Bank of Uganda pushes for new regulations, honest customers to get credit without security

By Alice Lubwama

The central bank is coming up with regulations that will require utility companies, landlords, and providers of trade credit including manufactures to report to the credit reference bureau on their customer’s transactions.

Speaking at the financial inclusion symposium in Kampala today the director supervision bank of Uganda Dr Tumubweine Twinemanzi said that the information will be used to create a credit profile for borrowers to enable the trust worthy customers get cash or trade credit without
having collateral.

“Let me give an example when you go to buy a car , the car dealer will ask for your national identification number and every time you make your promised payment on time ,the car dealer will report to the credit bureau and when you’re late they will report the lateness.

He noted that by understanding people’s transaction behaviour, one may not need actual physical collateral to be able to borrow.

Tumubweine adds that once the regulations have been approved by the ministry of finance, they will now organize trainings of various stake holders in the industry including traders, manufacturers, utility companies on how they can provide information to the credit reference bureau who will then create credit profile for their customers and in turn use the information to make credit decision.

The managing director Compuscan group company, one of the credit bureau for consumer data, Mark Mukasa noted that the benefits of the regulations are both positive and negative since it will create positive truck record for the people who access credit in the country but at the same time also have a punishment for defaulters who will not be able to access credit from other lenders if they don’t pay up their credit from formal lenders.

“Property has been at the centre of the requirement for one to access credit for formal lenders, yet very few people own property in Uganda.” Mukasa said

He said that by getting credit information over a period of time, lenders will start growing reputation collateral of individuals, that will be used for one to access credit.

According to the central bank credit reference bureaus supports robust growth of the financial sector through providing timely and accurate information on borrowers debt profile and repayment history.

Ugandans dissatisfied with COSASE

By Edwin Muhumuza

Debate on the COSASE report starts this Tuesday (26 February) on the floor of parliament amid high expectations that maybe officials implicated by the probe will be brought to book. What the public is demanding for already are the heads of the culprits.

When it was finally completed and read to the house a section of the public said it had promised too much but only to deliver too little.

While appearing on the Capital Gang Radio Show, Chairperson Abdu Katuntu expressed disgust that members of the public did not appreciate the role of other state institutions. This was in response to claims that his report was toothless and that culprits would walk away free as had been noted in other previous parliamentary reports especially the oil handshake report.

…‘a parliamentary committee report goes to the house where it may be adopted, dismissed or amended. When you have government institutions, they work in accordance with the law. Why we talk about the rule of law is to have different institutions perform different roles. Do not expect a parliament of a republic or a parliament of any country to start having the powers to prosecute or arrest. What will the Judiciary do, Katuntu argued!’

In 2017, Ugandans were angry that 36 government officials shared Shs.6 billion oil bonus code-named the “golden presidential handshake” by officials from the Justice ministry, Uganda Revenue Authority (URA), Ministry of Finance among others. It was this same committee that probed the saga and in public view nothing has been done about the officials. This was one of the issues that Katuntu had to explain in recent weeks amid intense criticism from sections within his FDC party including his successor MP Mubarak Munyagwa for what they said was incompetence during his two and a half tenure as COSASE Chairman.

Now another major report is due for debate by public representatives and the question being asked is what will the discussion help if nothing may be done to those the report seems to indict?

Katuntu says, ‘our focus was in the actions more than individuals because at the end of the day there are state agencies that should be able to take up the individuals. What we did was to say, look here, actually, we used two words deliberately, the officers and officials who participated in this process should take full and personal responsibility. That covers their actions but we imagine that other state agencies now go and look at exactly who handled this process’.

For over two months, Bank Of Uganda (BOU), officials led by the governor Tumusiime Mutebile appeared before the committee chaired by the Bugweri County MP to answer to queries raised by the auditor general’s confidential special audit report which revealed weaknesses in the management of Central Bank and questioned the Governor and his team for the hitches in the closure of at least seven commercial banks.

The sale of Crane Bank, however seemed to have opened a can of worms after the proprietor businessman Sudhir Ruparelia accused Bank of Uganda of being unfair. Crane Bank was a commercial bank licensed and supervised by the Bank of Uganda, the national banking regulator with total assets‎ amounting to approximately ‎UGX 1.81 trillion employing over 600 staff.

This was a much bigger financial entity compared to the other defunct banks and certainly had to attract immense public attention including the media. In his new report to Parliament, the Auditor General, Mr John Muwanga, queried BoU officials on the flaws in the closure of Teefe Bank (1993), International Credit Bank Ltd (1998), Greenland Bank (1999), The Co-operative Bank (1999), National Bank of Commerce (2012), Global Trust Bank (2014) and the sale of Crane Bank Ltd (CBL) to dfcu (2016)

Most Ugandans are aware that the closure of Crane Bank by Bank of Uganda was illegal, what remains to be seen is what happens to the culprits that were engaged in this illegality and whether other agencies such as the Inspectorate of Government, the ministry of Finance, Criminal Investigations Department of Police will bite.

