By Tracie Mugisha
In October 2016, the Ugandan citizenry was pelted to shock by a Bank of Uganda announcement. They had taken over Crane Bank and immediately ordered for the suspension of the top management. What followed next were massive withdrawals as thousands of clients rushed to get hold of their deposits. The second-order effects of takeover were beyond expectations. Suddenly Bank of Uganda was trapped by its decisions.
In Economics, a term was derived; “iatrogenics” popularized by Nassim K Taleb the probability Guru and writer of Black Swan. Iatrogenics is simply a term used to describe harm that is done by the healer which is what the Central Bank did to Crane Bank.
From the start of the year, the bank had been posting profits. However, the effects of its written off Non-performing loans had caused some sort of liquidity crisis. The Central Bank hounded the owners of Crane Bank to recapitalize within a month or else face receivership. Sudhir Ruparelia, one of the owners requested that he be allowed at least 3 months to recapitalize. This was rejected by the Central Bank. He then requested that the Central Bank bails him out and he attaches his real estate properties to save the bank. Once again, BOU rejected this proposal.
In July, Crane Bank was stopped from offering any loans, letters of credit, bank guarantees just to mention but a few. As a result, the business community that always frequented the bank begun to shift house. They withdrew their money and opened accounts in other banks. It is no surprise that in the same month, despite having posted profits from the start of the year, the bank posted a loss having suffered all these effects. Then the rumours of businessmen withdrawing their money begun to circulate. Surely something was amiss at Crane Bank. Before long, the rumours were maturing on Social Media. Now, even the normal clients begun to withdraw their little money. Finally the bank was put under receivership further sinking it into an abyss of no-return. It was a black-hole for a Crane Bank.
On the day of the take-over thousands of the bank’s clients could be seen leaving the bank with bundles of cash. The Central Bank’s interventions had sunk Crane Bank.
But did the Central Bank really have to act? Did it realize that its naive interventionism was instead harming the bank and the economy at large?
In complex systems, small errors should be left to correct themselves. These small errors are ways in which complex systems achieve self-stability. Yet the Central Bank intervened in order to correct these small errors. And on top of this, broke the number one rule of Common Sense which states; “the law cannot be a substitute for common sense.”
Now Crane Bank is in a worse situation that it was. No investor would love to take on an already soiled entity. The customers have transferred to other banks and Crane Bank will need much more injections, thrice what it originally needed to recover. Already, tax payers have lost UGX 200 billion that has been injected by Government to save the bank. Still, the Central Bank doesn’t realize that its naive interventionism has also cost tax payers over 200 billion and will continue to cost them even more.
What was so hard about letting Crane Bank recapitalize over 3 months? Was it the only bank that was in such a dire situation? In hindsight, the Central Bank may have to eat a humble pie and accept its faults in failing to adjust its policies to the realities of the economy. It will also have to accept that the death of Crane Bank was entirely its responsibility. And one can only hope that in future they will learn to go slow on their naive interventionism. The blood of Crane Bank is marked on Bank of Uganda’s hands.
Note: Tracie Mugisha is a writer with CampusEye.ug.
Museveni meets President of StarTimes Group during FOCAC Summit
Ugandan President Yoweri Museveni met with the President of StarTimes Group Pang Xinxing on Wednesday when he was attending the Summit of the Forum on China-Africa Cooperation in Beijing. Mr Pang Xinxing introduced that StarTimes created more than 6000 job opportunities since it started investment in Uganda in 2009 and StarTimes digital TV transmission platforms have enabled Ugandan people to watch rich international and local television programs with an affordable price. Pang said: “We look forward to expanding further bilateral cooperation with our advantageous technology and media resources.” President Museveni appreciated StarTimes’ contribution in Uganda’s digital migration progress and the project of “Access to Satellite TV for 10,000 African Villages”.
He said that the national digital migration is a very important fundamental project for Ugandan people and it wouldn’t be achieved without StarTimes’ involvement. Museveni also invited Pang to visit Uganda with hoping that StarTimes can have more investment in the country.
