When violent land grab further impoverishes already poor peasant farmers: The plight of Apaa people in Amuru District

What can an illiterate subsistence farmer do for a living once the land he usually tilled for a living has been forcibly removed from him? That is exactly the existential plight of Apaa people; a community that was forced to give up their livelihoods, food supply and access to water.

Like refugees they have been forcefully uprooted from their homes. But unlike refugees, no one has offered them any kind of support to match their level of desperation. Their illiteracy and lack of job skills renders them unemployable in alternative decent jobs in the formal economy. Hypocritically, as officials of development agencies fly around the world talking about lofty Sustainable Development Goals like No Hunger, No Poverty etc, the rhetoric spewed at these high level conferences are certainly not really being matched by action at grassroots level to uplift vulnerable poor communities like Apaa.

The ruins of a home in Luru Village, Apaa (May 2018). The hut is just one of more than 844 huts destroyed during the eviction.

Game rangers escort people evicted from part of East Madi Wildlife Reserve In Apaa Parish, Amuru District last year. Land wrangles are rampant in Acholi sub-region. PHOTO BY SAM LAWINO.

On the morning of July 11, 2018, after several hours of grueling travel, mostly on foot, 234 men, women, and children from the sub-parish of matched through the gates of the United Nations Office of the High Commissioner for Human Rights (UN OHCHR) in the City of Gulu. They represented a community that in the preceding months had seen three individuals killed, 844 huts burned down, and over 2,000 people left homeless in brutally violent evictions from their ancestral lands.

Apaa Protesters occupy the UN Human Rights compound in northern Uganda

Their occupation at the UN premises ultimately lasted five weeks and helped attract media attention to their problem (Sara Weschler & Tessa Laing). The community of Apaa arrived armed with a letter addressed to the outgoing UN High Commissioner for Human Rights, Prince Zeid Ra’ad Al Hussein. The occupiers’ letter highlighted the fact that the UN has vociferously praised the Ugandan Government for providing land to refugees, while remaining silent about the same government’s role in the violent seizure of land from its own citizens, themselves struggling to recover from decades of war.

After the guns fell silent in northern Uganda after two decades of civil war, new battle lines were drawn over land. Lots of contestation exist over the land in question. The local community in Apaa, the victims of the eviction, insist the area is their ancestral land where they lived prior to displacement into camps during the insurgency. The Ugandan state represented by Uganda Wildlife Authority, on the other hand claims that the land belongs to a Wildlife game reserve. The sure thing is that there is so much human suffering and economic deprivation as a result of the eviction.

The inhabitants of the Acholi districts of northern Uganda have endured repeated waves of forced displacement for over a century. During the early colonial era, British officials used sleeping sickness control campaigns as a reason to uproot the entire population of western Acholiland, forcibly resettling them along newly constructed roads for administrative and economic convenience. In subsequent decades, colonial authorities often converted the territories they had coercively emptied into nature reserves.

The Acholi communities evidently maintain strong ties to their historic lands, returning to resettle them during periods of degazettement – only to be evicted again as successive colonial and post-colonial governments altered the administrative boundaries within the region.

The same population also bore the brunt of so much economic devastation for nearly 2 decades of armed insurgency that ravaged most of Northern Uganda, pitting the National Army against rebels of the Lord’s Resistance Army. In 1996, the Government of Uganda drove 90 per cent of the Acholi population into Internally Displaced Persons (IDP) camps for over a decade. The Government framed this policy as a measure to protect Acholi civilians from the attacks by the Lord’s Resistance Army (LRA) rebels.

Like nearly all peasants in rural Acholi, the natives of Apaa spent this period confined to camps and experienced widespread deprivation. All these while they relied on relief food supplied by the World Food Programme (WFP). Farming, their erstwhile prominent economic activity came to a grinding halt as they were not allowed to go back to their farm land, which had effectively turned into battlegrounds. They were reduced to destitution. Former United Nations Under Secretary-General for Humanitarian Affairs Jan Egeland declared the 20-year conflict in northern Uganda “the world’s worst form of terrorism” and “the world’s biggest neglected crisis”.

