Uganda: Now Government Wants to Revive Uganda Commercial Bank

May 02, 2019 | The Citizen; All Africa

After the recent revival of Uganda Airlines, National Planning Authority (NPA) officials have said they are carrying discussions and consultations on how to revamp the defunct Uganda Commercial Bank (UCB).

The plan is aimed at helping the government to influence interest rates charged by private commercial banks.

In a telephone interview on Tuesday, Dr Joseph Muvawala, the executive director of NPA said currently, Stanbic Bank which took over UCB is the determinant of interest rates in the country since it is the largest bank and government has no say on fixing the rates because of the existing free market economy.

"We want to strengthen commercial banking with government input in the market of credit to influence interest rates so that with the development of banking, government becomes a big force but we are studying the options," he said.

Dr Muvawala said banks like Pride Micro Finance, Housing Finance Bank and Post Bank are government-owned can be consolidated into one bank or government can buy one, but currently; there are a lot of consultations going on to advise government on the best option.

Asked why they are reviving a corporation which government closed and sold off its assets claiming it was a loss-making statutory enterprise, Dr Muvawala said NPA is advising government to adopt a quasi-market approach where it invests in areas where the private sector is not investing, in order to develop those sectors.

He said that this the reason Uganda Airlines was revived to strengthen the air transport.

He said NPA is also advising government to revive Uganda Telecom because private telecommunication giants MTN and Airtel have become too big yet they have not listed on the Uganda Stock Exchange for Ugandans to buy shares.

Mr Matia Kasaijja, the finance minister on Tuesday confirmed the development and said there are ongoing back and forth discussions within Cabinet to have a government owned commercial bank although it will not be named Uganda Commercial Bank.

"The discussions are going on but the bank will not be called Uganda Commercial Bank. We have been having back and forth discussions in cabinet but a decision has not yet been taken," he said.

Uganda Commercial Bank is among the government owned businesses that government sold off in the 1990s under the privatisation programme following advice from the World Bank.

Its assets and liabilities countrywide were sold to Stanbic Bank.

Some of the revived companies whose assets were sold by government include Uganda Railways Corporation and Uganda Airlines among others. (NMG)

Source: All Africa