TAKE LESSONS FROM MILK INDUSTRY TO PRODUCE FOR EXPORTS

It was reported recently that milk production had reached record levels at 3.2 billion liters in 2022. Prior to the covid lockdown the Dairy Development Authority (DDA) announced the country had passed South Africa as the leading exporter of dairy products on the continent.

When history is written the exponential leap in milk production – it was 460 million liters in 1990, will have pride of place and may very well serve as template for the increased production of other commodities.

"Apart from coffee, which like milk’s success is due largely to small holder farmers, there is no other commodity, that has seen a leap in its fortunes like milk....

This was not by mistake and is all the more surprising given the decimation of the herds in eastern Uganda due to insurgency and cattle rustling in the 1980s and 1990s.

So, it was left to Western Uganda to carry the load. A long period of peace helped to boost milk production, but also an adoption of higher yielding exotic breeds, a program to dot the region with milk collection centers, at once created a market for milk that was previously poured down the village paths for lack of market and set the foundation for milk processing industry.

From a solitary processor, Dairy Corporation, which was itself privatized in 2006, there at are more than 135 processors to day with an installed daily capacity of above 2.89 million liters. Dairy Corporation had the capacity to process only 60,000 liters a day when it was a monopoly.

The formula can be used on any other commodity – Increase production, have collection sectors to lower logistical costs, set up processing units to suck up the increased production and open new markets for our processed output

As it is now barely a third of what we produce is consumed locally.

There two thirds of the produce is what is giving president Yoweri Museveni sleepless nights, criss crossing the globe in search of markets.

Maybe for the first time in a long while the president has something to hawk that has export-size production. Coffee is top of eth list but also sugar. The latter though has been canibalised by questionable policies that threaten our national sugar surpluses.

The trade ministry licensed other operators in the Busoga region who are poaching sugar cane from the Kakira and Sugar corporation of Uganda ltd (SCOUL) making previous investments in farmer subsidies, research and development increasingly unviable.

"Unlike coffee and milk whose back bones are the small holder farmer, if the math doesn’t add up for our biggest sugar producers, sugar shortages will not be far behind....

However, the dairy industry is far from ironing out all its glitches.

Dairy farmers in Kikuube district western Uganda were lamenting the slide in milk farmgate prices. They complained the fall from sh900 a liter to the current sh600 by their cooperative was making the enterprise unfeasible. They said with the cost of drugs and pesticides, margins are now paper thin or non-existent at all.  They inevitably called on government to put a floor under the falling prices.

This is a good indicator that despite the explosion in dairy processing capacity there are still demand-supply imbalances that need to be addressed. Hopefully by the private sector and not the government.

Thankfully we can not export raw milk. So unlike coffee we need to turn into long life milk or milk powder or its constituent proteins like Casein to export it. In theory it’s the one industry we can capture most of the value addition for ourselves.

People in the know say that for successful animal husbandry tow things are key feeding and genetics. The gains our dairy farmers have made may be down largely to feeding.

In more developed markets the genealogy of the animal, genetics, are value in themselves. Tracking an animals ancestry as far back as possible is good for several reasons but two jump to mind. That it can be certified that there has been no inbreeding, that would affect the health and quality of the animal and relatedly, that the animal has been bred for its best qualities.

Some of our best farmers are now importing semen from as far a field as the Netherlands to improve the quality of their herds, because they do not trust the local breeds. An investment in genetics and its management can ensure we get to the next level of the sector’s development and open all sorts of new markets for us....

While the sugar industry is mostly large plantation farming and our coffee bushes are rather hardy in surviving years of neglect, the delicate nature of dairy production may hold some useful lessons for us in how to increase production in other commodities and develop industry and export markets around them.

 

HACKING THE AGRICULTURE CODE

We met to talk about something else. When that was done, I found out about his farm.

I tend to roll my eyes at stories of urban elite running farms. Often, they are vanity projects, subsidized by their paychecks, that can not stand on their own without the subsidy.

My friend, I will call him Jack, made me seat up and listen when he said he had opted for crop farming over cattle farming, though he is from Kashari, long horn Ankole cow country.

I asked him why, he said he wanted to make money and the mathematics of cows did not add up for him...

So, he went off hundreds of kilometers away and got himself land in Masindi, a large expanse of which he now has 230 acres under maize.

I asked whether he went so far for fear of being laughed out of Kashari, he just laughed.