In 2007 when the region was relatively pacified, the community began returning back together former homesteads. They found their homes gazetted into an Adjumani wildlife reserve off limits, they were told, to human inhabitants. Over the next decade, they would face repeated attacks from state authorities as they tried to defend the lands on which they had lived for decades prior to the LRA war.

In 2009, the Uganda Wildlife Authority (UWA), Adjumani District officials, and a South African game park investor signed a 20-year management concession for the territory in question. The UWA began large-scale violent evictions the following year. Although the community launched two court cases — one of them resulting into a court injunction against further evictions — the UWA’s offensive continued to intensify.

In mid-2017 the crisis appeared to take on an ethnic dimension when, despite generations of predominantly peaceful coexistence, Adjumani political leaders incited Madi villagers to clash with the Apaa community, resulting in at least nine deaths.

In short, for all these years, the plight of the Apa people was being handled as a political matter. Yet deep down, this should really be handled as a humanitarian issue that requires long term solution to the livelihood and economic problems of the people. A lot of time has been wasted on gerrymandering, such as determining the administrative boundaries between Amuru and Adjumani district, yet no attention is exerted on ameliorating the suffering of the people.

A family ponders their next move after authorities threatened to evict locals out of Apaa land bordering Amuru and Adjumani Districts in February 2018. Photo by URN.

Uganda happens to be one Africa’ s largest refugee hosting country with over 1.5 million refugees from her restive neighbors like South Sudan, Congo, Burundi. Incidentally, refugees in gazzeted refugee settlements in Uganda all have access to small piece of land, food rations, and social services including health, education, water and sanitation, and social welfare. By sharp contrast, displaced people from Apa do not have access to these kinds of support. Simply put, the humanitarian predicament emanating from land evictions has rendered them to be in a precarious situation, worse than any single refugee being hosted in Uganda. 

Can they afford food for their children? Can they take their children to school? An entire generation of children is being left behind, courtesy of intergenerational poverty. Local leaders reported at the time that upto 5000 pupils were left stranded as schools in the area were destroyed during the evictions.

Displaced people at Oyanga Primary School where they have sought temporary shelter. Photo by Daily Monitor.

Hope for Apaa People

To put the plight of Apa people in proper context, it’s worth remembering than millions of subsistence farmers across Uganda who still own their lands are equally still trapped in poverty. By implication, land deprivation worsened an already bad situation, making Apaa people arguably the poorest of poor people in the world. All this in a world where people are suffering from obesity and over eating.

Eliciting help from compassionate people of this world is in order. Apaa people are not poor because of laziness. They grew poorer because they have been dispossessed of their land, their prime means of livelihood to feed themselves and their communities.

Not even the United Nations on whose compounds they camped in protest in 2018 could find an amicable solution for their problem. Their problems such as Poverty (SDG 1) and Hunger (SDG 2), Literacy (SDG 4) and inability to farm on their lands (SDG 8) and are still pretty much intact.

But there is still hope for the people after all. Following the leads from Nobel Laureate Dr. Mohammed Yunus, the founder of Grammen Bank and author of Creating a World Without Poverty, a specially tailored microcredit can be leverage to lift these people from their present travesties.  Apaa problem shouldn’t be looked merely as a land dispute. If these evicted people had money, they could easily buy land elsewhere and resettle peacefully. Poverty is the biggest culprit. Helping them out of poverty is therefore a worthwhile sustainable solution.

WezaCash was created to help economically vulnerable people like those in Apaa to group together and initiate collective agricultural enterprises of their own. Farming is what these people have been doing, albeit at subsistence level. By providing these people with affordable credit, and an agronomist to support them, these people will be offered wings to fly away from the bondage of poverty that has bedeviled them for decades. By helping them transit from subsistence farmers, to commercial farmers, the future of their children will be secured.

