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01/08/2019

Islamic Banking in Uganda

Islamic Banking has recently attracted media attention and generated animated commentary from the public. This debate about a new financial product or service is healthy and warranted. However there are some misrepresentations and falsehoods in this debate that need to be corrected. .

In line with its constitutional mandate, Bank of Uganda (BoU) worked with Parliament to ensure that legislation enabling the introduction of Islamic banking products in Uganda was enacted. Consequently the Financial Institutions Act 2004 was amended in 2016. The amendments included specific provisions allowing for the establishment of fully fledged Islamic Financial Institutions and for existing Financial Institutions to offer Islamic Banking alongside their conventional banking services.

But what then is Islamic banking? In essence, it is a banking system based on the principles of Islamic or Sharia law. It is underpinned in application by concepts derived from the Quran and the writings of Islamic scholars. These concepts revolve around the value of a sound currency and fairness in transactional dealings, the latter being structured within the bounds of Sharia law. Parties to any transaction in this banking system are obliged to conduct their business affairs, with a focus on what is permissible and lawful under Sharia law.

As indicated earlier, Islamic banking transactions are guided by morals and value system as derived from Sharia Law, and these demand: transparency and full disclosure between parties to a transaction; good faith in conduct by the parties to a transaction; and participation in transactions that do no harm to the wider society. Consequently, transactions in Islamic Banking are often viewed as a culturally distinct but religiously motivated form of ethical investing.

And last but not least, the central premise in Islamic Banking is that money, in of itself has no intrinsic value, but rather it must be used to generate income through trade and / or investment in tangible assets; whence it derives its value. Any gains arising from the trading are shared between the party providing the capital and the one borrowing the money and providing the expertise. In supplement to this fundamental premise, there are four key principles that provide additional anchor for this type of banking, namely:

a) Prohibition of payment and receipt of interest

Interest represents any fixed or guaranteed payment on cash advances or on deposits, therefore representing a sure gain to the lender regardless of the performance of the borrower’s business or commercial undertaking. This is precisely what Islamic Banking prohibits. However, Islamic Banks are permitted to engage in trade and commerce, and the value they create is through the profits earned in trading or participating in other forms of commercial enterprise. But this option is not available to conventional banks, since the value they create is through the earning of interest.

b) Mutuality of risk sharing-profit and loss

In Islamic Banking, the Banks and their customers are partners, and share in a predetermined and agreed ratio, the profits or losses arising from this “joint venture”. This of course demands full disclosure or rather minimal information asymmetry from both the lender and borrower with respect to the said transaction.

c) Prohibition of investment in harmful sectors / Businesses

Islamic Banking integrates Islamic moral and ethical value systems, and as such, prohibits the financing of harmful products and or activities. The definition of what constitutes harmful is derived from Sharia Law, and thus Islamic banks cannot therefore finance businesses such as casinos, nightclubs or any such activity.

d) Prohibition of uncertainty and speculation

There are strict rules in Islamic finance or banking against transactions that are highly uncertain or speculative or that may cause any injustice or deceit against any of the parties. For example: the sale of goods or assets of uncertain quality or delivery or payment; or contracts not drawn out in clear and unambiguous terms; are some of the many transactions prohibited under Islamic banking. This prohibition extends to transactions or contracts where uncertainty is combined with one party taking advantage of the property of the other, or where one party can only benefit when the other party loses. And by extension, speculative transactions are also prohibited since no asset is created.

How Islamic banking will operate in Uganda

In operation, Islamic Banks mobilize customer deposits and provide financing arrangements to customers by structuring various types of financial contracts. These contracts or transactions must uphold the four (4) key principles of Islamic Banking that were described earlier.

Mobilization of Deposits:

Under mobilization on deposits or funds, the existing legal and regulatory framework in Uganda allows for customer deposit mobilization through the following arrangements:

Profit Sharing Investment Accounts

These are akin to fixed deposit accounts in that the account holder allows the bank to invest the funds on their behalf either in projects specified by the account holder or in unspecified projects. The bank and the account holder share profits / losses arising from the investments.

