Monitor UCB’s trade

With John Kakande PARLIAMENT has passed a resolution blocking the planned divestiture of Uganda Commercial Bank Limited (UCBL) ostensibly until a comprehensive report on the modalities of the sale are considered and adopted. MPs want the sale delayed by 24 months. A section of MPs have put up a spirited fight against the sale of UCBL to foreign interests. MPs want the UCBL shares either not sold at all or sold to Ugandans. The resolution passed is simply a tactic to frustrate planned divestiture of the Bank. Four competitors, Standard Chartered, Barclays Bank, Stanbic Bank and Development Finance company of Uganda had been invited by Bank of Uganda to bid for UCBL. Economics and not politics should be the over-riding consideration when deciding the way forward for UCBL. Political demagogies must not be let to dictate the fate of UCBL. MPs have advanced the nationalistic argument that UCBL must be in the hands of Ugandans and not foreigners. While I do appreciate the nationalistic sentiments expressed by the MPs opposing the sale of UCBL to foreigners, I believe delaying the Bank’s divestiture is wrong and misconceived. The UCBL ought to be sold as quickly as possible, whether to a foreign or local investor who can run it professionally. The argument that UCBL should be sold to Ugandans appears attractive and nationalistic. But it is an old and endless argument. It is simply a dream that cannot be realised. UCBL is a big financial institution and there should not be any gambling with it. If it sinks, the way Greenland Bank and International Credit Bank did, it would be too costly to the taxpayer and extremely bad for the national economy. We ought also to reconcile to the bitter fact that — with globalisation, liberalisation and privatisation — no sector of our economy will remain in the hands of the locals. The moment we agreed to liberalisation, privatisation and globalisation, we implicitly agreed to let the foreign Multinationals play a leading role in our economy. This is the reality that some Ugandans do not appear to appreciate. There have been a number of locally owned banks, which have either collapsed or been taken over by foreign interests. Prof. Kamuntu’s own Nile Bank was saved from ruin by the timely intervention of the Bank of Uganda, which subsequently sold it off to foreigners. This was the same story for the Sembule Bank, which has since changed name to the Allied International Bank. Centenary Bank is reportedly no longer fully locally owned as it was at inception. Is there a guarantee that a locally owned UCBL would survive? Let us not forget that the nationalistic argument has in the past led to misconceived and ruinous economic policies. Many post-independence leaders in Africa pursued economic policies that were populist and nationalistic but economically ruinous. Obote’s Move to the Left policy and Idi Amin’s ‘economic war’ were all driven by political nationalism. However, these policies left the majority of Ugandans poorer and miserable. A disaster is currently unfolding in Zimbabwe due to President Robert Mugabe’s populist but misconceived white farms seizure programme purportedly executed in the name of nationalism. UCBL has for years been in the hands of Ugandans. Ugandans ran UCBL down. The taxpayer lost billions in UCBL. The list of UCB debtors passed over to the Non-Performing Assets Trust (NPART) is very informative about who has caused the UCBL woes. The list includes politicians, government bureaucrats and businesspersons with political connections. Some of these politicians advocating for sale of UCBL to Ugandans could actually be scheming to take it over in order to get access to its huge deposits. Watch out! ends