To make this happen, WezaCash is looking for partners with whom they can work together to deliver social credit to empower poor people and lift them out of poverty. By providing credit rather than handout, this programme can sustainably reach many other poor people over the years.   

Owachgiu Dennis

Team Leader WezaCash Project – www.wezacash.com

A Comment on ‘The White Man’s Burden’ by William Easterly

Robert Picciotto, King’s College, London

William Easterly, a development economist, has done research and operational work in many developing and transition economies. Since his retirement from the World Bank he has published widely. His academic work probes the elusive nature of economic growth and the uncertain poverty reduction impact of aid. His new publication (The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good) addresses the general public. Sales have been brisk in the United States and the book is just about to be launched in Europe. A soft cover edition is in the works.

Some books about development are lean and mean. This one is not lean (380 pages) but it is mean all right. At a time when public support for foreign aid is growing, Easterly challenges the basic assumptions that underlie how the business is currently conducted. Since public opinion is fickle and hostility to aid remains widespread, especially in the United States (which ranks close to the bottom of the aid league table) a balanced and constructive critique would have been welcome.

Unfortunately, William Easterly has chosen to burden the book with ideas that pander to the aid critics of the radical left as well as the extreme right. The book offers a devastating critique of the aid establishment – of which he was a part for more than sixteen years. It is filled with vignettes, anecdotes and humorous asides as well as learned
disquisitions about development theory. It is entertaining, instructive and easy to read.

But its central message is stark: the aid business must reform itself or else “the current enthusiasm for addressing world poverty will repeat the cycle of its predecessors: idealism, high expectations, disappointing results, cynical backlash”.

Five useful themes
Easterly is adept at illustrating the potential of aid by pointing to successful development interventions carried out by the private sector (e.g. Shell’s market based promotion of improved stoves), the voluntary sector (e.g. Population Services International distribution of bed nets that serve to combat malaria) and private individuals (e.g. the water
development scheme sponsored by a Ghanaian immigrant to the United States in a remote village plagued by Guinea worm disease). But revealingly, no example of success drawn from the official aid portfolio is put forward.

Included in the book is a thoughtful review of the aid effectiveness literature. Five important and relevant themes of the book stand out. First, Easterly describes the horror of global poverty with economy and eloquence. Second, he disseminates good practice examples of aid initiatives that work – or at least seem to work. Third, he stresses that the
quality of aid matters more than quantity. Fourth, he defines aid effectiveness in terms of its innovative and incentives characteristics. Fifth, he advocates greater accountability and more independent evaluation within the aid industry.

These are sensible propositions. They could have been the central thrust of the book. It is certainly helpful to debunk the cross country econometric studies that measure aid strictly in dollar terms and aid success solely through the proxy of growth. The costs and benefits of aid are far more complex. First, the cost of aid includes its transaction costs, the lack of coordination with other donors, tied procurement rules, etc. Second, economic growth does not capture such benefits as reduced infant mortality or improved maternal health. Easterly rightly suggests putting a close this kind of research which is bound to remain inconclusive and does not offer insights into what makes aid tick.

Easterly is also on the mark when he reminds readers about the perils of externally induced policy reform. At a time when macro-economists have captured the commanding heights of the aid enterprise, it is refreshing that Easterly describes development as a microeconomic phenomenon generated bottom up by social entrepreneurship, cynical
idealism and hard headed analysis. Furthermore, a book that pulls no punches about the need for aid to reform itself is timely since much remains to be done to improve aid effectiveness.

It is good fun to puncture the exaggerated claims of aid advocates who pretend that doubling of aid volumes will ensure achievement of the millennium development goals. It is also healthy to decry the prohibitive administrative burdens that current aid practices impose on weak governments. Finally, there is little doubt that ‘big pushes’ on the aid front embedded in the International Financing Facility championed by Gordon Brown are likely to be detrimental to aid quality. Indeed, a modest and incremental approach is a respectable way to conduct the aid business.

