Dear Atingi-Ego and Nuwagaba, whose bankers will you be?

Dear governor and deputy governor, it is a pity that your appointment happened in the middle of two major political events.

We didn’t have the time to welcome you properly. On the one hand, the man who appointed you is still harassing his bush-war comrade, Dr Kizza Besigye, for not selling his soul to him. On the other, a violent by-election was ongoing. Again, the man who appointed you sees by-elections as potential affronts on his hold on power.

Had it not been for these events, you deserved a more pleasant welcome because the country had waited for far too long. Congrats! I am no economist, but I have a leg in political economy.

Political economists tend to brag that we have a better view of things than mainstream economists. It is from this perspective that I write to you and I am arrogating myself the role of a wananchi representative.

I will try to set the challenge. Since your jobs are in money matters, I seek to remind you that there are things beyond money and politics: legacy, honour and community, among others. We are looking at you with anxiety. You are likely to be the governors at Museveni’s departure – and probably, you are marking the beginning of a transition.

Gentlemen, you have become governors in a difficult time. The country is in a nervous condition – politically, economically. Your boss is a very over-reaching fella. He will not allow you much legroom to exercise your independence as experts.

But even under colonialism, colonial collaborators often found a small window to exert their agency. It is through these windows and openings that we will judge your legacies.

Tumusiime Mutebile legacy

You both recall the Mutebile-Suruma debate, and Museveni siding with Mutebile to liberalise banking as IMF and World Bank were pushing. Of course, the World Bank and IMF interventions were built entirely on forgery and utter deception. (Prof Ezra Suruma and Dr Jörg Wiegratz have written about these things).

Indeed, Mutebile and Museveni actually handed over our banking sector – and entire economy – to foreign capitalists, whom we had only kicked out 30 years ago. These have milked this country unreservedly. Mutebile outdid himself.

He not only closed local banks violently like a colonial lord – without minutes as Auditor General John Muwanga told parliament in 2021– but also made sure a bunch of foreign capitalists and unelected officials uniting under Uganda Bankers Association (UBA) made into the Bank of Uganda Act of 2006.

Can you imagine, UBA actions are legally protected! They cannot be sued. But they are in Uganda entirely to make profits. Indeed, Ugandans are afraid of these banks. Not because they aren’t interested in banking, but these are extractive colonial outposts. You don’t need to have a bank account for the bank to have its mandibles in your wallet but being in the workforce.

Even the labours of the girls of the night are actually exploited for these banks. Indeed, only banks can make Shs 200bn of profits after tax in half a year – in an economy where everyone else is asking for bailouts. With whom would they be trading?

Notice also that these profits are never spent in Uganda. Ever wondered why there is so little money circulating in the Ugandan economy – and we are always broke? Yes, foreign monopolies – banks, telecoms, miners, Umeme, coffee middlemen – are scooping these humongous profits only to spend them abroad.

Mutebile did not only close already existing local banks but ensured no Ugandan would ever start one. As of last year, 2024, Bank of Uganda increased the premium for starting a bank sixfold – from Shs 25bn to Shs 150bn as paid-up capital. Why? This about $40m!

If Shs 25bn was debilitating enough, what motivated this sharp rise? Why would a potential local banker in Katakwi or Rukungiri – where borrowers would be taking an average Shs 5m need to deposit Shs 150bn with Bank of Uganda?

At Mutebile’s funeral, Yoweri Museveni claimed having been misled by the deceased man. I didn’t believe him especially as regards his weakness dealing with IMF and WB. Ironically, even after admitting failing Ugandans, he has done nothing to amend the situation. Has he done so by appointing you?

Looted through interest 

Gentlemen, you must have read that story from The Economist (March 21, 2020) about five years ago, which focused mostly on Uganda, and noted that “Banks in East Africa are the most profitable in the world, while being the least efficient.” Why?

Interest rates – where the loot rates often average at 25 to 35 per cent. This is extortionist, gentlemen. Not too long ago, Bank of Uganda closed Mercantile Credit bank. As usual, there is never sufficient explanation for the closure of these banks.

And as John Muwanga showed us, oftentimes, there have been no reasons at all. But that is not the story that interests me. It is the story of their loan clearances. In a brave story done by NTV’s Solomon Kaweesa, a school proprietor, a taxi driver, a carpenter and printing guy had all separately borrowed money from this bank at a whopping 40 per cent interest rate.

But if you put aside the fact that COVID-19 had messed with their operations and thus making it even harder to clear their loan obligations, in which world does a 40 per cent loan become acceptable?

The most saddening part was that these unpaid loan obligations were being followed up by Bank of Uganda itself. Absolute shamelessness.

Moving forward

When the government in Kenya tried to cap interests, The Economist told us, bankers sought to sabotage the Kenyan economy. They simply stopped lending. They would not be different in Uganda especially that these bankers work like a cartel.

But what ought to be done, good governors, is to open the playing field. Shs 150bn is designed to create a monopoly for foreign capitalists. Shs 25bn for smaller credit facilities is also colonial.

MFIs and Saccos are terribly encumbered. Europeans don’t practice this nonsense of open markets for whoever has money to loiter in their economies. Banking for them is a national security issue, and one for their pride. Banking ought to be localised.

Prof Ezra Suruma warned us. We will remain paupers until we own banks. We will judge you against these things.

yusufkajura@gmail.com

The author is a political theorist based at Makerere University.