He tried soya bean, it failed. He tried coffee, the environment was too harsh, before eventually settling on maize. He has a few cows of course, wondering around, more for the aesthetics than anything, I think. They are already costing him, they have been responsible for breaking though his fence to get at the maize. Ten acres he has lost to his cows this last season.

Jack, a lawyer, who spent most of his career working abroad, counsels that it would be suicidal to go into an enterprise his size first time.

“I have been studying this for at least 20 years. I worked in Zambia for 18 years and learnt from my friends the ins and out of commercial agriculture there,” he said. And even on his current land he tried out on a small scale, things he thought would work, before jumping in with both feet.

There is a visible gleam in his eyes when he talks about how his experiment has turned out. He has so far done three years and he is keen to build up to 500 acres. Renting land in the area is about sh150,000 an acre per season. There are two maize seasons March to July/August and again from August to December.

“I think another 70 acres for maize will be good, the rest I will leave for the cows, coffee and I want to get back into soya bean,” he says in between sips of his tea.

Jack is looking forward to next season, which planting season will soon be under way, because he discovered and tested a ferterliser that will significantly increase his yields in the next season.

“I am doing about one ton an acre now, with good rain about 1.2 tons with this new ferterliser I am seeing up to two tons an acre,” he says gleefully.

But back to why he cannot be bothered with cows.

“There is no grading as a determination of quality in this country. So the beef from scrawny cows sells at the same price of that cow’s meat which has good genetics and has been looked after well. As long as that continues, a real beef market is hard to see here,” he said.

He points to South Africa where President Cyril Ramaphosa’s Anklole cattle are selling for hundreds of millions of shillings each.

With milk, the wild price fluctuations mean one probably has to set up an processing plant, that means building a large enough herd to do that, a huge capital outlay, which again is a discouragement. It can be done but crop farming is the low hanging fruit.

“Here I have two seasons a year, my friends in southern Africa had only one. It is a nobrainer.”

However, he does not live on the farm. He visits it once every two months, leaving the day-to-day running to his manager.

“I got a young man who was willing to work, had him trained at a agiculture school and sent him off. During the week we talked a lot about integrity and long-term thinking. He has turned out very well,” he said.

In addition to his salary, he is paid a commission on every crop and Jack has helped him get land in his home area and build a house.

In addition, he has an app which monitors his tractor, the biggest asset in his farm. He showed me where it was in real time. The app also monitors fuel consumption, mileage, whether the tractor is due for service and any number of metrics.

"Other than expansion of his farm he is now building storage facilities, mainly to be in control of the price he gets for his crop. Crop prices fluctuate according to seasonal patterns. Prices fall during the harvest and jump when the harvest crop is exhausted....

During his journey Jack was also surprised to find a lot of help for agriculture available.

“I borrowed using the ACF (Agriculture Credit Facility) to buy my tractor and also insured my first failed crop and got reimbursed what I put in. I think these facilities are just not marketed well,” he said.

With the ACF his bank dragged their feet for two months before a chance meeting at the golf course, after which a few calls were made and he had his tractor within the week.

He acknowledges that it is still early days and that he continues to learn, but he is convinced the future is bright.

“I think the urban elite should seriously consider taking up crop farming. Whichever way you look at it, it works,” he said

 

CHEAP POWER IS GOOD BUT ….

In The New Vision recently PhD Candidate Jessica Kersey, while noting the achievements made in the electricity sector since the 1999 reforms, however pointed out that higher tariffs in the sector had put electricity usage out of the reach of many in society.

First a recap. Previously there was Uganda Electricity Board (UEB) which did everything from generation to transmission and eventually distribution of power.  The unbundling and privatization of UEB was based on the fact that more investment, to the tune of billions of dollars, was required to raise the sector to a meaningful level of generation and distribution. Money the government did not have.

"The unbundling of electricity giant was to make it easier to attract investment and foster specialization and hopefully more efficiency up and down the value chain....

About $5b (sh18.5trillion) has been invested in the sector since 2000 with the building of Bujagali, Isimba and Karuma dams counting for more than $3b between them. Umeme has since the beginning of its concessioning 2005 invested about a billion dollars in the grid.

While more could have been done this aim of attracting more investment into the sector has come through. The investment means more people have access to power to day than at the beginning of the century.

As an indicator Umeme has seen account numbers grow from 294,000 to just over two million today. The nay sayers would say that is just a factor of momentum, that anybody would have built up those numbers any way. If that was true then account numbers would have grown to about 1.5 million to reflect the fivefold growth in the economy, but instead has grown almost seven-fold during the same period.

