By Muma Keith
In July 2007, Bank of Uganda lifted the moratorium on licensing commercial banks in Uganda. There was a rush by several banks; Equity, KCB and Global Trust Bank among others to set up in Uganda. The Ugandan market was open for business and for the banking sector to bring down the cost of credit. dfcu at the time was a bank in transition as it was seeking to consolidate its services including the successful leasing arm into a commercial bank where all services could be found.
The merged services included leasing, trade finance, mortgages and commercial banking. And they tapped a man they thought would turn this around – Juma Kisaame.
That marked the return of Juma Kisaame to a bank where he had worked for in 1992 until 2002.
In 2007, Juma Kisaame was appointed the first Ugandan CEO of dfcu Bank. He came to the bank to manage that transition and see its rise to one of the top banks in the country.
In his first full year as CEO, dfcu’s after-tax profit rose to Shs13.1bn and its asset base also rose to Shs801bn. On average, for the last 11 years, dfcu’s asset base and after-tax profit have grown by about 24% annually.
I first met Juma Kisaame on 27th June 2012 at the Kampala Serena Hotel. It was the dfcu AGM. It was my first dfcu AGM as a rookie journalist. Kisaame was a media shy and rarely liked getting asked questions by the media. That was in 2012. Over the years he transitioned into someone who is media savvy and ready to respond to questions put to him. In 2012, there were rarely any tough questions.
dfcu was on a growth trajectory that was driven by a strong shareholder, CDC (Commonwealth Development Corporation) taking the lead with a 60% stake.
In all the 11 years Kisaame spent at dfcu as Managing Director, the toughest year was 2015 when NPLs surged in part due to the sharp price drop in the tea sector. In Uganda, companies will publish results and then leave it to the journalists to write stories. Rarely do we have investor briefings.
This “blip” in 2015 resulted in after-tax profit declining to Shs35bn from Shs41.5bn.
At the time dfcu was once re-aligning its focus on the agricultural sector. CDC/Actis in 2013 sold its majority stake (54.7% of 60%) to the Dutch bank, Rabo Development and Norfund from Norway. It was Shs119bn transaction, the largest for any listed company on the Uganda Securities Exchange (USE). The new shareholders sought to further dfcu’s focus on SME’s but to also focus the bank on lending to the agriculture sector.
“The main goal of Rabo Development’s partnership with DFCU is to improve access to banking services for the unbanked population, while food security and financing the agricultural sector are important elements in its strategy as well. Together we are a good fit with similar objectives and vision. We find in dfcu a deeply rooted local bank with good initial access to the rural areas. We have found each other,” said Bruce Dick the Managing Director Rabo Development in June 2013.
(Both Norfund and Rabo now own dfcu shares through an entity called ARISE BV).
It is never that easy. Agriculture and banking in Uganda have had a love-hate relationship. Sometimes you get your figures burnt. That explains the struggles of the tea sector leading the bank to take a hit.
With the new shareholder structure, the team still trusted Kisaame to lead the bank.
The bank did recover from that blip and continued to grow. The bank acquired some assets and liabilities of Global Trust Bank in 2014. The overall contribution to the balance sheet was not very significant but it saved Global Trust Bank customers from failing to access their funds. At the time, however, it had a negative impact on the dfcu books.
In January 2017, dfcu acquired some of the assets and liabilities of Crane Bank for consideration of Shs200bn payable over 18 months. Even for those who did not know Kisaame, they got to know him. He was always focused on the job. Ever since that acquisition, his name has been in the news. Even his departure from dfcu after 11 years as Managing Director has been blamed on that transaction.
dfcu bank is a wholly subsidiary of dfcu Limited. dfcu limited is the listed entity on the Uganda Securities Exchange (USE). In 2016, we accessed proprietary information on some of the banks that sought to acquire the assets of Crane Bank. dfcu was one of them but did not confirm to us at the time. However, they did eventually emerge as preferred bidders and took-over Crane Bank. For acquisition of this size, Kisaame would not have approved it on his own without the strong backing of his board and shareholders, dfcu Limited.
The first AGM after the acquisition of Crane Bank in June 2017 was rather all about this transaction. For several shareholders, the concern was that Crane Bank assets were too toxic to mix with the “clean” dfcu books. This was the opinion of several minority shareholders. The majority of shareholders Arise BV (own 58% of the bank now) even provided $50m (Shs180bn) bridging facility to cater to the capital requirements for taking over Crane Bank assets and liabilities. Even further confidence was shown when a rights issue of about Shs200bn was over 90% subscribed.
The challenge for Kisaame has been negative news coverage around the transaction that may be one of the factors for the fall in the share price in the few months. This is where he divides opinion. Some argue that he brought on too much risk with the several aquisitions in banking sector he made. They say it was reckless and exposed dfcu to negative publicity and legal issues with Meera Investments.
Others argue that dfcu for the case of Crane Bank was an opportunity to grow faster and then consilidate a bigger balance sheet. dfcu is a much bigger bank and able to generate much greater value to shareholders and also be a dominant player in the issuance of credit.
dfcu’s share price movement since 2008. In 2014, there was issuance of bonus shares (1 for each ordinary share held) leading to an adjustment in the price from Shs1120 per share to Shs640 per share.
Kisaame’s last tour duty at dfcu was in January 2019 and has been replaced by the young and enthusiastic, Mathias Katamba who was a previous CEO at Housing Finance Bank. A well managed transition from Kisaame to Katamba was concluded in January 2019 and it is now time for Katamba to get the bank to focus on its core buisoness.
Kisaame leaves a team of other .enthusiastic officials including William Sekabembe an Executive Director & Chief Commercial Officer, Kate K. Kiiza the Chief Financial Officer, Harriet Musoke Head, Human Capital, Agnes Mayanja Chief Risk Officer, Denis Kibukamusoke Head, Personal & Business Banking and Agnes Tibayeita Isharaza Chief Legal Officer.
“Under Juma Kisaame’s leadership we witnessed the transformation of dfcu from a mid-size Bank to the second largest bank in Uganda, something achieved by Kisaame’s willingness to acquire banks in distress and manage a seamless migration of customer accounts and immediate access to their money,” said Jimmy Mugerwa the dfcu Bank board chairman during Kisaame’s farewell dinner.
He bows out dfcu after 20 years with his head held high, having kept the bank growing in a competitive environment. He joined the financial sector in 1986 as an accountant trainee at UDB until he became a senior accountant in 1989. In 1992, he joined dfcu as the Head of Finance until 2004. He left dfcu in 2004 and joined Eurafrican Bank in Tanzania as Managing Director. In 2007, he returned to dfcu as a Managing Director.
