On this day at the end of 2005, Kenya Airways’ morning Boeing 737 from Nairobi is approaching Entebbe airport. With the bright sky of the dry season, the first image of travelers is the magnificent view of Lake Victoria with its immensity and intense blue. However, the small team of the BANK OF AFRICA (BOA) does not linger. It hurries to join the Financial Manager of the Allied Bank who is waiting for in the parking lot, and they all take the long road that will lead them to Kampala. Thus began the first field mission that would lead a year later to the BANK OF AFRICA-UGANDA.
For a few months now, BOA’s holding company has resumed its negotiations with the Belgolaise bank for the purchase of part of its African network. After more than a year of fruitless discussions, particularly for Ghana’s branch, efforts are focused on the acquisition of the Belgian Group’s majority stake in its subsidiaries in Uganda and Tanzania. Both banks are small, but they are a crucial stake in strengthening a recent entry into the East African Community (EAC). Several favourable factors will play a role in facilitating and accelerating the establishment in Uganda in the first place.
In 2005, Allied Bank ends a difficult period during which it had been well restructured. The Ghanaian Managing Director who was then at the helm of the bank used his experience, his knowledge of the field and his « leadership » talents to mobilize his teams in a heavy work of reorganization, modernization and commercial revival. The managers and staff around him have actively worked on this project, which is now bearing its first fruits.
On BOA’s side, the due diligence goes smoothly and gives a clear idea of the institution’s situation, the likely cost of the purchase, the extent of further investments to be made and the possible strategy. A fraction of the time spent in Kampala is also used to raise awareness of the BOA Group and to convince key local stakeholders of its strengths. This is of course first and foremost the case for the staff, who are concerned about whether this French-speaking bank will be able to impose itself in Uganda, adapt its methods to the local context and instil the dynamism that has been lacking in recent years in the outgoing shareholder. The same presentation is held at the Central Bank that must be listened to in order to understand the rules that will have to be respected to obtain the authorization of this purchase, as well as to then carry out the bank’s activities. On leaving Kampala, the mission’s conviction was fixed: the audit did not reveal any anomalies likely to call into question the preliminary discussions, the growth potential of the bank and its contribution to regional synergy is significant, and the welcome received was positive. So it’s necessary to move quickly to take the steps.
Once this orientation has been validated by the Board, several trips to Uganda at a rapid pace will lead to a quick evolution of the file. From the first return to the site, the Managing Director of Allied, who was absent during the initial stay, will be a valuable support. As comfortable in commercial or administrative contacts as he is attentive in control, with a clear vision of the potential of his bank and the means to achieve them, he is ready to continue his mission, which would extend the work already accomplished. He easily adheres to the orientations set out for the future: preservation of the existing clientele but strong broadening and diversification of the target public; building a network of branches; « all-out » exploitation of synergy’s advantages in the AEC; continuous policy of modernization and integration into the BOA Group, especially for « key accounts ». It was therefore easily decided that he and all the members of staff who wished to do so would be able to remain in place. Their overall acceptance, as well as that of the Chairman of the Board approached for this purpose, make it possible to place the approach adopted under the sign, reassuring for all, of a perfect continuity of the teams at the service of the new expansion policy supported by a Group in broad development.
At the Central Bank, the application for approval is also progressing rapidly. In view of the regulatory requirements, the essential role of BANK OF AFRICA-KENYA is confirmed. The Group therefore immediately achieves a capital increase of the latter, which gives it the financial means to hold a 46% stake in the capital of the subsidiary being created. Kenya’s two partners, FMO and Aureos Investment Fund, each acquire 22% of the capital. Central Holdings Uganda, already a shareholder in Allied Bank, maintains its 10% stake and will remain a loyal partner. On this solid basis, and facilitated by the diligence of the Governor of the Central Bank and his staff, the agreement was obtained in May 2006. The lengthy legal updates efficiently carried out by the Group’s Kenyan lawyer lead to the opening of BOA-UGANDA in October 2006.
From then on, the new entity will be able to seize all opportunities to improve its visibility and growth. Through its emphasis on commercial activities and quality of service, the Bank succeeds in retaining its previous clientele and rapidly developing its audience despite increased competition from the arrival of new institutions. The construction of its new headquarters strengthens its attractiveness, improves the installation of growing teams and facilitates their work. Methodically, BOA-UGANDA builds a dense network of branches in the capital and in the rest of the country and became the « all public » banking institution that was sought. The dynamism of Uganda’s economy and businesses is driving the impact of these various initiatives. Thanks to them, and to the impressive leaps in equity capital – multiplied nearly 20 times in EUR between 2006 and 2023 – BOA-UGANDA is progressing on the banking market and is gradually entering the category of « Tier 2 » banks. Admittedly, it is hit as everywhere by the systemic crisis of Covid 19 and also suffers the disadvantages of frequent currency depreciations. Despite everything, the figures speak for themselves: in 18 years, the balance sheet as well as deposits and loans will have multiplied by 12 to 15 times in Ugandan shillings, while the bank will have remained almost constantly profitable.
The latter is resolutely charting its course in the harmonious balance of a strong local anchoring and an active contribution to a banking network in continuous growth. Regional integration has been strengthened with BOA-KENYA becoming the majority after the departure of FMO and Aureos. The young Financial Manager of 2006 became today the Bank’s Managing Dircector and has lost none of his enthusiasm and commitment. The Bank, its team and its shareholders continue to invest and innovate. BOA-UGANDA has not finished growing and surprising.
Happy birthday and big hits ahead.
Paul Derreumaux