Profit Earning Investment Accounts

These in operation are akin to savings accounts in conventional banking. With these accounts, the customer earns a profit on their deposits held with the financial institution.

Non-profit-bearing deposit accounts

These are akin to current accounts in conventional financial institutions. The depositor does not earn any profit on their deposits.

Disbursement of Credit: Regarding funds mobilized in a Sharia compliant manner, Islamic banks provide and extend Sharia compliant credit facilities in the following forms:

Sale Based Financing (Cost-Plus Mark-up); in this contract, the financial institution purchases an asset directly from a supplier and sells it to customer at a pre-determined price. The selling price includes the original cost plus a negotiated profit margin.

Lease Based Financing: where the financial institution purchases an asset directly from a supplier and leases it to the customer for a certain period at a fixed rental charge. The repayments made by the customer comprise the cost price plus the financial institution’s profit.

Equity Partnership: Financing; these contracts are based on Profit or Loss Sharing arrangements and they mainly take two broad forms: Trust Financing and Partnership as indicated below: i) Trust financing: The financial institution provides the entire capital needed to finance a project, and the customer provides the expertise, management and labor. The profits from the project are shared by both parties on a pre-agreed (fixed ratio) basis. However, in case of losses, the entire loss is borne by the bank.

ii) Partnership: These are similar to joint venture agreements, in which a bank and an entrepreneur jointly contribute capital and manage the business project. Any profit or loss from the project is shared in accordance with a pre-determined ratio. The financial institution would ordinarily terminate the joint venture gradually after a certain period or upon the fulfillment of a certain condition.

Regulatory framework: As indicated earlier, The Financial Institutions Act 2004 was amended in 2016 to enable Islamic Banking. The amendments therein included exemptions offered to licensed Islamic Financial Institutions with respect to restrictions on engaging in trade and commerce, activities not allowed for in conventional banks. Subsequently, Bank of Uganda issued the Financial Institutions (Islamic Banking) Regulations in February 2018 to cater for the technical aspects unique to Islamic financing, and to operationalize the amendments related to Islamic Banking in the Financial Institutions Act 2004.

This regulation covers the “how” and “what” for the licensing and regulation of Islamic banking in Uganda, and a proviso that outside of the specific exemptions granted in the amended Financial Institutions Act 2004, Islamic financial institutions are still bound to comply with all existing regulatory requirements.

One key requirement of the abovementioned Regulation is the establishment of a Shariáh Advisory Council (SAC) at the Bank of Uganda. This SAC is responsible for ensuring that all Islamic financial products presented and marketed as such, meet Shariáh based criteria for the said products and services. The establishment of this SAC should be concluded once consensus has been gotten with the relevant stakeholders.

Islamic Banking in Uganda, where we are today:

Various entities have expressed interest in establishing Islamic Banking entities in Uganda. Bank of Uganda is currently processing three applications: one for an Islamic products window by a locally domiciled conventional Bank, and two applications by foreign entities interested in establishing fully fledged Islamic Banks.

It should be noted that Islamic Banking is practiced in various jurisdictions around the World. In Africa, this includes countries like South Africa, Nigeria, Mauritius, Botswana, Kenya, Tanzania, Rwanda, Senegal, Algeria, Egypt, Sudan and Tunisia. The diversity of the dominant religious belief systems of the nations on the list above, underscore the fact that Islamic banking is not a preserve of Islamic states or nations.

