NATIONALISE CRANE BANK TO BRING BACK UCB!
1. The recent discomforting event that has seen the Bank of Uganda take over the day-to-day running of Crane Bank following the announcement that it was insolvent, takes us back to the debate on government bail-outs. Uganda Peoples Congress was on record at the time the bail-out debate was raging stating its position that it was in favor of bail-outs.
The collapse of Crane Bank has vindicated the Party as we now have the Bank of Uganda in effect bailing out the failed owners of the Bank by effectively guaranteeing deposits of customers. The Bank of Uganda has also stated on record that investors are welcome to buy the Bank. This was the position of Crane Bank in the months preceding the collapse.
Uganda Peoples Congress stated that the responsibility of Government is to its citizens first and foremost. The Government should have acted hastily once it knew that Crane Bank was in a precarious financial position and should have taken a majority stake in the Bank and in that way it would protect the share-holders and the public purse. Instead public funds are going to be used to shore up a bank that will inevitably be sold to an investor who may well asset-strip it and then leave the hollowed out shell for Government to return and again pick up the pieces.
The Government recently admitted that the sale of the Uganda Commercial Bank was a mistake. Here we now have a ready made opportunity to reverse that mistake. Crane Bank should be nationalised and its business model reshaped to mirror that of the now defunct Uganda Commercial Bank. Uganda Commercial Bank only failed due to a hasty privatisation regime forced on Uganda by the donors. In the run up to that, loans that were effectively just political patronage were made, these quickly became non-performing, thus bad debts. The same has happened at Crane Bank, where loans are also now posted as bad debts. Crane Bank’s owner appeared in the media a while back claiming the economy had been ruined by the government.
There may be an element of truth to the above, but we as a Party are aware that he was the beneficiary over the years of an unsustainable overly-liberalised economic model, one that has collapsed worldwide. It is therefore no good crying over spilt milk when the inevitable boom that was funded by donor generosity has come to an end. The banks were never the friends of the public during those good times, their interest rates for loans attest to that. They simply encouraged consumption over investment.
Therefore it is time now for a sober re-think over how to rebuild Uganda’s economy, and the best starting point would be to acknowledge that a mixed-economy trumps the rampant free for all that the free market model has provided. Crane Bank should be nationalised and run along the lines of the former Uganda Commercial Bank, National Housing and Construction Company as we, The Uganda Peoples Congress, stated last week should work hand in hand with National Social Security Fund and the new Uganda Commercial Bank to provide a solid foundation to return this country to prosperity. Agriculture should be the primary focus and destination for affordable credit as we move away from a consumption-led economy.
2. Uganda Peoples Congress notes with concern the reluctance of the government to adopt fiscal policies that would address our current economic plight. The gap left by the gradual decrease in donor funds has been taken up by ever increasing taxation. In a country where service delivery is poor, the contract between citizen and state is not being honoured and with our perception of corruption within the state machinery, confidence is low.
The Party challenges the government to alter its course and lower taxation to free up personal incomes in order to boost personal incomes hence spending. The Government has to find alternative means to the tight regime imposed by donors who themselves are struggling to contain the fallout from following tight monetary programmes viewed as austerity policies.
3. Uganda Peoples Congress has always contended that the over-liberalisation of the economy and the past donor generosity merely created an illusion of well-being. We are now facing a hangover after the exuberance of abundant funds all designed to make the country more attractive to foreign direct investment at the expense of local investment in the backbone of our economy, agriculture.
The government to its credit has now started to recognise the misdirection and has placed greater emphasis on the revival of cooperatives. UPC will do all it can to support these efforts and in line with the first point, the government should now look at the return of the Uganda Commercial Bank as part of its policy to run in conjunction with the revival of cooperatives.
Whilst we encourage foreign direct investment, the reality is that all we have achieved so far is to provide a haven for investors with extended tax holidays thus transferring a greater burden onto citizens, and cheap labour with little or no labour regulatory policies to ensure their welfare and take home pay. The knock on effect has been one of demoralisation which we all have to find a way to alleviate.
4. Uganda Peoples Congress takes this opportunity to congratulate its football team that participated in the past weekend’s Inter-Party Youth Platform (IYOP) football tournament; held at Makerere University Rugby Grounds and were runners up to the eventual winners, JEEMA. The Party extends its congratulations to JEEMA.
5. The Uganda Peoples Congress would like to congratulate the Government of the Republic of Zambia, and the Citizens of Zambia on their 52nd Independence Day celebration. The UPC would like to pay special tribute to an illustrious son of Zambia and Africa Cde.Dr Kenneth Kaunda who fought not only for the Independence of Zambia but for the entire continent of Africa. Together with his colleagues of the Mulungushi Club Cde. Dr Julius Nyerere and Cde. Dr Apolo Milton Obote, who ensured the struggle to free Southern Africa, was a success though with heavy sacrifices.
Long Live Zambia!
FOR GOD AND MY COUNTRY
MICHAEL OSINDE ORACH