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.
///Cue in “And so in many cases even…….
Cue Out…. after a very long struggle” ///
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.
///Cue in “I did a lot of restructuring……
Cue Out…. they just wanted it and they took it literally by
Professor Suruma says World Bank/IMF diagnostics studies only targeted
indigenous banks like Uganda Commercial Bank, Uganda Development Bank and
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
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
Suruma welcomes the idea saying the government shouldn’t have been cautious in
the first place.
///Cue in “So there are some areas……
Cue out…and I think that struggle must continue.”////
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