Kersey is right in saying that power tariffs have risen three times during the period, a commercially attractive tariff was required to attract investors to the sector.

But the tariff also continues to be out of reach of many because economies of scale have not quite kicked in. Funding for these projects continues to be expensive, partly because we don’t have much local savings to underwrite these major projects and foreign funding remains pricey because in terms of price we are not a prime lending client. Which is related to the first.

Relatedly, if we are to bring the price down government has to be more involved in the sector and hence the taking back of our power generation capacity into the public sector.  But to do this and learning from the UEB experience government has to make those entities that are being vested I with the running of the sector, viable in their own right, if only because government subsidy of the sector is not a sustainable proposition.

"As a rationale for taking back the sector, government has argued that the private players are asking for too high returns on investment pushing up the end tariff. Given this argument one can see that government intends to have its companies not require a return on investment at worst or allow them a very thin margin at best. That would be the mistake that would send us back to the dark ages of UEB...

The last thing that the government wants and the economy needs, is power companies that have to wait for government budgets to finance development or god forbid, come up with payroll.

If government’s current cash crunch is anything to go by, where priorities are shifting by the day, one can expect that if government inflows are the lifeblood of any of these enterprises, they will be dead on arrival.

As consumers and as an economy, we don’t need the power sector to be reliant on government for its day-to-day survival.

The example of National Water & Sewerage Corporation (NWSC) can provide some useful learnings both for and against the reinstatement of public entities to run the power sector.

NWSC has a tariff that is affordable – thankfully ware is all around, but high enough to support the massive investments they have to make. Their viability is such that NWSC can go to the market to borrow money on the strength of its own balance sheet. However, government also guarantees its loans as a way to keep the tariff low and ensure it fulfills its mission to supply water to all.

But government is hampering NWSC smooth operations going by the billions of shillings they owe and seem to see no urgency in clearing their bills.

The same model (apart from the bad debtor part) must be adopted for the new entities that will takeover from the private players. First off government needs to properly capitalize them. Then government needs to allow them a reasonable level of return, not as high as the private players, but enough they can finance their own developments. And also in the light of the huge investments that still need to be made in the sector, government should guarantee the loans and external financing as a way too to keep the tariff low.

The sector’s planners should not see a low a tariff as an end, but as a means to an end, the end being the widespread, sustainable use of power in the economy.

Affordable power is desirable, even critical for our development ambitions, but government should not pander to populists who want power tariffs brought down even if it is at the cost of the long-term viability of the sector.

FDC AND WHY POLITICS IS NOT A TEA PARTY

In the 1985 Wimbledon tennis championships opponents of German teen sensation Boris Becker complained that at the changeovers he tended to bump into them and generally not give way. When the complaint was raised with his manager the bearish Ion Tiriac his reply was “This is not a tea party”

In the last two weeks differences within the Forum for Democratic Change (FDC) that have been festering under the surface for years came into public view. The boil burst this week spewing out its fetid contents for all to see...

Like in the body, this should be a good thing, as the toxic contents of the boil may have gone on to infect other parts of the body if it had not oozed out.

For us on the sidelines of the action, it looks like an internal dispute that erupted but had to be aired out for progress to be made for better or for worse.  But we do not put it past the ruling National Resistance Movement (NRM) to have lanced the boil open.

Beyond this being a natural progression of development anyone who has been watching the FDC from its inception and even before when it was the pressure group Reform Agenda should not be surprised.

There are many reasons things are unfolding the way they are but two jump to mind.

Like with most political organisations FDC was founded on the personality of the Dr Kizza Besigye. Following his run for the presidency in 2001 the consensus was that he was still the one who could go toe to toe with President Yoweri Museveni in the polls. This was in 2005 just before the 2006 elections, which saw the return of multi-party elections to Uganda.

"When Besigye stepped down as party president in 2011, it was always going to be an uphill task to find a leader of similar global appeal. In addition, Besigye never went away. He hovered around Najjanankumbi like a bad smell, making it impossible for his successor Major General Mugisha Muntu to stamp his authority on the leading opposition party. Mugisha Muntu’s successor has fared no better, ceding the leadership of the opposition to Robert Kyagulanyi in the process.

Besigye has argued of course that there is no time/term limit in the struggle to remove Museveni, which makes sense, but one can see how his shadow remains a problem in FDC.

