By JAMES ANYANZWA

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The Development Finance Company of Uganda (DFCU) Ltd has rendered 58 employees redundant in a major reorganisation aimed at improving efficiency, growing earnings and consolidating its market share after the acquisition of the troubled Crane Bank six years ago.

The Uganda Securities Exchange-listed lender disclosed through its latest annual report (2022) that the employee restructuring plan that focused on competence-based assessment resulted in a “regrettable” attrition of less than five percent for the year.

DFCU could not disclose the number of people affected by the redundancy programme but going by the lender’s total head count of 1,174 for 2022, it appears 58 staff have exited the institution, putting the employee turnover at four percent compared with 6.2 percent in 2021.

“The employee value proposition was also enhanced with the alignment of terms of service across job families and the upgrading of staff remuneration across job grades. As a result, there was a regrettable attrition of less than five percent for the year,” the lender says.

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Staff attrition refers to the loss of employees through a natural process, such as retirement, resignation, elimination of a position, personal health, or other similar reasons without replacement.

According to DFCU, the competence-based assessment project was implemented to match job role requirements to skill levels, align key performance indicators to strategy, and foster collaborative efforts toward the achievement of organisational objectives.

In addition, cascaded sessions targeting areas of improvement for employees were implemented, critical roles to drive the business and technology filled with new talent and skilling for existing staff through the organisation wide training programme.

DFCU acquired the assets and liabilities Crane Bank, which had been put under statutory management by the Bank of Uganda, in January 2017 for Ush200 billion ($53.83 million) strengthening its position as one of Uganda’s top tier banks.

The lender’s profit after tax for the year ended December 31, 2022, more than tripled to Ush29.47 billion ($7.93 million) from Ush9.31 billion ($2.5 million) in 2021.

However this is a major decline compared to the profit after tax of Ush73.4 billion ($19.75 million) in 2019, the highest net profit after the Crane Bank acquisition.

DFCU’s growth plan is hinged on transforming lives and business through innovative solutions and empowered people.

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Institutional efficiency

This is being executed under three pillars, which include entrenching customer obsession with winning propositions, becoming a digital and data-driven organisation and building a high-performance culture.

Last year, the lender’s restructuring plan included revamping the agency banking business, comprehensive review of the credit procedures, streamlining of the procurement process, cost management and business process re-engineering to increase institutional efficiency.

These changes are aimed at helping the lender attain procurement excellence, branch footprint optimisation, process refinement and automation and modernisation of technology infrastructure.

The implementation of credit review process and other initiatives, during the year, resulted in the achievement of a 48 percent reduction in overall impairment of loans and advances to customers, with 30 percent increase in loan recoveries.

The lender says the collapse of regional banks in the US like Silicon Valley and First Republic Banks, coupled with the takeover of Credit Suisse by UBS calls for stringent risk management.

“We will need to be more intentional in how we manage risks with special emphasis on market risk,” says DFCU.

American Silicon Valley Bank (SVB) collapsed in March largely as a result of the lender holding a large proportion of customer deposits in the hold-to-maturity securities whose values were significantly hit by the Fed’s decision to raise interest rates.

The collapse of SVB sent shock waves through the global banking industry.

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DFCU has also implemented for personal banking revolving around partnerships for mass customer acquisition, loyalty and rewards schemes, and personal financial management solutions.

The lender executed sector specialisation, value-chain financing and optimised the corporate sales coverage model.