Unfortunately, these are not the messages that readers will remember. What makes the book distinctive is its vivid and eloquent confirmation of the biases, exaggerations and half truths that have long sustained the anti-aid lobbies of the right and the left. Indeed, if the ‘White Man’s Burden’ has become a best seller in the United States it is for three main reasons. First, it provides learned justifications for that country’s miserly contributions to development. Second, it perpetuates convenient myths about the aid industry. Third, it is silent about the distortions of the global system that keep poor countries poor. For all three reasons the net effect of the book on global welfare may not
be positive.

Aid volumes are meager
Right after a vivid and forthright description of the human costs of extreme poverty (‘the first tragedy’), the book identifies a ‘second tragedy’: the allegedly massive failure of aid.
How is it, the book intones, that despite aid expenditures of $2,300 billion over five decades, there are still 1 billion people without access to clean water, malnutrition affects 840 million people and 10 million children die needlessly every year while they could have been saved by four-dollar bed nets and twelve cents medicines?

One does not need a PhD in economics to point out that $2,300 billion over 50 years is equivalent to $46 billion a year. Since 5.3 billion people live in developing countries, they receive aid that amounts to $8.6 per capita per year. If aid could be targeted and limited to the 3 billion poor people that live on less than $2 a day, it would not amount to
more than 4 cents a day, just enough to a big coca cola bottle every month.

The truth is that aid accounts for only 0.4 percent of the national incomes of rich countries. Following a secular decline in the share of national incomes allocated to aid, a recovery is currently underway but it will take many years to reach the 0.7 percent level that OECD countries have undertaken to reach at successive United Nations’
conferences. The money spent on military expenditures by the United States is twenty times larger than all the aid provided by OECD countries.

Aid quality is mixed
Regarding the quality of aid, the policy research evidence is mixed and the fortunes of aid recipients vary. Some aid recipients have experienced growth rates that are unprecedented in world history. Whereas the United Kingdom took more than sixty years to double output per person (1780-1838), Turkey did it in twenty years (1957-77), Brazil
in eighteen years (1961-79), and China and Korea in ten years (1977-87). Between 1966 and 1990, Thailand tripled its real per capita income and India doubled its per capital income.

Independent evaluations suggest that over two thirds of projects funded by the World Bank have met their relevant objectives efficiently and that the trend is up. As for the cottage industry of cross-country correlation studies, it remains inconclusive. A careful review of the evidence suggests that the effect of aid volumes on growth is small and
statistically insignificant in the aggregate. However, the econometric studies that underlie this conclusion do not distinguish between aid channels, instruments or modalities. Nor do they take account of the social and institutional environment within which aid activities are embedded.

This performance record within a public domain that is inherently risky and offers exceptionally high rewards to global peace and prosperity does not justify the vitriolic attacks on aid that the Easterly book offers. Of course, in Sub-Saharan Africa, overall poverty rates have been rising instead of declining and this is a region that has received a
great deal of aid. But it is also a region that has endured a heavy colonial legacy and a great deal of conflict.

If in John Lennon’s words, we ‘imagine, there is no country’ the development narrative has not been altogether bleak. As a share of the total population, poverty dropped in the aggregate between 1981 and 2001 – from 67 percent to 53 percent for the two dollar a day benchmark. Indeed, during the 1980-2000 period annualized per capita growth rates was 3.6 percent for developing countries compared to 2 percent for rich countries.

Average social indicators in developing countries have recorded major gains: life expectancy rose from 55 years in 1970 to 64 years in 2000; infant mortality rates dropped from 107 per thousand in 1970 to 58 in 2000; literacy rose from 53 percent in 1970 to 74 per cent in 1998; the number of people suffering from chronic malnutrition declined from 35 percent to 17 percent of the population. Aid did not do it all but it certainly helped.

