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Savings trust that grew into people’s bank

Centenary’s long journey to the top

Judging by the number of branches alone, Centenary Bank was arguably the fastest growing bank in 2008.
Not only did the Catholic Church owned bank open five new branches in 2008, it also started building its new eight-storey headquarters on Kampala Road.
Mapeera Complex, as it is to be called, is due for completion in 2010, having been financed by the bank’s own resources.
Started in 1983 as a credit trust, Centenary Rural Development Bank (CERUDEB), as it was later to be called, has since grown into perhaps the biggest indigenous bank, with 680,000 customers, 32 branches and 51 ATMs outlets.
Only eight years ago, Centenary Bank had 195,000 depositors, scattered through its 15 branches.
Last year’s massive expansion did not come cheap as it cost the bank Shs2.5 billion. But that has not stopped the bank from planning to open another five branches in 2009 at an estimated cost of Shs2.2 billion.
Centenary Bank’s books of accounts showed a healthy net profit of Shs8.5 billion in 2006. This figure shot up to Shs16.4 billion the following year.
Insiders have told The Weekly Observer that the latest books of account due out in March 2009 will show yet another profitable year.
According to the General Manager in charge of Business Development, Sylvia Zizinga, the rapid expansion is helping the bank reach out to more customers.
“We don’t think that people will move into our branches immediately, but they do come eventually and that is how we are growing,” Zizinga said.

The genesis

Following his election as chairman of the Uganda Episcopal Conference in 1983, the now retired Bishop of Kabale Diocese, Barnabas Halem’Imaana was inspired to start a financial institution for Catholics.
For years, Kabale Diocese had encouraged thousands of peasants to save through small, informal and unlicensed credit institutions known as Biika-Oguze (‘save and lend’) which were based at their parishes. The bishop sought to build on the success of these institutions by expanding the saving scheme.
“I realised that this was popular in many other dioceses and I thought that the church should be at the heart of formalizing this scheme to help Ugandans improve their lot,” said the 80-year-old retired bishop. 
The other bishops endorsed Bishop Halem’Imaana’s idea and appointed a former Permanent Secretary, Adrian Sibo, to implement it as board chairman.
But implementation of this idea proved complicated. First, the Catholic Church lacked the money to start a bank, so it decided to use the Biika-Oguze formula of encouraging peasants to buy shares in the credit trust on behalf of their parishes.
Under the Biika-Oguze scheme, those who saved more would earn more in interest on their savings.
“We thought at the time that the people should buy shares for their church but still share in the interest gained from investing with us,” the retired bishop explains.
The move was enthusiastically accepted, and sooner, from the 19 dioceses in Uganda at the time, the bank had amassed enough money to register with the Central Bank as a credit trust.
However, success was a long way coming. For nearly five years, the credit trust made no profit, and actually nearly went under. It was not until 1989 that it registered a profit, after restructuring its ownership.
The French Investment Bank, Sidi, bought into the bank, taking up 8% shareholding as the 19 dioceses retained 42%, while the Catholic Secretariat held onto its 50%.
With these changes, the bank started to make changes in its administration and was earning a steady profit by 1993 when the Bank of Uganda certified it as a commercial micro-bank.
New shareholders

The bank’s shareholding has since changed again, although the Catholic Church continues to hold a substantial portion of the ownership.
The Dutch Investment Bank, Stichting HIVS-TRIODOS FONDS, now holds 18.3% ownership while French Investment Bank Sidi took up 11.6%. The 19 dioceses retained 38.6% of the bank, while the Catholic Secretariat reduced theirs to 31.3%. Also, a few individuals bought up 0.3% ownership.
Between 1999 and 2000, the banking industry experienced major shocks with the closure of International Credit Bank, Uganda Commercial Bank, Co-operative Bank, and Greenland Bank. This left Centenary Bank as the largest indigenous bank in terms of branch network.
Besides, almost all the remaining banks were perceived as elitist and quite intimidating to average savers. Banks such as Barclays and Standard Chartered were demanding not less than Shs 500,000 for one to open a savings account, yet Centenary Bank could do with Shs 50,000 only.
This alone placed Centenary in the position of “the people’s bank” vacated by UCB, Greenland Bank and Co-operative Bank.
The bank continued to appeal to low income earners and SMEs by retaining lower bank balances, and reaching out to rural customers, as well as giving out agricultural loans, which other players were not keen on.
In fact, it’s partly Centenary Bank’s success in this regard that forced the “elite” banks to go for retail business over the last couple of years.
According to Zizinga, Centenary Bank has eased the loan application process to enable small businesses grow faster as they form the biggest employer of Ugandans in gainful employment. “Our mission is to provide appropriate financial services, especially micro-finance, to all people,” she said.


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