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Neocolonialists Using BOU to Frustrate Indigenous Banks – Dr. Ezra Suruma

Compiled By Markson Omagor



Crane-Bank was closed by BOU

In 2019, Dr. Ezra Suruma wrote an article titled, ‘Ugandans will remain poor until they own their own Banks’ at a Washington DC Hotel Lounge.


Dr. Suruma was responding to an article written by a concerned Ugandan regarding the fate of SACCOs in the Ugandan set-up.


Having come across this article in one of the WhatsApp forums, this writer gave the accomplished Economist a telephone call on Wednesday, 31st January, 2024 to find out whether he still stood by his views expressed in the 2019 article.


Dr. Suruma is former Minister of Finance, Planning and Economic Development, Deputy Governor Bank of Uganda, Managing Director of the defunct, Uganda Commercial Bank (UCB), founding Director of UGAFODE Microfinance Limited, a Tier III, deposit-taking microfinance institution, and shareholder of National Bank of Commerce (Uganda) (NCBU).


Dr. Suruma holds a Bachelor of Science in finance from Fordham University in New York City, obtained in 1969. His Master of Arts degree in economics was obtained in 1972, also from Fordham University. His Doctor of Philosophy in economics was obtained in 1976 from the University of Connecticut. He also has a master’s degree in computer science and one in international banking.


Dr. Suruma worked as a professor of economics and management at Makerere University and at Florida A&M University.


In 1987, he joined the Bank of Uganda, the country’s central bank, as the director of research, serving in that capacity until 1990.


From 1990 until 1993, he served as the deputy governor of the Bank of Uganda. In 1993, he left that position and joined the Uganda Commercial Bank as the chairman and managing director, serving in that capacity until 1996.


In 2005, he was appointed Minister of Finance, Planning and Economic Development. He served in that capacity until 16 February 2009, when he was appointed senior presidential adviser on finance and economic planning.


The international banking magazine The Banker chose Suruma to receive the “Best Finance Minister of Africa Award” for 2008.


During his time as minister of finance, he was a strong promoter of Uganda’s banking industry and was instrumental in the planning and initiation of Uganda’s micro finance project that helps small farmers and businesses obtain low interest loans.



UCB was forcefully sold off even when it was making profits

In the late 1990s and early 2000s, Uganda’s banking industry underwent a major restructuring. Several indigenous commercial banks were declared bankrupt, taken over by central banks, and eventually sold or liquidated.


These include Uganda Cooperative Bank, Bank of Greenland, International Credit Bank, Tief Bank and Gold Trust Bank.


Uganda Commercial Bank (UCB) was initially privatized by selling a majority stake to a purported Malaysian company. However, it was later revealed that the actual buyer was a partnership between the then bankrupt Bank of Greenland and a politically connected individual.


A second privatization sale took place, with South Africa’s Standard Bank, the winner. The privatized UCB merged with the former Grindlays Bank Uganda, already owned by South African Standard Bank, and renamed Stanbic Bank (Uganda). The merged bank is now known as Stanbic Bank Uganda Limited. As of 2008, Stanbic Uganda was Uganda’s leading commercial bank, holding approximately 27 percent of all bank assets and approximately 20 percent of all bank branches.


Indigenous institution Nile Bank Limited was acquired by British conglomerate Barclays in January 2007 and merged with its existing Uganda operations to form Uganda Barclays Bank.

NBC-bank owned by indigenous Ugandans was also closed down

Add to the list, National Bank of Commerce (Uganda) (NCBU) which according to Dr. Suruma was closed without reason and its shares later sold to CRANE Bank owned by Sudhir Ruparelia which was also closed.


UGAFODE Microfinance Limited, a Tier III, deposit-taking microfinance institution which was founded by Dr. Suruma and other local investors to provide cheap credit to Ugandans has eventually been taken over by foreign investors who now own 85% of the shares.


According to Dr. Suruma, the foreigners came in after BOU raised Start Up Capital for Banks to Shs25 Billion forcing them to source for investors who initially bought off 70% of the shares. They were also forced to sell 1dditional 15% of the remaining shares.


The Dr. Suruma’s who are now left with meager 15% shares had successfully run this institution for 20 years before BOU struck with its high Share Capital requirements.


It is against this background that Dr. Suruma wrote this article that we are proud to reproduce.




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 25 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.


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