For every aid failure one can point to a spectacular aid success that has delivers widespread benefits. River blindness has been banished in many countries as a direct result of aid. Clinics funded by aid have saved thousands of lives throughout the developing world. The green revolution has helped to avert large scale famines and it would not have been possible without the investments in new varieties, irrigation, fertilizer plants and agricultural supporting services funded by aid. For these reasons, in a review of Easterly’s book that appears in the October 4 issue of the New York Review of Books, Nicholas Kristof opines that ‘foreign aid is often the very best investment in the
world’

The pros and cons of aid advocacy
The most unattractive feature of the book (and unfortunately one that readers will enjoy most given Easterly’s masterly use of ridicule as a debating tactic) is the frontal attack on Jeff Sachs, Bono, Gordon Brown and other advocates of doubling aid to developing countries. To be sure, these personalities have exaggerated the poverty reduction impact of aid but other public advocacy campaigns are similarly prone to exaggeration and
simplification. Would aid have rebounded from its secular decline without ambitious millennium development goals that reflect universal human aspirations and that the public can readily understand?

Another disconcerting aspect of the book is the sharp distinction it draws between planners and searchers. Easterly scorns the former and lionizes the latter. The subtext is clear – governments are the problem and private agents the solution. But markets need states just as states need markets. What about fragile states where a third of the absolute
poor live? Is there not a dark, illicit and frequently violent side to entrepreneurship when state institutions are failing or have failed?

There is little doubt that small development schemes run by voluntary organizations and private companies can be beautiful but all too often they have a short shelf life, they involve heavy transaction costs and they are far too dependent on their charismatic sponsors. They are often akin to Potemkin villages designed to lull gullible private
donors. They usually escape any kind of evaluation. Nor are they easy to replicate or taken up on a large scale by resilient national institutions. This means that their poverty reduction impact is modest and that little is left behind when development fashions change.

The simple truth is that large programs that truly impact on poverty require a combination of searchers and planners. Innovative development searchers are frequently very good planners. Consider the uplifting stories of the cooperative dairy ‘White Revolution’ in India, the Grameen Bank in Bangladesh and Progresso, the widely acclaimed school feeding program of Mexico. In all three cases, the institutional innovation started on a small scale. Once proven, the pilot was expanded rapidly through planning and rigorous management – and with substantial official aid support.

 

Nor is the notion advanced by Easterly that aid conditionality never works in line with reality. To be sure, coercive, intrusive and complex conditionality backfires but the art of development assistance is to combine rigor, empathy and simplicity. Thus, the case of Turkey’s policy shift favorably mentioned in Easterly’s book is an instance where
adjustment lending helped to deliver impressive results.

A grievous sin of omission
A major sin of omission is the book’s neglect of the non-aid policies upheld by rich countries towards poor countries. Many of these policies are biased against the poor and they now matter far more than aid. Whereas open trade policies tie rich economies together, severe trade barriers, biased migration regimes, lopsided use of natural
resources and unfair intellectual property regimes impose a heavy burden on poor countries. This is a far more shocking scandal that the alleged failure of aid.

Non aid policies must come to the centre stage since globalization has created new mechanisms of resource transfer that are dwarfing the ‘money’ impact of aid and creating new connections between rich and poor countries (as well as among poor countries).
Already, at the global level, the private sector is already vastly outpacing the public sector both as a source and as a recipient of loans and grants. Worker remittances are growing rapidly and are expected to exceed $230 billion in 2005. Another $260 billion worth of foreign direct investment, equity flows and commercial loans is directed at poor
countries.

Thus, total private flows are at least four times as high as aid flows. The net welfare benefits that could flow from trade liberalization is a multiple of aid flows especially if punishing tariffs against labour intensive products could be reduced, workers of poor countries were allowed temporary access to rich countries and food importing countries
were induced to generate an agricultural supply response through well targeted aid and support for policies that are not biased against the rural poor.

Thus, trade protectionism on labor intensive products has greatly handicapped Bangladesh. It pays the United States more in import duties than France does, even though the value of French exports to the United States is 13 times as high. In the early 1990s, Bangladesh received USD 1.6 billion from foreign aid, USD 2 billion from exports, and USD 0.8 billion from remittances.

