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. 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 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.
The rest will immigrate to the Middle
East to work as slaves. 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 Shs 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 Shs 2 billion to Shs 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 per cent 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. The bank had been profitable from 1965
to 1987 except for 1978 when their buildings in Masaka were destroyed in
the Tanzania war.
So, the loss of those buildings was
written off, resulting in an overall loss. Otherwise the bank had a
history of profitability. The fact that it was government-owned had not
stopped it from profitability.
Today, the four biggest banks in terms
of assets in the whole world are government owned: ICBC, China
Construction Bank, The Agricultural Bank of China and Bank of China. The
idea that government cannot operate a profitable institution is a
sickening lie.
Alongside the restructuring of the Bank
of Uganda – with advisors from Washington, London and Australia - came
the closure of Cooperative Bank and the restructuring of the Uganda
Development Bank.
The President of Uganda resisted
successfully pressure from the IMF to sell Uganda Development Bank. When
I became minister of finance in 2005, I was immediately required to
come up with a paper on micro finance. I moved around the country
looking for examples of successful micro finance practice.
I found successful saccos and
recommended that model. It was adopted by cabinet. My colleague General
Salim Saleh worked with me to draft regulations for the Saccos. Before
we could take them to Parliament for adoption, we were dropped from
finance! In my case, I had just been voted the best Minister of finance
with GDP economic growth rates ranging from 7 per cent to 10.3 per
cent, perhaps the highest on record!
Looking back, I wonder if my dismissal
in 2009, when our attempts to build local capital through Saccos, was
similar to my dismissal in 1996 when I was sacked from UCB for making it
profitable and resisting its sale.
When we proposed Saccos as a means to
increase domestic savings and credits for our people, we knew that they
had to be effectively regulated. Without regulation and supervision,
people’s money would be stolen.
When we left finance in 2009, the
regulations were put aside until 2018 when they were finally legislated
by Parliament. By then many Saccos, including the one in my parish which
had once flourished and helped so many people, had failed.
Incidentally, with the new regulations,
the hand of the Bank of Uganda was smuggled in and the processes of
registration became more complicated. For example, before you can
register a Sacco, members have to be trained by a government commercial
officer.
In every case I have been involved we
had to pay at least Shs 100,000 to the commercial officer as “transport”
to the commercial officer to come and train us. Even in Kampala!
Herbert Sabiti’s observations about the
extension of BOU into savings and profit cooperatives will see the last
window of freedom to form local capital subjected to the control of the
number one neocolonial agency in Uganda. The facts are clear: Bank of
Uganda has the most continuous presence of foreign advisers of any
institution I know of in Uganda. The impact of that advice is the
closure and persecution of indigenous financial institutions.
It is clear that no Ugandan can open a
bank now. The Bank of Uganda has made sure that that no longer happens.
Moreover, even the few avenues that we tried to open for Ugandans such
as Saccos are being closed.
The threat to our future has never been
greater than it is today. The ideology that foreign capital should be
given every privilege while African investment is persecuted and treated
with contempt is before our eyes. We are made to see foreign investment
being praised as our own businesses and lands are taken over by foreign
banks because we cannot repay loans from foreign banks given to us at
exorbitant interest rates.
The lies that interest rates would come
down if UCB was privatized were precisely that: lies. From Congo to Cape
Town, the economic fate of the Blackman is as precarious as the fate of
the young men on boats in the Mediterranean Sea or the young girls
traveling to the Middle East only to end up as slaves, prostitutes and
organ donors.
Do not be deceived. Colonialism is not
only real, it is growing and we are losing even the land we had remained
with at “independence.” If you do not believe me check your parish and
see how much land remains with the natives and how much has been bought
by foreigners. I hope I am wrong.
The author is a former minister of Finance, Planning and Economic Development.
