CONTENTS | ANB-BIA HOMEPAGE | WEEKLY NEWS
by Crespo Sebunya, Uganda, April 1999
THEME = ECONOMY
Greenland Bank is an imposing eleven- storied building
facing the Ugandan Central Bank in Kampala.
But in December 1998, its founder and managing director,
Dr. Sulaimani Kiggundu, was removed from office
Dr. Sulaimani Kiggundu used to be governor of the Ugandan Central Bank but was unceremoniously removed from that job. Together with big business and other financial resources, Kiggundu then built up the Greenland Empire which, in its heyday, included hotels, interests in a university, food processing and, of course, its flagship, Greenland Bank. The Bank was a runaway success with any number of investors willing to entrust their hard-earned cash to the bank's tender care.
But in December 1998, everything began to go wrong - at least as far as the general public was aware. Kiggundu was sacked by orders of the government and his Chief Accountant, Kassim Mukiibi, is believed to have fled to California.
The Central Bank says Kiggundu sinned when he allowed huge transfers of cash from the Ugandan Commercial Bank (UCB) to some directors of Greenland Bank. The UCB and Greenland were strange bedfellows, and the relationship was somewhat confused.
The state-owned New Vision ran a story to the effect that Greenland Bank had purchased the UCB through a crooked deal. It later transpired through a parliamentary investigation, that Major- General Salim Saleh, related to President Yoweri Museveni, had used the Westmont Company of Malaysia as a front to buy the UCB.
On 1 April 1999, Greenland Bank was finally closed and Kiggundu was prosecuted on the grounds of causing severe financial losses to investors.
The UCB/Greenland saga is but one episode in Ug-anda's sad financial history. This sector of the economy was supposed to facilitate investors and allow the growth of indigenous banks which could then be easily accessed by Ugandans. But Kiggundu's wish to have black representation in Uganda's commercial banks seems to have been wishful thinking. By 1992, nine out of fifteen banks were indigenous, but by 1998 only two out of twenty-two could truly be called "Ugandan" Banks.
One reason for this downwards trend is that in Uganda, the attitude towards lending has not sufficiently developed. Mark Ellyne who once served as the International Monetary Fund's representative in Uganda, says Ugandans are among the worlds worst debtors because "they take loans with little intention of ever repaying them. They view loans not as something to be paid back but as a gesture of friendship". Small wonder that all local-run banks are saddled with unpaid loans!
Sad to say, even our bank managers fall short of what should be expected from them. The problem is, Uganda's own banks are family- run businesses and those in charge don't separate business from pleasure.
However, despite all their inefficiencies, the banks still attract customers. Greenland Bank had 120,000 depositors at the time of closure.
Greenland Bank is not Uganda's only banking disaster. The most memorable case involved the International Credit Bank (ICB) and its dealings with the Rwandan government. The Rwandans forwarded $3 million to the ICB for the purchase of helicopters. The helicopters were not the model required by Rwanda and, moreover, the number fell short of what had been ordered and paid for. The Rwandan government felt conned. But what did the ICB's managing director, Patrick Katto, son of Thomas Katto, the bank's owner have to say? "As far as we know, the goods were delivered and received by Rwanda's Ministry of Defence." The Rwandan government obviously hopes it will get its money back but it will be a long haul. The Central Bank of Uganda has already informed them that the Central Bank is in the process of liquidating the ICB and priority for reimbursing funds will be given to Ugandans.
The feeling has been growing within financial circles in Uganda, that the Central Bank of Uganda has been falling short of its responsibility of keeping an eye on Uganda's commercial banks. But now the Central Bank is waking up to the task. Its supervisory department has been strengthened, and on-site inspection has been made of suspect weak banks. Gold Trust and Crane have both been inspected and their operations streamlined. Another strong response has been to deal decisively with debtors who don't pay their debts.
The government has taken other measures as well to strengthen the banking industry. The ICB was "closed for business" and given six months to either recapitalise or go under the hammer. The six months began in September 1998 and ended in March 1999, with the ICB showing no signs of recapitalisation. The ICB managers had pinned their hopes on Chinese or South African investors who never materialised.
Liquidating banks has not proved popular with the average citizen. Recently, a pressure group called "Citizens Concerns" let it be known that they will resist efforts made to liquidate banks and that the Central Bank may be acting maliciously.
Indeed, sympathetic voices have been heard in the corridors of Parliament supporting the ICB and calling for the Central Bank to issue a "stay of execution" order.
END
CONTENTS | ANB-BIA HOMEPAGE | WEEKLY NEWS
PeaceLink 1999 - Reproduction authorised, with usual acknowledgement