DR EZRA SURUMA: No Ugandan can open a bank now
COMMENT | Dr. Ezra Suruma | One of the most blatant aims of new colonialism (neocolonialism) is to ensure that Africans are denied access and control of capital. The evidence is overwhelming.
It started in 1987 when the World Bank financed consultants to do “diagnostic “ studies of locally owned banks: Bank of Uganda, Uganda Development Bank, Cooperative Bank and Uganda Commercial Bank. The findings were that all these banks were poorly managed, insolvent and candidates for restructuring, closure and privatization.
The financial sector reform that ensued is discussed in my book: Advancing the Ugandan Economy, published by the Brookings Institution in 2014.
Following the recommendations of the diagnostic studies a far reaching financial sector reform followed.
How new BOU law was written
The law governing the Bank of Uganda was scrapped. A new one was written. 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.
This is a critical hypothesis which all patriotic Ugandans can study and accumulate the evidence to show that neocolonialism in the financial sector has increased. 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 favored over domestic investment. Without capital Ugandans are destined to be laborers. Those who are not laborers will be unemployed beggars however educated they maybe. The rest will emigrate to the Middle East to work as slaves.
A Ugandan needs 25 billion to start a commercial bank
Secondly, The law governing the supervision of banks was also rewritten in 2004 so as to strengthen the powers of BOU in their supervision, making it impossible for Ugandans to start a bank by increasing the capital needed beyond their means.
You need 25 billion to start a commercial bank! Even those who had started earlier were made to sell to foreigners as the minimum capital required kept rising.
For example, Kigezi Bank of Commerce which we had started to help in developing Kigezi area struggled to remain open when the minimum capital required was increased from 2 billion to 5 billion.
We were forced to look for new investors both domestic and foreign. The domestic investors brought in very little. We were lucky to get some Asians from Kenya who came in and now owned 76 percent of the bank. Later on when we tried to get those shares back we were dragged into the Temangalo saga which our enemies were using to stop us from regaining control of the bank.
In the end it was closed anyway because the neocolonial masters and their agents are determined to stop Ugandans from owning and controlling capital.
Similarly, Uganda Commercial Bank was privatized because the colonialists could not bear to see Ugandans controlling such a strong bank with nearly half of all bank deposits in Uganda. At first they gave the excuse that it was insolvent. I gave up my position as Deputy Governor and went to UCB and restructured it. It became profitable. I was triumphant and told the World Bank that the UCB was now profitable so there was no need to privatize it.
The World Bank delegation remarked casually, to me, that “now it will fetch a better price.” That is when I realized that “insolvency “ that is, lack of profitability, was just an excuse to take the bank from us.