Dr. Tumubweinee Twinemanzi

Executive Director Supervision, Bank of Uganda

imf.org 05/03/2019

IMF, Anti Money Laundering and Economic Stability – IMF Finance & Development Magazine | December 2018

"Money laundering is what enables criminals to reap the benefits of their crimes, including corruption, tax evasion, theft, drug trafficking, and migrant smuggling. Many of these crimes pose a direct threat to economic stability," writes the IMF’s Rhoda Weeks-Brown. Learn more at http://ow.ly/MS9x30mNGYq

imf.org Money laundering poses a direct threat to economic stability. The IMF is committed to helping its members identify today’s dirty money laundromats—and close them down.

22/02/2018

Russian interference in the US elections: Have kept my cool throughout all this drama. The principle in any capitalistic move is wealth. So if you want to know the push factor, follow the " who benefits" theory.
So my question is which international power benefits or benefited most from the Trump presidency.
He is totally against the Iran Nuclear deal......who benefits most.
He increased defence grant to Israel......who benefits
He recognises Jerusalem as Israel capital........who benefits
He is against the two state policy in Israeli Palestine conflict.......who benefits most.
And so many more

So if we also talk about motive: who didn't want to see Hillary and the Obama policy continue in the White house..........
Maybe V Putin, maybe Benjamin.
And Russian is the third or forth language spoken in Israel. So is it possible that the plan was executed by my smart friends in the Arabia and the Kremlin was framed............just thinking.

10/02/2018

IMF Finance & Development Magazine

What is inflation? Find out in less than 2 minutes!

03/02/2018

I HAVE NO IDEA WHO WROTE THIS BUT IT MAKES INTERESTING READING & FOOD FOR THOUGHT

Friends,

Let me add the benefit of my time as a student and then resident in the UK-and I live in Kampala now. The first thing that I discovered about UK-born,white, English undergraduates was that all of them did holiday or weekend job to support themselves-including the children of millionaires amongst them. It is the norm over there- regardless how wealthy their parents are. And I soon discovered that virtually all other foreign students did the same-the exception being those of us status-conscious Ugandans.

I also watched Richard Branson (owner of Virgin Airline) speaking on the Biography Channel and, to my amazement, he said that his young children travel in the economy class-even when the parents (he and his wife) are in upper class. Richard Branson is a billionaire in Pound Sterling. A quick survey would show you that only children from Uganda fly business or upper class to commence their studies in the UK. No other foreign students do this. There is no aircraft attached to the office of the prime minister in the UK-he travels on BA. And the same goes for the Royals. The Queen does not have an aircraft for her exclusive use.

These practices simply become the culture which the next generation carries forward. But there's one core difference them and us (generally speaking). They (even the billionaires among them) work for their money, we steal ours!

If we want our children to bring about the desired change we have been praying for on behalf of our dear country, then please, please let's begin now and teach them to work hard so they can stand alone and most importantly be content, and not having to "steal", which seem to be the norm these days.

"30 is the new 18", which seem to be the new age for testing out the world in Uganda now. That seems to be an unspoken but widely accepted mind set among the last 2 generations of parents in Uganda.

At age 18 years, a typical young adult in the UK leaves the clutches of his/her parents for the University, chances are, that's the last time those parents will ever play "landlord" to their son or daughter except of course the occasional home visits during the academic year.

At 21 years and above or below, the now fully grown and independent minded adult graduates from University, searches for employment, gets a job and shares a flat with other young people on a journey into becoming fully fledged adults.

I can hear the echo of parents saying, well, that is because the UK economy is thriving, safe, well structured and jobs are everywhere? I beg to differ and I ask that you kindly hear me out. I am a UK trained Recruitment Consultant and I have been practicing for the past 10 years in Uganda. I have a broad range of experience from recruiting graduates to executive director level of large corporations. In addition, I talk from the point of view of someone with relatively privileged upbringing.

Driven to school every day, had my clothes washed for me, was barred from taking any part-time job during my A-levels so that I could concentrate on studying for my exams?! BUT, I got the opportunity to live apart from my parents from age 18 and the only time I came back home to stay was for 3 months before I got married!