By the end of the decade, Bangladesh aid receipts had shrunk to USD 1.4 billion and its exports had risen by more than three times (to USD 6.5 billion)—and this despite an erosion of its terms of trade (by 10 percent). At the same time, receipts of remittances more than doubled, to USD 1.9 billion, and inflows of foreign direct investment, at USD
222 million, were seven times what they were ten years before.

If Bangladesh is no longer considered a basket case, it is in part because of reforms that were facilitated by policy adjustment loans provided by the World Bank. This is yet another development success that does not conform to William Easterly’s dismal assessment. . To be sure there are still lots of poor people in Bangladesh but the bottom line is that poverty reduction in that populous country has been remarkable. This is thanks to well planned and well targeted aid and the combined efforts of reforming governments, private investors and a vibrant civil society Looking ahead, one can only wish that William Easterly will transcend his aid bashing proclivities and apply his debating skills and his sharp analytical mind to the non aid dimensions of the relations between rich and poor countries. This is where the true challenge of development cooperation lies in the 21st century.

Is Bank of Uganda the most Corrupt and incompetent Central Bank in the World?

Whereas Bank of Uganda (BoU) is legally mandated to supervise commercial Banks to safeguard depositors’ interest, it appears the bank’s actions are dictated by the vested interest of its officials rather than national interest.  The controversial closure of Crane Bank opened the pandora box and in effect brought BoU under public scrutiny. Many people, including ordinary people on the streets, now believe that BoU officials are abusing their powers.

Crane Bank owner and Prof Mutebile of bank of Uganda

Ever since Parliamentary Committee on Commissions, State Authorities and State enterprises (COSASE) started its probe, it emerged that BOU acted outside the law in several instances while carrying out its supervisory roles. At the height of impunity, they had the audacity to hawk commercial banks casually through phone calls. It turned out most shareholders of these banks were neither consulted nor involved in the controversial sale of assets of the closed banks.

The directors of the defunct National Bank of Commerce (NBC) have since sued BoU for losses and damages amounting to UGX 295 billion arising from illegal closure of their bank. The directors maintained that BoU acted outside the law when it illegally closed the Bank.

While appearing before COSASE, the Chairman Board of Directors of on NBC Mathew Rukakire told MPs that although the shareholders had capacity to raise the required capital shortfall of 300m, the central Bank with ill motives summarily and arbitrarily closed their without consulting the shareholders. They were shocked to learn that their bank was sold within a record six hours later to Crane Bank.

Whereas the Central bank claimed to have closed the Bank to protect depositors’ interests and maintain the stability of the financial sector, the depositors interest were not under any threat according to NBC shareholders. It is apparent that the officials were determined to fail the bank at all costs. For instance, at the time of the closure, the shareholders revealed that they had raised and invested 7Bn. But BoU had already made their mind to close the bank. BoU went ahead and took over the bank ignoring the right procedures. “When Bagyenda discovered that we had raised the money in the shortest time possible, she became angry and demanded to know where I had gotten the money” says Amos Nzeyi, one of the shareholders of the defunct NBC.

The sale of Crane Bank was even much more controversial. Dr Sudhir Ruperialia sued BoU for illegally taking over and selling his Bank and properties. This was after BOU sued Dr Sudhir and Meera Investment Ltd for allegedly fleecing his self-owned Crane Bank, of Shs397b in fraudulent transactions and transfers. At the time BoU sued Sudhir, the Central Bank had a sort of moral high ground. But as COSASE probed continued and rots unearthed, BOU had completely lost that moral high ground.

Dr Sudhir Ruparelia through Meera Investments has sued the central bank demanding to repossess the former bank branches of the defunct crane bank which belonged to Meera Investments Limited. Dr Sudhir accuses BoU and the commissioner of land registration for fraudulently transferring these properties to dfcu without the knowledge and consent of the owner, Meera Investments yet Crane bank was just a tenant.