Given that he has been there from the start it would be unrealistic to expect Besigye be an indifferent observer to the goings on.

The second issue which is related to the first is the long-term dominance of the political scene by the NRM in general but Museveni in particular.

Just as at Wimbledon politics is not a tea party. Any ruling party worth its salt will be monitoring the opposition and looking to counter any maneuvers they maybe making. Spreading dissension in the enemy ranks is legitimate political tactics, never mind what the moralists say. Both factions in FDC accuse the other of receiving financial aid from the NRM. I believe them, both.

Beyond that the example of Museveni at the helm of the NRM for decades is causing much discomfort in the opposition. The opposition feel some moral pressure to show they are different from the NRM, to have term limits for their leaders,  which is good for the optics but does not allow anyone to gather momentum and pose a potent threat to Museveni. No sooner has leader gained traction than he has to step aside for “good governance”.

The challenge with this therefore is that every so often there is jostling for position in opposition parties, each contest factionalising and disenfranchising members, weakening them meaning they find it hard to present a united front to the public. FDC suffered this in 2016 and again in 2021.

It is no tea party in the opposition, especially with Museveni pulling the strings across the road. It means there will be no smash and grab rush for the leadership in Uganda. That the road to statehouse – whatever the politicians tell their minions will always be a marathon and not a sprint.

Given the internal tension in opposition parties time is not something they have in any meaningful supply. Their fragility is exposed with the passing of time, more so than with the NRM.

Ideally all political actors should be working towards creating a robust and an enduring democracy. But politics is about the attaining and retaining of power, which often plays counter to the development of democracy. This is the brutal honest truth about politics.

But it is also why democracy is not an event but an evolution. Believe it or not the natural progression is towards individual freedom which is democracy. The nature of each country’s democracy is determined by how they resolve the contestation between the ruling party and the opposition.

The fracas in FDC is excruciatingly painful for those involved but seen against the greater schemes of things and inevitable occurrence in the progress towards democracy.

 

WE NEED TO GO BACK TO BASICS ON BUSINESS LED GROWTH

History has shown that countries are only as viable as their business communities.

If ever there was proof  of this was the collapse of the communist block in the 1990s. The communist led by the USSR believed in controlled economies where government-controlled the forces of supply and demand. A bad idea.

The viability of the business community depends on many things but mainly the sanctity of property rights, the observance of contracts and the quality of the human resource.

The interaction of these then determine the nature and vibrancy of the markets in which the businesses operate.

This last part is important. Think of a market as a place where hundreds, thousands even million s of business experiments happen daily. These experiments are generated by individuals playing in the market. The successful experiments succeed or otherwise are discarded...

No one entity can simulate these experiments and that is why controlled economies have failed spectacularly through history. It is why North Korea, the USSR and chairman Mao’s China before it, are/were nuclear powers but had “bread lines”.

For a government interested in sustainable development the question of to have or not to have a functional market does not arise.

Markets create wealth and not governments.

The trick then becomes how can we then have this market serve our national development aspirations?

The market is brutal. Left to its own devices it gives more to those who have and to those who don’t have, even the little they have can be taken away.

If the role of the market is to create wealth, the role of governments is to distribute that wealth in a way that assures an improving standard of living for the population with out killing the goose that lays the golden eggs, the market.

So, in countries which enjoy growth but have huge income and wealth disparities, it is an indictment on the government and not the market, which has created the economic growth.

The US for example the wealthiest country in the world has among the highest level of inequality, partly for racial reasons but also because the market having been left to run rampant has become so powerful that it fights attempts by anybody to bring it under control.

The National Rifle Association (NRA) in the US fights off any attempts to introduce more stringent regulation around guns held in public hands despite the hundreds that die every year from mass gun shootings in that country. As at the end of June, 416 had been killed in 340 shooting incidents, which would mean more than two people are killed daily in America from needless gun violence.

"But beyond distribution of the goodies, governments’ role is increasing the enabling environment for the markets to thrive....

But to do this there has to be some understanding about how business and by extension the market works.

At the basic level businesses are set up to make money. But all good businessmen know that the extent to which they make money depends on how many people they can serve in a cost-effective way.

Business despite what they say don’t like competition. A monopoly situation is ideal for businesses because they can price their products higher than they could in a competitive environment and make massive profits.

Part of creating an enabling environment is ensuring there is room for fair competition. So governments should be involved in creating new markets, regulating existing ones within a coherent national strategy.