Am I saying that every parent should wash their hands off their children at age 18?
No, not at all, of course, I enjoyed the savings that I made from living on and off at my parent's house in London - indeed that is the primary reason for my being able to buy myself a 3 bedroom flat in London at age 25 with absolutely no direct financial help from my parents!

For me, pocket money stopped at age 22, not that it was ever enough for my lifestyle to compete with Paris Hilton 's or Victoria Beckham 's. Meanwhile today, we have Ugandan children who have never worked for 5 minutes in their lives insisting on flying "only" first or business class, carrying the latest Louis Vuitton ensemble, Victoria 's Secret underwear and wearing Jimmy Choo's, fully paid for by their "loving" parents.

I often get calls from anxious parents, my son graduated 2 years ago and is still looking for a job, can you please assist! Oh really! So where exactly is this "child" is my usual question. Why are you the one making this call dad/mum?

I am yet to get a satisfactory answer, but between you and me, chances are that big boy is cruising around Kampala with a babe dressed to the nines, in his dad's spanking new SUV with enough "pocket money" to put your salary to shame. It is not at all strange to have a 28 year old who has NEVER worked for a day in his or her life in Uganda but "earns" a six figure "salary" from parents for doing absolutely nothing.

I see them in my office once in a while, 26 years old with absolutely no skills to sell, apart from a shiny CV, written by his dad's secretary in the office. Of course, he has a driver at his beck and call and he is driven to the job interview.

We have a fairly decent conversation and we get to the inevitable question-so, what salary are you looking to earn? Answer comes straight out- UGX 2,000,000.
I ask if that is per month or per annum.

Of course it is per month. Oh, why do you think you should be earning that much on your first job?

Well, because my current pocket money is UGX 1,000,000 and I feel that an employer should be able to pay me more than my parents.

I try very hard to compose myself, over parenting is in my opinion the greatest evil handicapping the Ugandan youth. It is at the root of our national malaise.

We have a youth population of tens of millions of who are being "breastfed and diapered" well into their 30s. Wake up mum! Wake up dad! You are practically loving your children to death! No wonder corruption continues to thrive. We have a society of young people who have been brought up to expect something for nothing, as if it were a birth right.

I want to encourage you to send your young men and women (anyone over 20 can hardly be called a child!) out into the world, maybe even consider reducing or stopping the pocket money to encourage them to think, explore and strive.
Let them know that it is possible for them to succeed without your "help".

Take a moment to think back to your own time as a young man/woman, what if someone had kept spoon feeding you, would you be where you are today?.
No tree grows well under another tree, children that are not exposed to challenges, don't cook well.

That is why you see adults complaining, “my parents didn't buy clothes for me this Christmas", ask him/her how old they are-30+.
Because of the challenges we faced in our youth, we are where and what we are today, this syndrome-my children will not suffer what I suffered is destroying our tomorrow.

Deliberately reduce their allowance or mum-don't cook on Saturday till late afternoon or evening, do as occasion deserve.

Anyone who keeps learning stays young. The greatest thing in life is to keep your mind young.-( Henry Ford) .
Hard work does not kill, everything in Uganda is going down, including family settings. It is time to rebrand our children, preparing them for tomorrow. We are approaching the season in Uganda where only the RUGGED, will survive. How will your ward fare?

If the present generation of Ugandan pilots retire, will you fly a plane flown by a young Ugandan pilot, If trained in Uganda? People now fly first class, who cannot spell GRADUATE or read an article without bomb blast! Which Way Uganda!, Which Way Ugandans!!

Is this how we will ALL sit and watch this country SINK?

Pls forward to as many parents as you know

03/02/2018

*Throw Away That Degree Otherwise You Will Die Poor* 👌🎓🎓

✊Things have changed so we must change too, Universities in the 60s used to produce 1000 graduates each year and they would get jobs even before finishing, but now each year we graduate more than 80,000 from over 30 universities and 100 institutes.
🤷🏻‍♂Where are these people going? Even if We pray day and night, we can't have jobs for even a quarter of these graduates.

