Written by Yusuf Sserunkuma
Those old enough recall a time when thieves and conmen on Kampala’s streets had mastered the art of disguise found in fashion.
After some time, thieves understood that being dressed shabbily was to be suspected of crime—making it difficult to rob anyone. Thus, upping their game, they started investing heavily in their wardrobes and salons. Looking dope and dandy, and oftentimes carrying briefcases, they rendered their victims calm and unsuspecting.
But this trick was not original to muggers and street conmen. It was a thing they copied from a more sophisticated bunch of gangsters – bankers. Ever wondered why it is a “professional” requirement for bankers to appear dandy and well-groomed?
Yes, the idea is to trick their clients that they are dealing with highly accomplished, equally-rich folks who are simply helping them invest better and grow themselves. But behind this façade of well-groomed dandies and damsels is the ugly hand of tyranny and pillage.
As you know, dear reader, we have been fighting the banking regime in Uganda for some time now. Previously, we focused on (a) the extortionist interest rates, going up as high as 27 to 35 per cent and all of which being driven by a colonial-era racially-driven mistrust of Africans as non-creditworthy, and (b) the Tumusiime- Mutebile-led closure of exclusively locally- owned commercial banks (seven of them closed without minutes) which has (c) ended in commercial banking in Uganda being monopolised by foreign banks.
To this end, I have argued that a combination of extortionist interest rates, and the extractivist foreign monopolies make business life in Uganda difficult (unless one is a thief, not paying taxes or heavily subsidised by taxpayers’ money).
But while we have spotlighted the 24 commercial banks in Uganda (where only two are locally-owned) that endlessly register hundreds of billions of profits—even in the year of the Covid-19 lockdown—we have never spotlighted the cartel calling the shots, Uganda Bankers Association (UBA).
Note that the thing called ‘commercial bank profits’ in Uganda is the true definition of ‘accumulation by dispossession:’ It is taking over borrowers’ assets for loans, which were secured under a banking regime designed to deprive and impoverish the borrower further. It is benefiting from their sweat on end.
Uganda Bankers Association Exclusively constituted of chief executives and their deputies, UBA is an exclusive club of elite compradors. These employees — yes, workers — of Wazungus based in the Netherlands, UK, Germany, South Africa, and the United States have served their masters to perfection.
In turn, Wazungu motivate and remunerate them quite sumptuously: these men and women earn salaries ranging from Shs 85 million to Shs 150 million a month (about $500,000 annually). They are allocated residences, which are like small hotels, in the poshest neighbourhoods of Kampala; with two shamba boys (yes, they are called shamba boys like in the colonial time).
They are given two maids including a chef; comprehensive medical insurances covering entire families; four children education in international schools, gym membership, fully paid holiday trips in Europe and North America, and several allowances and perks. These are dyed-in-the-wool compradors given access to lives akin to—and they serve like—colonial administrators.
These salaries and perks—which are peanuts compared to what they enable their masters take—buy their silence and accomplice in their exploitation of their compatriots. I will never forget that moment when businessman Hamis Kiggundu and DTB Kenya had a Shs 41 billion deal go sour, and UBA, instead started blackmailing and harassing government of Uganda to compensate DTB Kenya.
Their obviously malicious contention was that not compensating DTB Kenya created a bad impression about the judicial environment for business in Uganda. Because public opinion was flowing against DTB and by extension, UBA, its executive director, Wilbrod Owor, unusually took to the media, publishing a bitter opinion in New Vision laced with insults and invectives accusing commentors of cheap moralising, and exhibiting “significant gaps in financial literacy.” It was all baloney, comprador sycophancy.
The truth of the matter was that government of Uganda and UBA have been going at this for a long time. They are a neatly-packaged, legally-sanctioned collusion fleecing Ugandans of their sweat and assets. The British magazine, The Economist, considers these banks, “the most profitable in the world while being least efficient.” Let me show how this cartel works.
The loopholes
While Bank of Uganda regulates that commercial banks to lend to each other at single digit rates, that is, between zero to nine per cent, Bank of Uganda is silent on what rate commercial banks should be lending to individual customers. This is what they left to the market forces of demand and supply.
Thus, left to the whims of UBA, commercial banks charge between 17 and 35 per cent interest rates. But in what business could the clients be involved to afford such capricious and blatantly brutal interest rates? It is basic economics that a bank is profitable at two per cent interest rate, which is why interest rates normally peak at 1.5 per cent in Europe and North America.
Consider this: to monopolise the market, and enjoy this looting window uninterrupted, they have made it difficult for any other private persons—ironically, under free market economics—to open banks and charge any interest they want. Whenever a bank is started by a native, they have two options: either to join UBA and behave like all others, or be summarily closed. Closure used to be the work of our friend, Tumusiime-Mutebile.
Tired of the embarrassment of unjustifiable closure, they simply hiked the starting capital for opening a bank to a humongous Shs 150 billion, effectively knocking out all potential local bankers.
It is my sobering position that, despite being a regime-friendly guy, Sudhir Ruparelia’s Crane bank problem was projecting himself as an indigenous banker, and thus making himself available for interest-rate negotiation with local businesspersons. He was bad business for the UBA.
The author is a political theorist based at Makerere University