A concerned citizen of Uganda, Derrick Nsereko, issued a notice of intention to sue BoU seeking declaratory orders on failure to supervise Crane Bank before selling it to DFCU bank. “The Central Bank has either failed in exercising its statutory mandate in supervising the management and affairs of CBL or the officers of the Central Bank colluded with the management of CBL in doctoring reports of sound financial health of CBL.” The suit reads.

A confidential ‘Special Audit Report of Bank of Uganda on defunct banks’ authored by the Auditor General (AG) revealed arrays of gross regularities orchestrated by BoU. One of the most damning is how BoU’s blew up Shs478.8 billion of the taxpayers’ money for liquidity support and other intervention costs as it prepared the sale of Crane Bank Limited (CBL), which it eventually sold to rival Dfcu Bank in January 2017 at a paltry Shs200 billion.

The auditor General also revealed that BoU senior managers used the money without following certain guidelines. The AG has also poked holes in the Purchase of Assets and Assumption of Liabilities (P&A) deal BoU officials signed with Dfcu on January 25, 2017 for the purchase of Crane Bank Limited.

On the valuation of assets and liabilities of CBL before the dfcu took over the bank in a Shs200b deal, the AG complained to Parliament: “On April 10, 2018, I requested for P&A agreement, including details of the assets and liabilities transferred after taking into account the requisite valuation. I noted that BoU did not carry out a valuation of the assets and liabilities of CBL. In the absence of the valuation, I could not establish how the terms for the transfer of assets and liabilities in the P&A were determined.”

“I was not provided with the negotiation minutes leading to the P&A agreement. In the absence of the minutes, I could not determine how BoU selected the best evaluated bidder and how the terms in P& A were determined,”

In a meeting with the BoU’s outgoing executive director of supervision held on June 13, 2018, at BoU offices, the directors admitted that the BoU did not carry out a valuation of the CBL assets and liabilities but relied on inventory report and the due diligence undertaken by dfcu to arrive at P&A agreement.
“I also noted that the P&A did not have complete details of assets and liabilities transferred to dfcu with their corresponding values; I was therefore, unable to establish the status of assets and liabilities transferred to dfcu.”

It was also revealed that Dfcu Bank, which took over its competitor Crane Bank Limited (CBL), played the role of the valuer and buyer at the same time, leaving questions whether such a transaction can be said to be credible. The now retired Executive Director Supervision (Justine Bagyenda) explained that BoU relied on the Inventory report and due diligence undertaken by Dfcu to arrive at the Purchase of Assets and Assumption of Liabilities (P&A). A source at BoU says Bagyenda and Deputy Governor, Dr. Louis Kasekende played a big part here as they so much wanted Dfcu Bank to buy off Crane Bank at whatever cost.

Section 89(5) of the FIA states that the central bank shall exercise statutory management over a financial institution for the minimum time necessary to bring the financial institution into compliance with prudential standards. But for the case of Crane Bank, BoU apaprently didnt bother to salvage the bank. Their single motive seemed hell-bent on squarely selling off the banks assets. And they sold it at a value that enraged shareholders. dfcu didn’t even pay cash for the purchase, much as they immediately began collecting loans from Crane Bank creditors.

The reports cites a Memo from Ms Bagyenda to Mutebile dated 31st July 2017, indicating that the bad book was Shs570.38 billion out of the gross loans of about Shs1. 2 trillion. This bad book was unfairly transferred to Dfcu to provide a resource for repayment of loans of Shs200 billion and bridge the shareholder’s deficit of Shs439.72 billion at the date of takeover.

The AG could not establish how the consideration of Shs200 billion was derived from the bad book of Shs570.38 billion. “I was also not provided with the schedule of loans and the corresponding collateral transferred to Dfcu therefore I was not able to establish the values and categories of loans transferred performing loans, non-performing loans and fully provisioned/written off loans (bad book)”

In achieving the above function, Section 90(4) (c) of the FIA 2004 requires the statutory manager to evaluate the capital structure and management of the institution and recommend to the Central Bank any restructuring or re-organization which he or she considers necessary and which, subject to the provisions of any other written law may be implemented by him or her on behalf of the institution.