_The education system only trains one to be a slave to another, work for someone for a pay cheque and make sure his dreams are achieved, it doesn't prepare us for the current competitive world where almost everyone has gone to school._

🤔Most of the Educated people in Africa are poor not because they are dense but the way they see things just doesn't apply to the real world. 🕺🏻The lucky ones who get a job earn less than 600k for a salary before tax and other deductions. When the deductions are put into consideration, the net salary comes to around 400k. The net salary then suffers from loan deductions, The landlord then demands for his 300k and monthly shopping takes away 100k leaving one with 0shs The taxi will demand for 6k going to and from work and other emergencies come in. The whole salary is gone and borrowed money starts working.

🙃 Most of the degree holders are poverty stricken, borrowing money to buy smart phones, nice clothes, shoes, makeup ,chicken and chips, pizza, and a small car for shobies.

👉🏻The biggest excuse for getting paid such low amounts of money and having to sit and work for another person for 30 days is *THE DEGREE* that one possesses and that’s all. This has made most of the degree holders very poor and will die that way most likely.
💵 _*A degree holder does not know how to generate money even from the simplest thing unless that money is generated for the employer. He is so dependent on the salary that he can do anything to get a job but will not think of starting a business of his own to employ others not even operate a chapati Business where he can make 30k a day.*_

▪A degree holder is not prepared to sell chips but enjoys them with friends every 3days in a week, my brother think of doing business here

▪A degree holder is not trained how to make money from school yet it's the order of the day in the real world.

▪A degree holder is not prepared to sell second hand clothes but is very happy to be employed by the business owners and is very good at buying expensive clothes

▪A degree holder is not prepared to make 1.5M monthly doing his own business but is very happy to work at the Till in a bank getting paid 500k.

▪A degree holder is not prepared to start a company and grow it in 2 to 3 years but will spend 4 years searching for a job and works for 30years pushing another person's dream.

▪A degree holder is not prepared to sell food to students but will be happy to be reporting to a boss with no qualifications as long as he is paid 400k for a salary.

▪A degree holder is so eager to get out of this country and work in another country than spend time to develop his own country by creating solutions and innovations.

▪A Ugandan degree holder would rather sweep the streets of London or USA than start a business and make money in Uganda – others work in people’s homes as maids.

▪A degree holder in Uganda will watch movies and music on his laptop all the time but never to write a book or research about business opportunities using the same laptop and make money.

▪A degree holder will blame the government for lack of jobs even when he was on government bursary for him to have his degree.

▪Uganda is blessed with people who have master’s degree and others are doctors in different technical fields such as IT and Engineering but all of them have failed to create a cartoon character and develop a movie from the same instead very happy to buy Tom and Jerry for their children thereby promoting America.

🍝🍹 *At the University I went to, there is an old man very humble and illiterate. He does not speak English but sells Soda at 1500shs and Fresh juice at 500 each making a profit of 600shs on each soda plus 300shs on juice. He also sells chips at 2500shs making a profit of 800shs on each plate. Not less than 30 students buy chips and a drink every single day. This means he makes a profit of 18000 for a soda ,9000shs for juice and 24000 for chips and a total profit of 51000shs Every single day. In 10 days he makes a profit of 510000shs, in twenty days 1,020,000shs that's 1,530,000 a month*

👉🏻The degree holder working in a bank at the till gets a salary of 700k every month with nssf, local service tax, pay as you earn and other deductions.

👊 *Why are the degree holders poor?*
Because they have decided to pride themselves in a degree and failed to think better than a man who does not have even a certificate to his name.

