprivileged youth groups across the country through donating self-empowerment tools like sawing machines, welding machines, grinding machines, saloon equipment among others which have bridged the financing gap. 

In conclusion, the poor conduct of some Banks should not be left on its own by different players but there should be a concerted effort to address this challenge because it can retard the growth of private sector credit uptake which can even slow down the attainment of our National development goals.

For example, according to the 2023 BoU report of January -March, banks extended credit worth only Shs 531.96 to the private sector but declined to approve Shs 468.16 worth of applications, which implies that almost 50 per cent of loan applications are turned down hence killing the ambitions of our country. Private sector banks should be seen as vehicles of the social economic transformation of our country. 

Ben Ssebuguzi is the Head of Research at the Office of the National Chairman (ONC)