However, according to the report, BoU management did not provide a plan or assessment detailing efforts to return the bank into compliance with prudential standards despite funding of Shs478.8 billion being injected into CBL. “In absence of the plan or assessment to revive CBL, I could not provide assurance as to whether Sections B9 (5) and 90(4Xc) of the FIA 2004 was complied with” The AG’s report states.

The report by Muwanga wonders why Dfcu was not asked to pay interest on Shs200 billion it is paying in installments to buy off CBL.  The former Crane Bank shareholders, just iike shareholders of other closed banks allege that they were excluded in the negotiations of the bank’s sale contrary to provisions of the Financial Institutions Act.

Muwanga reports that according to the P&A agreement between BoU and Dfcu; the rights of CBL to claim against its shareholders, directors or other parties for wrongs done prior to takeover date would remain with the Receiver (BoU). Section 106(1) of the FIA 2004 requires the liquidator to keep proper financial ledgers and financial records in a manner prescribed by the Central Bank in which shall be recorded all financial transactions relating to the liquidation. As such, BoU as the liquidator was expected to prepare a statement of affairs for CBL in receivership but that was not done.

It turned out that BoU which is mandated by the law to regulate and monitor the banking sector was largely at fault for failing efforts by former Crane Bank owner Dr. Sudhir Ruparelia to recapitalize the commercial bank.  Emerging information now indicates that Bank of Uganda has been involved in dubious deals for a very long time. The fraud cases BuU brought against Sudhir were in fact evidence that BOU had miserably failed in its regulatory role.

Many people were left wondering why BoU hurriedly sold the bank, yet the bank’s parent entity Ruparelia Group – a conglomerate with multiple multibillion investments – was in the process of recapitalizing the Bank. Surprisingly, the money Bank of Uganda used in closing Crane Bank was more than the Capital Crane Bank required to return to solvency.

BoU is also being faulted for how it gave away bad loans worth Ugx 550 billion. “Most of all these so called “bad loans” had collateral to back them up, in most cases the best pieces of real estate in Uganda. Right now DFCU is collecting money on these bad loans. Where is this money going since Sudhir has paid and is being asked to pay for the total value of all the bad loans?’’ Andrew Mwenda wonders.

BoU’s mess was not only limited to Crane Bank saga. All the other Banks sold over the years had similar anomalies. In the report, the AG says BoU sold assets of ICB, Greenland, Cooperative, GTB and NBC worth Shs164b at a discount of 80 per cent, yielding only Shs32b.

In the case of ICB, Greenland and Cooperative Bank, the total loan portfolio sold at Shs135b included secured loans of Shs34.5b which had valid legal, or equitable mortgage on the real property and were supported with legal documentation but were sold to Nile River Acquisition Company at a discount of 93 per cent.

For instance, the process of settling liabilities for ICB, Cooperative Bank and Greenland Bank has taken more than 17 years. The AG noted that this has affected the winding up process of these banks.
The AG preliminary report to Parliament also indicated that at least Shs23b from the sale of only Global Trust Bank (GTB) remained unaccounted for, 25 land titles missing, and customer loans inherited from closed banks were sold at an undervalued rate.

Many people now think officials at BOU are clueless shenanigans who need to downscale their arrogance given their exposed level of incompetence. BOU exhibited when breached the Confidential Settlement and Release Agreement (CSR) they entered into with Dr Sudhir.  Clause 7 of the CSR agreement stipulated that no party was supposed to sue each other.

For several years, Prof Mutebile was a widely respected Economics and internationally lauded for Uganda’s macro-economic stability.  Certainly most folks who respected him two years ago now have a totally different opinion of him.

After all is said and done, most investors might have to think twice before investing in Uganda’s financial industry. All because of the mess created by a few crooks.

Owachgiu Dennis