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I Feel Vindicated On Uganda Commercial Bank Sale – Professor Suruma

Professor, Ezra Suruma, says he feels vindicated now that cabinet is considering the revival Uganda Commercial Bank (UCB).

Suruma, the Makerere University Chancellor was one of the few government officials that had tried to resist the World Bank/ International Monetary Fund call for privatization of UCB.

He was the Deputy Governor Bank of Uganda at that time but decided to move to UCB as its Chairman and Managing Director as part of the efforts to save it from being privatized. 

In an interview, Suruma who later became Finance the Minister says the government was pressurized by IMF/ World Bank to privatize UCB and other parastatals as a condition for aid. 

The IMF/World Bank according to Suruma then advised that Uganda Commercial should be privatized because it was unprofitable and not liquid. 

But Suruma says his experience from United States was that the banking sector was a special industry whose operation was jealously guarded by both federal and state laws. 

He says UCB which at the time of its privatization was holding almost half of the banking deposits of Uganda should have equally been guarded jealously. 

UCB according to Suruma was holding over four hundred billion shillings in deposits at the time when it was sold. He says he had ensured the turnaround of UCB by the World Bank and IMF insisted that it should be privatized.  

Professor Suruma says World Bank/IMF diagnostics studies only targeted indigenous banks like Uganda Commercial Bank, Uganda Development Bank and Cooperative Bank. 

Parliament in 2001 after heated debate resolved that UCB should not be privatized. President Museveni, however, wrote to Bank of Uganda Governor, Emmanuel Tumusiime Mutebile insisting that it should be sold even when it had improved in liquidity.

“I have received resolutions passed by Parliament today regarding the privatisation of Uganda Commercial Bank. The resolution does not change my long-held view that UCB should be sold as soon as possible, as per our Privatisation Plan for the whole parastatal sector” reads part of the September 30th letter to Bank of Uganda.

Bank of Uganda proceeded with opening of the bids leading to the sale of majority of UCB’s shares to the South African Bank Stanbic bank at $ 19.6 million.

Cabinet has been discussing the possibility of reviving a bank similar to UCB to influence interest rates and promote development banking. There is feeling that Stanbic Bank now the largest bank determines interest rates on the market. 

Suruma welcomes the idea saying the government should have been cautious in the first place.

But the World Bank continues to cite the privatization of UCB as one of the success stories in Africa.

In 2007, a study “Bank Privatization in Sub-Saharan Africa: The Case of Uganda Commercial Bank” concluded that the privatization of UCB was successful because the bank become solvent and more efficient since the privatization. It said that the sale of UCB improved the access to banking for some parts of the population. 



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