👌If you want to progress, throw away that degree and start thinking better than someone without a degree. Be prepared to get your hands dirty and work like an ox for your business.
🍋A lot of opportunities exist in Uganda but u have to be keen to identify them, Agribusiness Is one of the sectors young graduates should put a keen thought to.
🤝 *Your innovation, commitment, hard work and patience will pay off.*

By
Allan Ahimbisibwe
Statistician by Profession(MUK)
CEO/Founder of Spark Agro-Initiatives Ltd
*A smart farmer, leader and Visionary Agripreneur*
🐟🐄🐓🐖🐇🍉🍅🌽🍆🥕🍍

18/11/2017

CNBC Crypto

Bitcoin lovers...

Bitcoin’s creator may be worth $6 billion — but people still don’t know who it is.

10/09/2017

Islamic banking and finance

How do Islamic banks make money if they can't charge interest because of shari'a?
----------------------------------------------------------------------
EXAMPLE

Housing Loan - The Islamic Finance Alternative

You are purchasing a house worth 100,000.

You make a down payment of 20,000 and take a loan of 80,000 to be repaid over 4 equal annual installments.

Thus, currently own 20% (20,000/100,000 x 100) of the asset.

Your repayment schedule would look something like this:

So essentially - over the years you are buying a larger portion of ownership of the house.

So what does the Islamic Bank get in return?
As a co-owner of the house the bank is entitled to charge rent. However, as you buy out the bank’s share of ownership the rent liability decreases over time.

Suppose the rent is 2,000 p.a., you will pay as follows:

Year 1 - 2,000 x 80% (bank’s ownership% during the year) = 1,600

Year 2 - 2,000 x 60% = 1,200

Year 3 - 2,000 x 40% = 800

Year 4 - 2,000 x 20% = 400

Year 5 - The asset belongs to you 100% - no need to pay rent

16/08/2017

Capitalism has no capacity or morale to fight poverty.......actually it thrives on poverty. It creates income inequality where the rich exploit the poor. We need to embrace social equality and justice to fight povert.........not just think of who takes the next dollar

16/08/2017

COPIED.

By Andrew Mwenda

R**e of Crane bank

Yesterday two things happened. First it was revealed that Bank of Uganda (BOU) bought 350 pens at the cost of Shs 125m - see picture below👇🏿. I don't know what type of pens they are and their special purpose. But Ugandans must ask why our central bank buys pens that cost Shs 357,000 each.

Then DFCU bank announced that in the first six months of this year they have made a profit of Shs 115 billion compared to Shs 22 billion over the same period last year (an increase of 400%), and Shs 46 billion over the whole of 2016. In six months of taking over Crane Bank they have made almost three times the profit they made for the whole of last year. They also revealed that of this profit, Shs 60 billion came from their take over Crane Bank.

Let us remember that BOU claimed that Crane Bank was insolvent, riddled with many bad loans and over statement of its actual financial position. So they sold its assets for Shs 175 billion only. What the news of DFCU profits for the first six months of taking over Crane Bank reveals is that BOU was either extremely incompetent and/or grossly misunderstood Crane Bank's actual financial position. Or may be there was fraud. What we now know is that BOU sold very good assets at basement bargain prices. Why?

Let us also remember that all the money DFCU used to "buy" the assets of Crane Bank did not even go to BOU. Rather it was put into DFCU allegedly to recapitalize the bank and improve its liquidity position. So we have a bank with Shs 1.8 trillion in assets sold for Shs 175 billion. DFCU "borrowed" from its parent company in London the entire Shs 175 billion to pay for Crane Bank assets. This means that within the first one and a half years, profits from Crane Bank assets will pay the entire loan. Unbelievable!!

BOU and DFCU also claimed that a lot of the assets of Crane Bank were bad loans, worth Shs 550 billion. They claimed that DFCU inherited Shs 800 billion worth of good loans from Crane Bank. Even a child of six years would see the stupidity of such a position - or the fraud involved in such a deal. If I am wrong let BOU publish the sale agreement.

