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Interview: Bank Of Kigali CEO, Dr. Karusisi Speaks About COVID-19 Effects To Banking In Rwanda




What has COVID-19 done to us? The recent World Bank report says the pandemic is dramatically increasing poverty in both rural and urban areas. The headcount poverty rate is likely to rise by 5.1% points (more than 550,000 people) in 2021, compared to the no-COVID scenario.

The increase in urban areas is greater than the increase in rural areas, the report says. Lockdowns, and other measures, which were critical to limiting infections, sharply curtailed economic activities.

GDP in real terms fell by 3.6% (y-o-y) in the third quarter of 2020, following a 12.4% contraction in the second quarter. The government expects that GDP will fall by 0.2% for 2020, compared to a projected expansion of 8% before the COVID-19 outbreak.

While the pandemic affected all major sectors, education and Rwandan strategic sectors (travel and hospitality) declined the most.

For the banning sector, the Central Bank introduced an extended lending facility to support banks facing liquidity shortfalls, and other factors.

Banks remained in sound condition, based on the share of non-performing loans in their portfolios and capital risk-weighted assets ratio, but newly approved loans were 9.2% lower in October 2020 compared to the same period in 2019.

There is a view that large corporations have not been affected that much. Rwanda’s leading Bank, Bank of Kigali (BK), would be an ideal template to assess real effects of the pandemic.

BK’s CEO, Dr. Diane Karusisi spoke to Taarifa’s Chief Editor, Magnus Mazimpaka, about the banks experience and her views on what’s coming next.

Describe the nature of effects, materially, strategically and operationally, caused by Covid-19

Dr. Karusisi: The COVID crisis exacerbated all risks the Bank manages: Credit risk (risk of loss resulting from inability of clients to meet their commitments), market risk such as  liquidity and operational risks including risks of fraud, cybersecurity risks as most transactions move to digital. As a result, the Bank has significantly increased provisions for expected losses, which will heavily impact our financials.

In a tightly regulated industry like ours, with heavy procedures and processes reliant on paper and physical contact, operating effectively in a virtual environment has presented great challenges. We were able to speed up implementation of some projects to reduce/digitize physical touch points internally and with clients in a way that improves service delivery but also helps people comply with health measures. The crisis has reinforced our strategic drive to digital with a focus on connectivity, automation and innovation to reduce turnaround times and improve customer experience.

What lessons has the pandemic taught you, technologically in regards to banking….

Dr. Karusisi: The key lesson is that business continuity and resilience is not just a document/policy – banks like all other businesses need to up their preparedness in terms of technology, people, processes, and financial resources. Companies with better financial cushions and resilience will not only survive the crisis but will be the first to innovate and grow after the crisis. We entered the crisis with strong capital and liquidity ratios, and this has helped us weather the storm. Also, more than ever, we have realized that digital is not the future, it is the present! Going connectivity, digital education, and access to devices will be critically important for people to get access to all kinds of services: banking, health, education, entertainment, etc.

What are your new norms. What adjustments have you considered?

Dr. Karusisi: For many companies, remote meetings are now a norm, and signing/approving digitally documents. We’ve discovered that there are excellent solutions to support remote work and remote collaboration, and we expect to extensively use post COVID.

Now that many businesses have taken massive blows. Are you considering an overhaul in product offerings, financing structures, requirements ?

Dr. Karusisi: When the crisis hit, we waived late payment charges, restructuring fees to support businesses with uncertain cash flows. The Bank later provided relief in the form of moratoriums, refinancing and affordable working capital facilities availed by the Government’s Economic Recovery Fund. Finally, we have closed partnership with KFW and are supporting severely hit businesses with grant funding to protect employment.

In terms of product offering, it is obvious that the risk appetite has reduced and we are more cautious in our lending business. There are sectors that will see less financing like hospitality, commercial real estate but I believe agro processing and light manufacturing are going to see a boost, as we want to build resilience at national level.

Tech must have been a saviour of the tough times brought up by Covid-19. Tell us about the experience…were you prepared? What challenges did you encounter, how did you deal with them…what methods did you use…?

Dr. Karusisi: Nobody was prepared to this level of disruption.  At the Bank, we setup a COVID crisis committee that was meeting (virtually) every morning to assess the situation and make quick decisions. The first thing was to protect employees’ and clients’ health across the branch network. We had to offer extra support to our staff on the front lines, organize remote work to support our clients, and scale systems capacity to respond to the exponential surge in digital transactions. In the end, it is always about people and we will keep investing in people – skills, leadership – to build resilience to withstand shocks in the future.

Tell us what your predictions are, based on what you have experienced….

Dr. Karusisi: The level of disruption brought by COVID is such that it will result into profound changes in behavior/preferences of customers – at work, at school, at home, etc. Some pre-existing trends have been dramatically accelerated, such as e-commerce, cashless payments. I believe some new trends will emerge as people have become more health-conscious, less mobile… All industries will be impacted and it is important for us to recognize these trends early, adjust our business models and strategies.