StarTimes now is the biggest digital TV operator in Uganda with holding 75% market because of affordabl prices and rich content services. In August, StarTimes just unveiled the biggest ever single sponsorship in the history of Uganda www.startimestv.com sport after remarkably securing the Uganda Premier League and FUFA Big League “Title and Broadcasting Rights” from FUFA for a staggering US$ 7,240,000 for 10 years starting with the
2018/2019 season. The Vice President of StarTimes Uganda company, Mr Aldrine Nsubuga said: “We however don’t just want to entertain football fans with foreign football, we want to be relevant to local football fans. We want them to appreciate their local football and support it with a greater passion which is why we want to bring the local league in every household through our broadcast platforms.” The project of “Access to Satellite TV for 10,000 African Villages” is a China-Africa Cooperation program, which was announced by Chinese President Xi Jinping on December 4th, 2015 when he was present at the Johannesburg Summit of the Forum on China-Africa Cooperation. The project is aimed at enabling African families in rural areas to have access to the digital signal with high-quality images and rich TV programs. There will be around 10,000 villages in more than 20 African countries benefiting from the project of “Access to Satellite TV for 10,000 African Villages”. For Uganda, 500 villages are
included in this China-Africa cooperation project. As Africa’s leading digital TV operator, StarTimes is undertaking the whole project. On 20th July, StarTimes launched the project of “Access to Satellite TV for 10,000 African Villages” in Uganda.
Emirates offers Ugandan travelers attractive offers to Dubai
Emirates is offering Ugandan travelers the opportunity to visit Dubai, available at a very special offer for Economy and Business Class roundtrip, a free third piece of luggage of up to 23 kg and a month’s tourist visa included in the offer.
Under the special offer, an Economy Class ticket from Entebbe to Dubai costs $359 and Business Class $1,309. The special offer is for a limited time only and tickets must be booked between 13th September 2018 and 27th September 2018, while travel must take place between 13th September 2018 and 31st March 2019. The cost of the ticket includes airport taxes.
Emirates is also offering a 3rd piece of luggage of up to 23kg for Economy Class and up to 32kg for Business Class, with a one-month tourist visa included.
Dubai provides a great escape for visitors. Its year-round sunshine, world-class shopping and restaurants, stunning beaches and iconic buildings offers something for the whole family. Visitors to Dubai can enjoy some of the city’s must-see places like Global Village – multi-cultural festival park and shopping destination – as well as theme parks such as Wild Wadi Waterpark and IMG World of Adventures. The city also offers a wide range of accommodation to suit all budgets.
On all Emirates’ flights, customers can look forward to hours of entertainment on the award-winning inflight entertainment system, ice, which offers over 3,000 channels of on demand audio and visual entertainment, from the latest movies, music, audio books and games, as well as family friendly products and services for children, including complimentary toys, kids’ meals and movies, priority boarding for families and the use of free strollers at Dubai International Airport.
In addition to the on-board comforts and products, customers will experience the world famous hospitality from Emirates’ multinational cabin crew who come from 135 nationalities and speak over 60 languages, while enjoying chef prepared regional and international cuisine, using the freshest ingredients, accompanied by a wide range of complimentary wines and beverages.
Emirates flies daily from Entebbe to Dubai.
MTN floors Threeways Shipping Group to recover USD 4 million
By Our Reporter
Threeways Shipping Services Group Ltd’s persistent applications to courts in a fervent effort to block the hearing of a suit filed by MTN against it and its Directors for recovery of USD 3,761,933 has hit a dead end in a fresh ruling by the High Court Judge, Justice Billy Kainamura of the commercial division who dismissed it with costs.
In his ruling on September 12th 2018, Justice Kainamura agreed with the position fronted by MTN Lawyers that the case involves enormous sums of money and justice would be furthered if the suit is heard on its merits. He further held that Threeways had not set out any legal grounds disputing the hearing of the case and the hearing of the suit had been frustrated by Threeways incessant applications.
The fresh ruling stems from a suit MTN filed against Threeways for defrauding the telecom giant of USD 4million in fictitious claims. Threeways allegedly made the fictitious claims to MTN between March 2009 and April 2012 on over 130 invoices with collusion of two former MTN employees: John Paul Basabosa and Naphtali Were and were paid colossal sums of money. The two employees were jointly sued with Threeways.
However, in 2014 the Commercial court presided over by Justice Christopher Madrama ruled that it was wrong for MTN to pursue the case against Threeways shipping Services yet there was a memorandum signed not to pursue a criminal case against the company at the anti corruption court.
Since then there has been back and forth appeals with MTN seeking to reinstate the suit and Threeways seeking to block it, resulting into the Wednesday ruling in which Justice Kainamura asserted thus: “I am inclined to agree with Counsel for the respondent, this case involves enormous sums of money and justice would be furthered if the suit is heard on its merits. On this premise, I dismiss this application with costs.”
MTN Lawyer Bruce Musinguzi said the next course of action is to set down the main suit for hearing at the earliest possible date to enable a speedy conclusion of the case.
A top official at MTN who preferred anonymity because the matter is still before court expressed happiness with the ruling. “It was just a matter of time before the truth comes out,” he said, adding, “You cant defraud a reputable company in broad day light, with all the glaring evidence and continue walking around with impunity. We are happy that court will finally dispense justice in a fair hearing.”
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