KAMPALA – The late Andrew Kayiira coined the phrase Kondoism which has been used in other terms to mean armed robbery or robbery with violence. This term can be comfortably used in conversations about money, politics, love, and most recently retail banking.
Retail banking is the economic parlance for what we were taught in school and later came to know as commercial banking. Their authorisation covers but is not limited to personal loans and banking, mortgages et al. A simple internet search will reveal there are 25 retail banks in Uganda.
Commercial banks have well been around Uganda before we got independence as banks Grindlays and the Uganda Credit and Savings Bank that later transitioned into Uganda Commercial Bank (UCB) in 1965 were operational. It should be noted that retail banking was well around before the central bank- Bank of Uganda was established in 1966.
A recent row has erupted between customers and the second biggest bank in Uganda by revenue, total assets and bank network Centenary bank, over a levy that the bank imposes on its internet
banking platform for a basic task of inquiry. This standoff has drawn two sides; one believing this levy to be Kondoism because other banks (Equity, DFCU) apparently offer this same service for free, while the contesting group argues that the fee is a necessary charge for a service that can be avoided by simply keeping your savings under your mattress where you can check on it and count it as many times free of charge.
Centenary bank responded to this Mexican standoff with a statement justifying the charge saying it “makes the bank able to cover the cost of running the service” even going on to promise that, “the service shall be fully free overtime”.
To settle the score, we have to rewind the hands of time to suss out the relationship between banks and Ugandans, in general, using two of the biggest banks in the country: Stanbic and Centenary.
It is certain that the birth of the nationally owned bank-Uganda Commercial Bank (UCB) was a love affair. A bank of choice for Ugandans that exponentially grew because of good management and patriotism. This spilled over to the austere Amin regime that blew the other banks the kiss of death following a presidential directive for government bodies to bank only with UCB.
Fast forward to the year 1983 where the “man of the moment”- Centenary bank was established. Started as a credit trust by the prominent Catholic laity, the bank has blossomed into a financial juggernaut mainly because of the backing of the Catholic church.
With all the bells and whistles augmented to the commercial banking
sector like the internet, agent banking, where has the love affair gone wrong?
To explain this, I will employ another economic term “Rentier Capitalism” to decode the entitlement of these financial institutions and explain their cavalier attitude towards their clientele. Rentier Capitalism simply put means an economy in which market and political power allow privileged individuals and businesses to extract a great deal of such profit from everyone else.
These banks have been built from the ground up off of the faith, goodwill, tears, heartbreak (Greenland bank), work and capital of Ugandans but from the natives’ point of view, these same banks are now merely collecting their due like the prodigal son! It should not be forgotten that Standard Bank SA the parent company of Stanbic bank acquired UCB from the government of Uganda after the then parliament had passed a resolution blocking its sale into foreign hands. In a nutshell, Stanbic bank was born with a silver spoon in her mouth thanks to her big brother – the Uganda government.
Having grown up a Catholic, it was strongly stressed in almost every Mass offering how we should bank with “our bank”. Considering that over 40% of the population was Catholic and the church’s parish model that stretched to all corners of the country, it’s fair to say Centenary bank reached the pinnacle of its success “escalator style” because of pious Ugandans.
Based on this history, the people’s frustration is understandable especially for the homegrown banks that seemingly enjoyed the business privilege and still are but have chosen not to shake “the mango tree after ascending to the top”.
Ugandan society is an avaricious one that understands the concept of profit and wealth and does not fault anyone who tries to make a buck. However, it is a society that is leery of those that go the extra mile to short-change it in the name of technology or any other reason.
My advice to the banking sector is to employ the minimax strategy of game theory which is, minimise maximum losses over maximising profits and to remember that their vision is best served when of benefit to the least advantaged members of society.
I would also like to bring to their attention a growing global trend where the public through their platforms of social media, blogs, push and turbocharge the stock prices of little known companies raising their value and making them profitable as has been the case with GameStop and AMC entertainment Holdings at the expense of larger companies and investors. This same maneuver can be employed by the general public and stakeholders in Uganda to the detriment of the banking sector.
So, 600Ushs, To charge, or not to charge, that is the question.
The author, Mark Kidamba is an
Independent Financial/Investment Analyst