DFCU had invested nothing to get these loans worth 800 billion. Given the average interest rate in Crane Bank of 25%, DFCU was inheriting an asset with income of Shs 200 billion (in form of interest per year). Yet it would have invested very little to earn this interest. It was obvious this was a deal made in heaven for DFCU.

Meanwhile, the central bank claims that Crane Bank had non performing loans (bad loans) worth Shs 550 billion. These were written off to zero and Sudir has been asked to pay for all of them. So they took Shs 290 billion worth of his shareholder capital in the bank and have asked him to pay another Shs 260 billion to top up the loss.

Now 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 Sudir has paid and is being asked to pay for the total value of all the bad loans?

This deal stinks. It smirks of fraudulent collusion between BOU, its lawyers and DFCU. Many companies lined up to buy crane bank as a going concern but BOU refused. Why? Many companies wanted to buy Crane Bank's bad loans. Again BOU refused. The silence ends here and now. Tomorrow I am going to reveal what actually happened.

16/08/2017

COPIED.

By Andrew Mwenda

R**e of Crane bank

Yesterday two things happened. First it was revealed that Bank of Uganda (BOU) bought 350 pens at the cost of Shs 125m - see picture below👇🏿. I don't know what type of pens they are and their special purpose. But Ugandans must ask why our central bank buys pens that cost Shs 357,000 each.

Then DFCU bank announced that in the first six months of this year they have made a profit of Shs 115 billion compared to Shs 22 billion over the same period last year (an increase of 400%), and Shs 46 billion over the whole of 2016. In six months of taking over Crane Bank they have made almost three times the profit they made for the whole of last year. They also revealed that of this profit, Shs 60 billion came from their take over Crane Bank.

Let us remember that BOU claimed that Crane Bank was insolvent, riddled with many bad loans and over statement of its actual financial position. So they sold its assets for Shs 175 billion only. What the news of DFCU profits for the first six months of taking over Crane Bank reveals is that BOU was either extremely incompetent and/or grossly misunderstood Crane Bank's actual financial position. Or may be there was fraud. What we now know is that BOU sold very good assets at basement bargain prices. Why?

Let us also remember that all the money DFCU used to "buy" the assets of Crane Bank did not even go to BOU. Rather it was put into DFCU allegedly to recapitalize the bank and improve its liquidity position. So we have a bank with Shs 1.8 trillion in assets sold for Shs 175 billion. DFCU "borrowed" from its parent company in London the entire Shs 175 billion to pay for Crane Bank assets. This means that within the first one and a half years, profits from Crane Bank assets will pay the entire loan. Unbelievable!!

BOU and DFCU also claimed that a lot of the assets of Crane Bank were bad loans, worth Shs 550 billion. They claimed that DFCU inherited Shs 800 billion worth of good loans from Crane Bank. Even a child of six years would see the stupidity of such a position - or the fraud involved in such a deal. If I am wrong let BOU publish the sale agreement.

DFCU had invested nothing to get these loans worth 800 billion. Given the average interest rate in Crane Bank of 25%, DFCU was inheriting an asset with income of Shs 200 billion (in form of interest per year). Yet it would have invested very little to earn this interest. It was obvious this was a deal made in heaven for DFCU.

Meanwhile, the central bank claims that Crane Bank had non performing loans (bad loans) worth Shs 550 billion. These were written off to zero and Sudir has been asked to pay for all of them. So they took Shs 290 billion worth of his shareholder capital in the bank and have asked him to pay another Shs 260 billion to top up the loss.

Now 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 Sudir has paid and is being asked to pay for the total value of all the bad loans?

This deal stinks. It smirks of fraudulent collusion between BOU, its lawyers and DFCU. Many companies lined up to buy crane bank as a going concern but BOU refused. Why? Many companies wanted to buy Crane Bank's bad loans. Again BOU refused. The silence ends here and now. Tomorrow I am going to reveal what actually happened.

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Plot 20 Mawanda Road
Kampala
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