Banks have done everything to deny Ugandans access to capital
Wednesday February 16 2022
The death in Nairobi last month of Uganda’s central bank governor Emmanuel Tumusiime-Mutebile dominated the country’s news and commentary for a fortnight.
As the public mourning and eulogies flowed, an article by the current chancellor of Makerere University about banking in Africa and Uganda surfaced and circulated heavily on social media, casting doubt on the relevance of central and commercial banking in Uganda to Ugandans in regard to their accessing or controlling capital is concerned.
The author, Dr Ezra Suruma, has himself been minister of Finance, a top central banker, top commercial banker, respected economics professor and top political ideologue of the National Resistance Movement, NRM.
His article was published by the Observer newspaper, Uganda’s equivalent of The Guardian, which doesn’t compete for market dominance but concentrates on deep reportage and strong discourse. The gist of this insider’s article is that, regarding development in Uganda today, banks are at best irrelevant and at worst dangerous.
Suruma explains how donors made the young NRM government over three decades back, to castrate the national banks, the central bank, Uganda Development Bank, Uganda Commercial Bank and Uganda Cooperative Bank. The last two, which worked directly with millions of individual Ugandans, were privatised and closed respectively. If anybody knows what happened to the banks, Dr Suruma, in his many capacities, does.
Writes Suruma about the foreign inspired reform of the financial sector: “The main change was to make the Bank of Uganda independent of the Ministry of Finance in particular and of government in general. That is why BoU can close domestic banks as if they are private property without bothering what parliament or any other branch of government thinks. They have successfully ensured that foreign banks (read colonial banks) dominance grows and indigenous banks are harassed and closed. Everything possible has been done to deny Ugandans access to the ownership and control of capital. This, in turn, has ensured that foreign investment is favoured over domestic investment. Without capital, Ugandans are destined to be labourers. Those who are not labourers will be unemployed beggars however educated they maybe.”
Dr Suruma adduces “evidence” of Ugandans being denied access to capital by citing the central bank’s determined closure of local banks, including one in which he was involved and whose shareholders had managed to get investors from Kenya to step in and capitalise it; astronomically raising the minimum capital to start a bank to levels national lenders cannot afford.
But possibly the most heartbreaking evidence of the drive to kill access to capital that Suruma adduces is what he calls “smuggling” the hand of the central bank in registration and running of grassroots savings and credit cooperative societies (Saccos). He laments that village Saccos are handicapped by the need to financially “facilitate” public officials who are required to attend their meetings.
Anyway, the heart of local capital was broken earlier with the closure of Coop Bank in 1999 and the more protracted privatisation of UCB, which saw three buyers in 1997 to 2001, the last one being a South African bank.
Suruma finally “adduces evidence” of the mass unemployment that is emptying African girls into the Middle East, where they are forced into prostitution or even have their organs harvested, and the increasing loss of land by locals in their villages to foreigners. He concludes by saying that colonialism is not only real but growing.
The rapid loss of land by locals is probably what restrains Suruma from belabouring the nationals’ increasing impotence to access capital to harness the natural resources like minerals — since they no longer own the soil in which these are found.
For every other week there seems to be hundreds of families being thrown out of land by “investors,” which land is known to contain minerals. For you can’t apply to a bank for a loan to mine and refine minerals in land you don’t own.
The government itself has been a victim of failing to access capital. For a decade and a half, it has run around — on its knees — in search of financing for the oil exploitation. In the end, the government-created oil company got shares in the venture for which parliament will probably be expected to provide a billion dollars.
If the country had indigenous banks which, in addition to making profits, are interested in national development, these should have financed the oil venture, if it indeed is worthwhile, rather than the country eyeing the taxpayer. They would also fund other worthwhile industrial ventures.
Joachim Buwembo is a Kampala-based journalist. E-mail:[email protected]