This of course requires a lot of mental application and to avoid it governments’ knee jerk reaction is to create companies. More often than not to their detriment.

Governments are bad at business not because the managers are incompetent, but because for governments other considerations – dishing out favours, other than long term viability are more important to them. Government businesses often survive longer than they should because they have access to free money – taxes to keep them afloat for longer than necessary. It doesn’t take much intelligence to keep shoveling good money after bad when you have an “inexhaustible” stream of revenue.

If a government understands how business is done it need not get involved, it just has to tweak the incentives for business to one, survive and thrive and secondly, to be in line with the national aspirations.

Japan for instance has no state-owned banks, but the banks have been key pillars of their export led development since the second world war. The businessmen initially had to be dragged kicking and screaming to support Japan’s infant industries but have come out the better for it and are more amenable to government’s direction.

In Uganda we went down the way of private sector growth because it was a condition to unlock the aid taps in the 1980s. More recently things are happening that suggest we were not really sold on the project and emboldened by increasing tax collections, government wants to go back into business...

That is where the trouble lies. Some people in government think the main reason our companies had to be got rid of was lack of money. They will soon find out that’s not true. 

It’s a prophecy I would like to be wrong about, if only because it is my money they are squandering in these blackhole new public companies.

"Government has the intellectual capacity to wrap their heads around how markets work and develop an incentive regime for businesses to support national strategy. It is not intelligence that is lacking in our government...

 

BOOK REVIEW: ONE SMALL DIFFERENCE –AN AUTOBIOGRAPHY

 A LIFE LIVED IN THE SERVICE OF HIS COUNTRY

AUTHOR: FRANCIS BUTAGIRA

PAGES: 136 PP

Available at all major bookshops

 

Francis Butagira has lived through the major inflection points of this country since Independence. It is always a pleasure to read the accounts of such people’s lives in their own words. In some ways their story pace second fiddle to the context in which the lived and their hand in forging our nation.

There is a lot that has been lost or is being lost, because a few good men refused or were unwilling to tell their story. This is important because one day these disparate accounts will be the source material for a proper telling of recent history.

In as far as Butagira contributes to this quest he cannot be faulted, his story will be a useful addition to the telling of this country’s history.

Butagira it will be remembered was the speaker of parliament between 1981 and 1985, during the second Obote regime. He came to the position by way of being MP for Mbarara West, which he contested under the Uganda People’s Congress (UPC) badge. He defeated current trade minister Francis Mwebesa in the 1980 elections.

But before that like many of his generation he graduates from a rural background to an urban, even cosmopolitan one – he served as Ugandan Ambassador to the Organisation of African Unity (OAU)UN and Germany before his retirement.

Looking at these elders accounts’, it’s clear that the tools for poverty eradication are within our grasp. While one can argue there was less competition in their time, the high percentage play remains stay healthy and go to school as as the surest means to social climbing...

The child of a parish chief, one may argue he was literally born with a silver spoon in his mouth, compared to the people around him, but you have to give him credit for taking full advantage of it unlike his other siblings.

He studied law In Dar es Salaam before doing his post grad in Harvard, was a judge of the high court before the allure of politics came calling.

Interestingly he became ambassador during the NRM era despite his roots being in UPC. He leaves us hanging on how he crossed to the Movement despite the hysterical protests of his leader, then exiled in Lusaka, Zambia. There must have been some moral dilemma there in breaking away from UPC, especially since he too maintains that charges of election rigging in 1980 were not true. He leaves us none the wiser.

The allegation of election rigging by UPC in 1980 served as the public basis for President Yoweri Museveni and his band of men going to the bush in 1981 and therefore a major sticking point between UPC and NRM.

The book sprints through his diplomatic career, which begun at the Organisation of Africa Unity (OAU) headquarters in Addis Ababa. There are interesting tit bits about negotiations with spirit medium Alice Lakwena, while he was high commissioner to Kenya. Lakwena was then a refugee in Kenya and wanted to return. Lakwena was the predecessor of Lord’s Resistance Army (LRA) chief Jospeh Kony, she led the rebel Holy Spirit Movement, brainwashing her followers to believe that by smearing special oils on themselves, would make them immune to government fire, an adventure that did not end well for scores of Acholi youth.

Maybe bound to secrecy, but during his time as a ambassador were some of the most hectic times for the country. One imagines our involvements in the Democratic Republic of Congo must have had him working overtime at the UN, our transition to multi-party democracy and other questions about governance in Uganda must have exercised him as a diplomat...

