Financial stakeholders in East Africa have been urged to rethink the role of capital and work towards a fully integrated financial ecosystem to unlock capital at scale, strengthen industrial competitiveness and facilitate seamless cross-border trade.
Speaking at the annual Regional Industrialisation Conference at Serena Kampala, dfcu Bank chief executive officer Charles Mudiwa said traditional banking approaches, largely centred on conventional commercial debt, were insufficient to drive the region’s industrial transformation.
Mudiwa said commercial banks, regulators and central banks should broaden their understanding of capital beyond money to include market access, technical skills and other capabilities that enable businesses to produce, scale and compete globally.
“Capital is far more than cash. Capital is market intelligence, knowing where, how and when to sell. Capital is also human capability, the technical skills and competencies needed to deliver value,” Mudiwa said.
He said emerging micro, small and medium enterprises (MSMEs) require a structured three-pronged intervention combining technical production skills, financial literacy and patient capital.
To operationalise the model, Mudiwa said dfcu Bank had committed at least one per cent of its annual net profits to the dfcu Foundation to create an interest-free catalytic fund.
Under the arrangement, MSMEs receive risk capital and repay only the principal, alongside a minimal administration fee, helping shield them from prohibitive interest rates.
Mudiwa cited dfcu’s interventions in agricultural value chains as examples of efforts to de-risk primary producers.
These include supporting cocoa growers in Kasese, alongside Rabobank under the SEED programme, to move into commercial chocolate production, as well as school-based poultry initiatives.
Mudiwa also urged East African Community (EAC) partner states to accelerate efforts towards a common regional currency and streamline cross-border banking operations, saying both would be central to creating an integrated regional financial ecosystem.
“As we think about deeper integration, the common currency is very topical. For us in banking, it would be a major milestone if a customer could open an account in Kenya, Tanzania or Rwanda and transact seamlessly under uniform Know Your Customer (KYC) protocols,” he said.
“Most of our regional currencies are called the shilling. In my opinion, we just need to remove the country prefixes to have a single regional shilling.”
Uganda Bankers’ Association executive director Wilbroad Owor called on central banks and revenue authorities to establish real-time application programming interface (API) linkages across national digital identity registries to enable instant digital cross-border KYC verification.
Francis Ogwang, the East African Development Bank (EADB) country manager, said patient capital, blended finance and Export Credit Agency financing, with repayment periods of between eight and 13 years, were essential to reducing capital and energy costs for manufacturers in the region.