AFRICA INTEGRATION: M7 moots plan to start African Investment Bank

Col.Nakalema was on Thursday addressing government agency heads and key stakeholders in the private sector and financial institutions at her offices located on Plot 51B along Lumumba Avenue, Nakasero-Kampala, ahead of a meeting with President Museveni today at State House Entebbe.

Access to cheap capital critical to address financing gaps in large-scale projects (roads, railway, power, etc), SMEs and other key sectors has been a major bottleneck in Uganda and Africa at large as far as growth and development is concerned.

Many African nations continue to stagnate economically due to predatory financiers (banks, private equity, venture capital, and hedge fund firms in Europe), who lend on abnormal interest rates or finance such projects at unfavorable conditions.

However, President Yoweri Museveni, whose dream of a united East Africa and later Africa is still alive, has got a diagnosis: establishment of an indigenous patient capital and cross-border African Investment Bank.

He envisages this form of capital as crucial for projects and enterprises that require time to mature and generate returns.

Col. Edith Nakalema, the head of State House Investors Protection Unit (SHIPU) is now rallying all Ugandans and government agencies heads to support the initiative which she believes is a magic bullet in turning around Uganda’s economic fortunes to the level of Asian economic giants like China, Singapore, Malaysia and others.

Col.Nakalema was on Thursday addressing government agency heads and key stakeholders in the private sector and financial institutions at her offices located on Plot 51B along Lumumba Avenue, Nakasero-Kampala, ahead of a meeting with President Museveni on Friday, 22nd March at State House Entebbe over the same.

The brainstorming meeting was attended by National Planning Authority officials led by chair Prof. Pamela Mbabazi, NSSF MD Patrick Ayota, Bank of Uganda bosses (Deputy Governor Dr. Michael Atingi-Ego and Tumubweine Twinemanzi, the Executive Director of the Bank Supervision Directorate), and Financial Intelligence Authority (FIA) new Executive Director, Samuel Were Wandera.

“Since my docket is tasked with investment, H.E President Kaguta Museveni tasked me to coordinate this engagement. This was a strategic preparatory meeting, inspired by President Museveni’s visionary idea of establishing an African Investment Bank whose focus will be on indigenous patient capital and supporting cross-border economic collaboration as envisaged by the president. We are paving the way for a financial institution that will transform Africa’s investment landscape. This is the right time for Africa to craft solutions for our challenges,” Col.Nakalema explained.

Others present at the meeting include Hez Kimoomi Alinda, the Executive Director of Uganda Free Zones Authority (UFZA), Bageya Waiswa, the Permanent Secretary Ministry of Works and Transport, Maj. (Rtd). Gertrude Njuba, former Minister Prof. Tarsis Kabwegyere, former Attorney General Mr. Fred Ruhindi, former Uganda Law Society (ULS) president, Francis Gimara, Andrew Musiime the Director Economic Affairs EAC secretariat, officials from Capital Markets Authority, Uganda Securities Exchange, the Insurance Regulatory Authority of Uganda, Uganda Investments Authority and among others.

“President Museveni is eager and believes this project [idea of an African Investment Bank] will work. As a flag bearer of the project, he needs our support. I urge you to help him in the East Africa and Africa integration agenda,” Col.Nakalema rallied.

NPA chair, Prof. Mbabazi, highlighted the significance of patient capital in driving sustainable growth, emphasizing its potential to unlock opportunities for projects like the Standard Gauge Railway.

“The establishment of indigenous patient capital aims to strengthen Uganda’s private sector, crucial for driving socioeconomic transformation amidst challenges like high interest rates and limited funding,” Prof. Mbabazi stressed.

Ayota, the NSSF MD, said the initiative is timely especially at a time when international lenders continue to attach strings on their capital. He cited an example of the recently passed Anti-homosexuality law meant to preserve Ugandan culture only to attract threats from the World Bank.

BoU’s Deputy Governor Ego described the idea as interesting while Executive Director of the Bank Supervision Directorate, Twinemanzi, described it as fantastic.

“The idea is very good,” added FIA’s Wandera.

Former ULS president, Gimara welcomed the initiative and tasked NPA bosses to open their eyes and think of more cross-border impactful projects.

For former Minister Kabwegyere, this is one of the efforts to counter those with neo-colonialism tendencies.

“Business financing has been extractive and tends to attract predatory capital (foreign banks charging crazy interests), which causes economic marginalisation and results in massive capital flight. We need Indigenous Patient Capital that focuses on long-term gains rather than short-term profits now more than ever,” noted former Jumia CEO, Ron Kawamara.

Dr. Beenunula Eyenunula, the CEO of TRAVACO is the brain and key consultant behind the project.

To realize this, he says the government ought to start with establishing cross-border impactful projects. These include SME parks and multimodal logistics corridors with the end result of retaining optimum value within Africa and indigenous patient capital.

African Investment Holding Ltd (AIHL) will be created for this effect.

AIHL will be granted control of African In-Situ minerals.

Through Standby Letters of Credit (SBLC) asset management practices, AIHL plans to create cash flow proceeds within six months.

Through In-situ Minerals, credit lines and cash flow for industry and infrastructure will also be created.

“With a minimum capital requirement of USD 5 million, the project seeks to mobilize asset management practices to generate cash flow proceeds within six months,” he explained.

It is African Investment Holding Ltd (AIHL) which will lead to the creation of the Africa Investment Bank.

According to Beenunula, focus will be on Private Placement Programs, also called “High Yield

Investment Programs” which is his area of expertise for over 20 years.

Private Placement Programs, also called “High Yield Investment Programs”, are private (non-public) investment programs which are based on the purchase or sale of bank financial instruments.

In most cases MTNs are mainly used.

These instruments are bought fresh-cut with a high discount on their base value to later be resold at a higher price in the secondary market.

The difference between the sale price and the purchase price is the investor’s profit. These programs are offered to investors with high spending capacity and can only be executed by qualified traders with a license to carry out these kinds of transactions.

A very special aspect of these programs is that usually the largest part of the returns is allocated to humanitarian causes as well as to the financing of larger business projects.

So, any institution takes precedence on this type of operation.

Actually, PPPs are not well known publicly, and only a very small group of investors that own significant funds or Bank Instruments have access to them. Most programs can be joined by invitation only.

These programs have been issued since for the past 60 years to finance humanitarian projects and international trade.

 

 

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