Parliamentary committee sets up a team that will read all documents submitted by Bank of Uganda

By Edwin Muhumuza

The parliamentary committee on Commissions, Statutory Authorities and State Enterprises(COSASE) yesterday decided to set up a team that will read all documents that are mainly confidentially submitted from Bank of Uganda for purposes of scrutiny. Chairperson, Abdu Katuntu said there will be no photocopying or taking photos of the documents to avoid leaking them to the public.

‘I set up a two-man committee involving one person from the NRM and one from the opposition, Hon Twesiime and Hon Medard Ssegona. They are going to be handling the confidential issues supervised by the vice. However, this information is not restricted to them because even members may access it for purposes of reading. No reproduction, No photocopies or even phones…’Katuntu said.

Meantime, the committee also accused Bank of Uganda of wrongfully closing Teefe Bank in 1993. Hon. Katuntu said that the then Finance Minister Jehoash Mayanja Nkangi did not have the power to order its closure on grounds that he based on the Bank Act of 1963 instead of the Financial Institutions Statute of 1993.

And as legislators began to point out more faults and seemingly about to condemn the Central Bank officials, there were appeals for patience at this stage of the probe.

‘now that we have ascertained their responses about the law, we are not going to judge anything at this point, let’s go through the process until the end, before we can make conclusions because we shall have heard all the information we need’ Katuntu remarked.

Earlier Bank Of Uganda Governor Tumusiime Mutebile was faulted over wrong and contradictions in his response about the dates of the closure of Teffe Bank. What was reflected in the response was not accurate according to the committee chair, Abdu Katuntu who noted that it was closed on 4th November 1993, and not in February 1993 as reported.

This amid arguments about the different legal regimes they acted to close it;1969 Bank Act or the Financial Institutions Statute 1993.

Members expressed disappointment amid calls for the Bank officials to go on oath, thus invoking powers of a High court to penalize witnesses over the contradictions.

While members mulled at the circumstances surrounding the failure of the Teefe Bank, Bank of Uganda Governor Emmanuel Mutebile revealed that he would not intend to reopen any of the defunct banks. This while responding to queries from Aruu county MP, Odonga Otto. ‘In principal, I would never dream of reopening a bank I have closed before.’

The committee will meet BOU officials every day except Saturday and Sunday until they are done.

Man drags A-Plus funeral services, Bank of Uganda to Court over Semwanga’s burial

By Sania Babirye

A concerned citizen a one Abey Mgugu has  dragged A plus funeral management and the bank of Uganda to the high court seeking orders to open the grave of Uganda socialite Ivan Semwanga and retrieve the money buried with him.

Mgugu is also seeking court to have the would be retrieved   money sent back into circulation so that the currency of Uganda and others are respected.

Mgugu also wants declaration that  the bank of Uganda  willfully  and negligently failed to ensure that all currencies buried  with the deceased are respected.

The public was amazed when a group of people calling themselves members of the rich gang stormed the burial ceremony of the late Ivan in Kayunga district and threw money into his grave before and when he is being lowered into his grave on Tuesday  this week.

The currencies  thrown ranged from 20 and  50 000 while others were  South  African  rands  and USA dollars.

Court is yet to pronounce itself on the matter.

Bank of Uganda has reported drastic raise in Annual crop inflation.

By Alice Lubwama

Bank of Uganda has reported drastic raise in Annual crop inflation in the last three month.

This comes at the time when many part of the country is experiencing drought which is likely to last until the end of this year.

While releasing the monitory policy statement for October  2016, the governor bank of Uganda Prof Emanuel Tumusiime Mutebire said that in the last month food inflation have jumped from -1.9% to 5.1%.

He explained that the major cause of this the drought that affected affecting planting season and subsequently harvest has been extremely poor.

He however said that the trend is likely to change if rains start in the near future.

Meanwhile annual headline and core inflation declined to 4.1% and 4.2% in September respectively from 4.8% and 5% in august prompting bank of Uganda to lower central bank rate to 13% from the previous 14%.

Photo: Alchetron

BOU warns against fake 100,000 Ugandan shilling note is trending online

It has come to the attention of the Bank of Uganda that unknown individuals have created and are circulating an image of a bank note of UGX. 100,000 purportedly issued by Bank of Uganda. This is illegal.

The public is informed that the Bank of Uganda has not issued any new denomination of Uganda currency and does not plan to do so in the near future.

The individuals circulating these illegal images are hereby warned to stop doing so with immediate effect. Misinformation of this nature has the potential to cause confusion and disruption of normal economic activities especially among members of the public in rural areas.

The public is urged to ignore the image as a hoax and report known perpetrators to Bank of Uganda.