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Mozambique Scandal: Credit Suisse & U.S. Conclude Deal



Credit Suisse Group AG is nearing an agreement with the U.S. government that would resolve a criminal probe regarding its role in a U$2 billion Mozambique bond scandal, according to people familiar with the matter.

The discussions with the U.S. Justice Department involve a deferred prosecution agreement that would include a fine, according to the people, who asked not to be identified because the talks are confidential. An agreement is expected to be announced Tuesday.

Any deal with U.S. prosecutors would be the latest action in a multi-year, international legal saga arising out of the 2013-14 deals that were supposed to fund a new coastal patrol force and tuna fishing fleet in Mozambique, one of the world’s poorest countries.

In a 2018 indictment, the U.S. Justice Department alleged the contracts were a front for government officials and bankers to enrich themselves.

Three former Credit Suisse bankers have pleaded guilty to U.S. charges stemming from the scheme.

Credit Suisse declined to comment on any agreement, as did the U.S. Justice Department.

A deal could help put to bed one scandal, even as the bank has been punished this year by investors for its stumbles with Archegos Capital Management and Greensill Capital, which have spurred broad management shakeups.

Mozambique has filed suit against Credit Suisse and shipbuilder Privinvest, one of several cases in U.K. courts that involve the bond deal.

Unlawful Conduct’

In defending its London lawsuit, Credit Suisse has insisted that it was deceived by rogue bankers and couldn’t be held responsible for their “unlawful conduct” when it arranged the loans in early 2013.

The Swiss bank has said it carried out its usual due diligence before the transactions and was aware of the risk of bribery and corruption.

Andrew Pearse, who led the global financing group in the bank’s London office, testified at a federal trial in Brooklyn, New York that he’d pocketed at least U$45 million in illicit payments for his role in the arrangement of the loans.

The Credit Suisse loans were for three separate maritime projects including a tuna fishing fleet, the building of a shipyard and surveillance operation to protect Mozambique’s coastline and protect against pirates, according to Pearse.

Mozambican government officials, corporate executives and investment bankers stole about U$200 million, prosecutors said.

Both Pearse and his successor at the bank, Surjan Singh, who also pleaded guilty, testified at the 2019 trial of Jean Boustani, a Privinvest Group executive accused by the U.S. of being behind the plan to get Mozambique to borrow billions of dollars and overpay for dubious maritime projects.

A third banker, Datelina Subeva, Pearse’s subordinate, also pleaded guilty but didn’t testify.

All three bankers await sentencing. After a six-week trial in late 2019, a federal jury cleared Boustani of all charges.


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DRC Opposition Protests Against Phone Tax



Martin Fayulu, DRCs leader of opposition coalition LAMUKA has called upon all citizens to take to the streets and demand for the abolition of a controversial mobile phone tax.

In June 2020, the DRC government set up – through the ICT, Post and Telecoms Ministry – a CEIR system (Central Equipment Identification Register), with the aim to fight fake devices and the theft of mobile devices.

However, Telephony mobile users claim the Mobile Device Registry (RAM), a controversial new tax is robbing them of their units and making them poorer.

In terms of RAM, mobile operators are cutting a big chunk of units monthly from their customers’ mobile devices, which many users believe is too high and unnecessary.

“We are calling for the immediate withdrawal of RAM. Because it’s theft, a scam. That no one is demobilized. Let’s march and denounce it because it is outright  theft. Once withdrawn, all money collected must be returned, ”said Martin Fayulu.

During a meeting this Saturday, October 16, 2021 in Kinshasa, Martin Fayulu called for the outright abolition of this fee.

During the rally, the leader of Lamuka pinpointed other topical issues, including the issue of appointing the leaders of the Independent National Electoral Commission (CENI).

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Tanzania’s Economy Records 4.3% Expansion in 2nd Quarter



Tanzania’s economic outlook seems very impressive as the country registered a 4.3% expansion between April and June according to the country’s National Bureau of Statistics (NBS).

Compared to the country’s economic performance in the same period last year, there has been a 0.3% upward expansion.

Briefing the media on Friday, Daniel Masolwa NBS Director of Economics Statistics, said, “Real GDP increased to Shs 33.4trillion from Shs 32trillion in the corresponding period in 2020, an equivalent to a 4.3% growth,” he said.

During the second Quarter of 2020, Tanzania’s economy registered the lowest growth rate of 4.0% since 2017 mainly due to the devastating effects of Covid-19 pandemic following the introduction of lockdowns and many countries to mitigate spread of this pandemic.

However, Masolwa tried to cool down any skepticism saying, the annual economic growth in 2021 is projected at a 5.0% rate. In terms of economic activities, he  said, during the period under review, information and communication attained the highest growth of 12.3%, followed by electricity generation at 12.1%.

Meanwhile, other services include arts and entertainment and households as employers (10.8%), accommodation and food services (10.1%), water (8.4%), and mining and quarrying (7.3%).

According to Masolwa, the expansion of economy by 4.3% during the second Quarter of 2021 was spearheaded by key drivers of growth which include Agriculture (13%), transport and storage (8.4%), trade and maintenance (8.1%), manufacturing (7.6%) and construction (7.1%).

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