Nevertheless, he is understandably proud of his work as diplomat, that being the biggest chapter in the book, given his longevity in the foreign service he must have served his country well.

Though short on detail, the book is competent record of a period of much interest in our country through one man’s eyes. It is a quick read, a broad-brush stroke through the life and times of the author. It would be served well by an update, where the author fleshes out more about his role, thoughts and perceptions about the key events in our history to which he was privy.

The book is to be launched on Thursday, 20^th July at Protea in Kololo and along with it “International Diplomacy” a compilation of his speeches and interventions at the UN.

 

INCREASING UGANDA BANK CAPITALISATION LONG OVERDUE

Last week Bank of Uganda communicated that the process of banks raising their minimum capitalization by the end of the year was going well.

Under the Financial Act 2022 commercial banks are supposed to raise their minimum paid up capital to sh120b by the end of 2022, but preferably by the end of last month. The previous minimum requirement was sh25b. By the end of the next year the banks should have bumped up this number further to sh150b.

"The idea behind the steep increase is recognition that it was long overdue, going by the duration between the last increments, but intended to enable banks become more resilient, able to absorb bigger shocks, ensure the stability of the sector and improve the ability for banks to do more for their clients...

In all three respects we have come a long way but still have a long way to go.

In 1998 and 1999 when we had a spate of bank closures, the law provided that minimum capital requirement to set up a bank was sh500,000 for a local bank and one billion shillings for a foreign bank. The good old days!

It should not come as a surprise that of the four banks that collapsed in the late 1990s three of them were local. If these banks had stayed on the straight and narrow, who knows we would have more, big privately owned local banks today.

Most of the bank closures were due to failures due to insider lending. The owners of the bank were lending themselves and cronies money, which they neglecting to repay the loans. Essentially the Ugandan depositor was financing these ladies and gentlemen for free. And they may have got away with it if they had not got too greedy and compromise the banks’ balance sheets irredeemably.

As a result of those bank collapses the central bank in 2004 raised the minimum paid up capital requirement to sh4b and raised this figure again in 2010 to sh25b. This in addition to limits on how much one shareholder can own of a bank and how much banks can lend to one client have meant that the sector has been spared the upheavals of the late 1990s.

"It was inevitable that bank capitalization was going to rise eventually but imagine if one had set up their bank with sh500,000, about $500 in 1993 when the law was passed, and built up the banks’ equity with retained earnings, it would not have been a stretch to meet the subsequent capitalisation increases. That’s the problem we are always wiser in hindsight...

But when you hollowing out the bank at every turn, it will take a small crisis and the whole operation comes falling like a pack of cards. Hence the need for the bank owners to put in more of their money to cover reasonable losses without jeopardizing the bank.

Covering the downside is always a good idea but to my mind what this increase in capitalisation will do is force banks to be more innovative and even aggressive in their provision of services. As it is now the biggest bank’s profits far outstripped their paid up capital last year, which means their respective owners were literally laughing all the way to the bank, forgive the pun.

Private investors should get an adequate for their money, but if the society in which their business operates benefit proportionately that’s a guaranteed win-win situation.

Used to these juicy returns bank owners in London or Johannesburg or Nairobi or New Delhi if they commit more of their funds will expect comparable returns, say six times more to much the increase in their contribution to the business. Bank managers will have to find ways to increase markets share, provide more products to their clients and even seriously consider lowering lending rates to meet the new targets. Doing all this legally and safely.

For example, unsecured lending really took off after the 2004 increase in minimum capital to sh4b from the earlier one billion shillings. Previously banks were content to insist you provide collateral for any lending. AS it is salary loans are now a major component of any banks revenues and the fastest growing revenue stream in the industry.

It will also means banks can finance bigger projects locally rather than syndicate them abroad. This may see banks paying more in taxes as they keep more of the profits from such transactions.

Of course there are those who will jump up and down and complain that increased capitalization effectively shuts out local banks. Well if previous experience is anything to go by maybe that is a good thing. But it is also not true there are no local banks – Housing Finance Bank and Post Bank are there and holding their won.

But also it an indictment on our business community, that if they feel so strongly about having a local bank, why don’t they come together raise the required sh120b and meet other requirements and have their own thing.

Oh, but they did that in the past with Greenland Bank, unfortunately it went under in 1999. Insider lending again the main culprit. A case of once bitten twice shy?