John Ddumba - Ssentamu Vice Chancellor, - PowerPoint Presentation

Slide1

John Ddumba-Ssentamu

Vice Chancellor, Makerere University and Chairman, Board of Directors, Centenary Bank, Uganda

1

Centenary Rural Development Bank (CB)

Brief backgroundEstablished by the Roman Catholic Church as a trust fund in 1983, known as Centenary Rural Development Trust Started

financial operations in 1985

Became a commercial bank in 1993 and changed its name

to Centenary Rural Development BankBrand name is Centenary Bank….our bank

2

Ownership of the Bank

Both local and foreignRoman Catholic Church- 69.8%Stichtins Hivos-Tridos Funds based in the Netherlands- 18.3%SIDI (International

Solidarity

for

Development) based in France- 11.6%Individuals- 0.3%

3

Bank Mission

“To provide appropriate financial services especially microfinance to all people particularly in rural areas in a sustainable manner and in accordance with the Law”In line with the mission, the bank serves rural areas and reaches the lowest segments of society.

Over 80% of the loans are micro loans

4

Growth of the bank

Has maintained its growth momentum with total assets at UgX 2.3 Trillion.Growth rate of 23.6% over a period of 17 years2016 Profit was UgX 109 Billion.Loans and advances stand at UgX

124.7 Billion

Deposits stand at

UgX 162.7 Billion.Deposit accounts currently stand at 1,482,617 as opposed to 236,000 in 2003.

Please note that (1 USD=

UgX

3500)

5

Growth of the bank (cont’d)

Banks’ market share is 23.9% of all deposit accounts in Uganda that currently stand at 6.2 million.Market share of total assets - 9.6%Market share of total deposits - 9.9%Market share of total loans in the country - 10.9%The bank is ranked 2

nd

in terms of profitability

Overall position of the bank country wide is 3rd out of 24 banks

6

Bank branch network

Currently stands at 69 branches In terms of branch network, CB is ranked 2nd 172 automated teller machines (ATMs) in 2016 as opposed to 20 branches and 10 ATMs in 2003.

7

8

Constraints to Financial Inclusion in Uganda

Poor infrastructure- road network and communication has limited coverage and delivery of financial services

Very few financial service outlets reaching out to the weak section of the population

Financial institutions are out of touch with rural masses and make little effort to seek ways of reaching them.

Limited and inappropriate financial instruments for the poor.

9

Constraints to Financial Inclusion in Uganda (cont’d)

Conventional collateral requirements exclude the poor. Normally collateral requirements correspond the situation of the relatively well off urban dwellers.Complex administrative procedures are beyond the understanding of the rural masses and small savers.Loan applications procedures are complex and require writing and reading skills.

10

Constraints to Financial Inclusion in Uganda (cont’d)

High interest rates-an issue which raises problems of accessibility for the poor.Formal banks consider the poor to be high risk and higher cost and therefore low return.Poor banking habits partly explained by poverty illiteracy and lack of awareness financial services.

11

Centenary Bank and Financial Inclusion

One of the strategies of the bank is financial inclusion. Since its inception, the bank has tried to extend its services to the following groups which other commercial banks exclude:-

U

nder

privileged in the rural and urban areas including low income households, small farmers , vendorsPeople engaged in the informal sector activities Women

Majority of students

Old people

Physically challenged individuals

Small scale enterprises

12

Centenary Bank and Financial Inclusion (cont’d)

Deliberate effort to reach out to the poor and low income groups through the provision of affordable financial services tailored to their needs.

CB has been setting up small

sub

branches (service centres) with

lean structures in rural areas.

- Keeping

structures lean particularly in rural areas have

led

to substantial reduction in administrative costs

.

13

Centenary Bank and Financial Inclusion (cont’d)

Commitment to business and profit growth initiatives- Achievement of Inclusive growth: a growth process based on fuller participation of all population segments- Poverty reduction: raises the average income at the household level leading to improvement in standard of living

- Better

health- better education- better housing- better nutrition.

Product design tailored to clients needs

Improving access through proximity and affordability of services

14

Centenary Bank and Financial Inclusion (cont’d)

Linkage banking

Centenary Bank has

arrangements with third parties to improve availability, accessibility and affordability of financial services to the groups and their members.

-

Third

parties include

Microfinance

D

eposit

T

aking

I

nstitutions (MDIs),

Savings and Credit Cooperatives (SACCOs) and Village Savings and Loan Associations (VSLAs

).

15

Centenary Bank and Financial Inclusion (cont’d)

To overcome the challenge of poor infrastructure, CB is proposing digital banking.

-Digital banking;

involves provision of services through digital platforms.. The objective is to grow our mobile banking subscribers to about 700,000 by end of year 2017, automate mobile banking registration to include:

- account opening,

- provide Microloans using Mobile Phones and

- introduce internet banking.

16

Centenary Bank and Financial Inclusion (cont’d)

Government should play the leading role in the improvement in the rural infrastructure in terms of transport, communication facilities and energy.Financial institutions should introduce new technology into the delivery of financial services to the poor.

17

Centenary Bank and Financial Inclusion (cont’d)

High interest rates:- an issue that raises problems of accessibility for the poor. CB acknowledges that this is still a challenge and this is because of the high cost of intermediation since the bank mainly deals with microfinance

.

CB proposes to minimise this problem through linkage banking

to overcome the high levels of illiteracy among the lower income groups.

To overcome high levels of illiteracy

and lack of awareness of financial

services,

CB emphasizes financial

literacy. This will enhance

financial inclusion

among

the lower income groups.

18

Conclusion

CB has provided access to flexible, convenient and affordable financial services that empower and equip the poor to build their way out of poverty in a sustained and self determined way.There has been registered increase in access, usage and quality of products and services

provided by Centenary Bank.

19

Thank you for your attention!

20