Uganda is not very good at promoting itself, says Patrick Mweheire, Stanbic Bank Uganda’s chief executive. The country has very many unexplored economic opportunities, and is a key component in sub-Saharan Africa’s growth prospects; this however, barely features in our media, he said.
Mweheire’s talk, on Wednesday evening at the African Centre for Media Excellence in Kampala, was a positive yet measured outlook on Uganda’s economy in the medium term. And because he heads the country’s largest bank, he also spoke at length about proposed interest rate caps, bailouts, and a recent public relations nightmare in which his name featured prominently.
“We have some really good investment highlights,” he said, wondering why journalists in Uganda do not point this out more often in their publications like the Kenyans and Nigerians do. “Fifty percent of the arable land in East Africa is in Uganda; that includes Kenya, Tanzania, Rwanda Burundi. That should be a bumper sticker somewhere, but I have never seen it.
“We’ve got this demographic dividend coming, we’ve discovered oil. We’ve been growing at 6% for the last 15 years.
On the regulatory delays in the oil sector which have pushed back the first date of oil production, Mweheire says Uganda is still set to benefit from the activities and investment that will follow the recent issuance of oil production licences.
“There is a lot of talk about oil and gas and there is a lot of excitement about first oil: is it 2020, is it 2021, is it 2022? And we seem to obsess on the wrong thing, at least from my humble opinion. Because, when I do some quick calculations on what sort of money is going to be invested in Uganda; just add three feed projects: pipeline – $4 billion, refinery – let’s round it up to $4 (billion), that’s eight. Upstream development in oil and gas is $9 (billion); that’s $17 billion.”
If you aggregate the value of the projects that will be undertaken in the next ten years, which rounds up to about $20 billion, the numbers are “transformational” considering that Uganda’s gross domestic product is currently about $25 billion, he said.
But in situating Uganda’s stronger economic grounding on the continent versus other economies, he cautioned against putting too much hope in oil windfalls. “The fortunes have changed; East Africa is going to play a much bigger role. In fact, we are beginning to see that much foreign direct investment is beginning to flow a lot quicker into these East African economies as the Angola’s, Mozambique’s, and Nigeria’s face ordeals with their own structural issues.
“Which is remarkable because you look at all those countries and this is a lesson for Uganda because we will be an oil producer soon. They budgeted oil at $95, $100, so their budgets are completely sideways because oil is at $40 a barrel. Russia budgeted at $90 per barrel. So, fiscal planning and reality is really important.”
Indeed, the narrative that East Africa’s diversified economies will drive Africa’s growth in the next decade or so following a turn in the fortunes of countries dependent on natural resources has taken root, and has featured in several recent reports.
Mweheire also cautioned against capping interest rates. He dismissed the claim that the rates are very high and exploitative, saying they are fair given the risks banks take when lending in a high-default environment and the cost of doing business. Drawing examples from other countries that have put caps on interest rates, he argued that they will create more harm than good should they be introduced here.
The publicity nightmare came at the very end, brought up by ACME’s Director of Programmes, Bernard Tabaire. Mweheire said the social media outrage following his apology letter to the minister accused of assaulting a female security guard arose from a misunderstanding. The minister did not hit the guard, and his apology was because “I am trying to drive a service culture in my bank,” he said.
“But anyway, we have apologised to both and I think the story has died, the facts are out there,” he said. “I will never write another letter in my life; so you’ve got the desired outcome.”