Download - Parliament of Uganda_1_

							                                Thursday, 13 December 2007

                 Parliament met at 2.34 p.m. in Parliament House, Kampala.


                                         PRAYERS

                       (The Speaker, Edward Ssekandi, in the Chair.)

                               The House was called to order.

                         COMMUNICATION FROM THE CHAIR

THE SPEAKER: Honourable members, I welcome you. The bad news is that our colleague
Michael Ocula had an accident last night as he was going to his home around
Kireka/Namugongo. I have been to Kadic Hospital Bukoto to see him; he is in the private
wing, room 3A. I was able to hold a conversation with him. He sustained two fractures, which
will be attended to tomorrow. So, that is the news.

Honourable members, we had planed to have a break for Christmas around 20th but I see
some interruption that may come next week. We could have Idd and another function in
Entebbe that may take most of you. Therefore, I am appealing to you that when we handle the
business today; let us curtail it so long as the impact is made on any particular business. We
may not have three days next week, we may have one or two. That is why, in order to clear
the business, we should curtail some of the contributions that we make so long as the impact
is made.

2.36
MR ISSA OTTO (UPC, Oyam County South, Apac): Thank you, Mr Speaker and
colleagues, Members of Parliament. I rise on a matter of national importance. Yesterday I was
reading the New Vision newspaper on the first page and besides that I happen to have had an
opportunity to attend a meeting of anti-corruption, which was at Hotel Royale. I was greatly
disturbed especially by the manner in which Members of the public and public servants have
always tried to devalue and undermine the integrity of this Parliament. There was a statement,
which was made by the Inspector-General of Government herself describing Members of
Parliament as idle people and wasting a lot of time here discussing only their own
emoluments.

I think it is the right time that Members of Parliament should rise up and demonstrate to the
people of this country that this institution needs to be respected. Not only to stop there, Mr
Speaker, the IGG was summoned by the parliamentary Committee on Legal and
Parliamentary Affairs and she stubbornly refused to appear before this committee and went
ahead to say, “How can I appear before an idle and dormant committee when I have a lot of
work?” I think these statements put even the integrity of our IGG into question because
Article 227 of the Constitution of the Republic of Uganda talks about the independence of the
inspectorate. I want to quote Article 227 which reads: “The Inspectorate of Government shall
be independent in the performance of its functions and shall not be subject to the direction or
control of any person or authority and shall only be responsible to Parliament.”

The last five words of the above are very important to me as a Member of Parliament and,
therefore, call for co-existence between Parliament and the Inspectorate of Government if we
are to achieve the sole objectives, which are enshrined in this Constitution. But for the IGG
not to consider this important Article in the Constitution –(Interruption)




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THE SPEAKER: Okay, what is your complaint?

MR ISSA OTTO: My complaint is that I think as Parliament we should condemn these kinds
of statements from a public servant and we should make it very clearly known to some of
these officers that the integrity and value of this Parliament is very important. As a matter of
fact –(Interruption)

MR SSEKIKUBO: Thank you, Mr Speaker, and thank you my colleague for giving way.
The Member is raising very serious matters particularly touching the integrity of Parliament.
Indeed I too read the same story yesterday and it was particularly disturbing where the IGG is
quoted saying that Members of Parliament are wasting time just debating increments of their
salaries.

The information I want to give is that earlier this year there was a kind of stand-off when the
Committee on Legal and Parliamentary Affairs wanted to interface with the IGG. She also
went to the press to castigate Parliament, “I cannot come there, I am not responsible to
Parliament; I cannot account to Parliament,” but to my surprise in the committee’s report the
IGG’s budget was passed. Is there no way really we can run in tandem; not that really we
want Parliament to overshadow the IGG - but where even the President acknowledges
Parliament as the third arm of Government, but now an institution comes to undermine
Parliament with which that institution ought to be working with! Is there a way we as
Parliament first of all, the way we are being treated: maligned, degraded and put to shame
unfairly and also the way how Parliament seems to be unable to assert itself to the extent
where one defies Parliament but Parliament proceeds to pass their budget, is there a way how
such a practice can stop?

The information is that this is not new. It has been persisting, it is ongoing and Government
itself seems not to be coming out to question or put the IGG to order. I thank you.

MR OTTO: Thank you very much for the information.

THE SPEAKER: Well, this is a serious matter. I do not know how to handle it but in the first
place, we have to correct facts: Parliament has not increased its salary; the salary which
Members of Parliament are getting – this Shs 1.4 million was determined at the time hon.
Mayanja Nkangi was the Minister of Finance. This was in the Sixth Parliament. Therefore,
the question of Members of Parliament increasing their salary whenever they sit does not
arise. That is a fact. The fact is that salaries of Members of Parliament -(Applause)- have not
been increased since hon. Mayanja Nkangi was a Member of Parliament.

We had hon. Ssendaula and now we have hon. Suruma but the salary of Members of
Parliament, which is Shs 1.4 million, has never been increased. In any case, the salary of
Members of Parliament is not determined here; it is determined by the commission. It is the
commission to make negotiations to determine it. So the question of you sitting here to
discuss that one does not arise.

However, you are talking about an important office, that is, the Inspectorate of Government. I
think that there is need for all agencies of Government to work together. We are not at cross
purposes; there is need for harmony between the Executive and Parliament; between
Parliament and the Judiciary; between Human Rights and the Inspectorate of Government et
cetera. So if what you have said is true, I think there is need for all the concerned to sit down
and see how best to work together without demeaning one another.

The leadership over this is the leadership of the Executive because when we talk about
Government many times we talk about the Executive. The Executive is the head of the three
arms of Government in the sense that the President is part of the Executive. So I do not know


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what the Leader of Government Business - the Prime Minister is here if he has anything to
say about the complaint of hon. Otto and hon. Ssekikubo. Maybe let us hear from hon.
Butime before we hear from the Prime Minister.

2.45
COL (RTD) TOM BUTIME (NRM, Mwenge County North, Kyenjojo): Thank you very
much, Mr Speaker. Just to add a few points before the Prime Minister comes in, I think that
the IGG needs assistance; she needs counselling because she is firing in every corner. If you
are an institution, you do not attack other institutions especially institutions, which are allies
to your work. Parliament is definitely an ally to the work of the IGG and the IGG herself.
Firing at Parliament is absolutely unnecessary because Parliament can also wait for you at an
appropriate time and deal with you conclusively. So if I were the IGG, I would not fire in
every direction because through that firing, you can even kill your allies and friendly forces. I
think she does not know who her friendly forces are.

She has gone on to criticise ministers who went to see the hon. Brig. Jim Muhwezi at Luzira
and those who stood surety for him. People have a right to stand surety for any person; those
are individuals. To attack ministers is also unnecessary because ministers are also allies to the
IGG.

She has gone on to say that she was appointed by God. (Laughter) That is what she said.
Appointed by God; protected by God. Now, who was not appointed by God? Who is not
protected by God? So you can see, I think she really needs counselling. Maybe if there is a
friend here who went to school with her or somebody she respects, you should go and sit with
her and counsel her. I thank you, Mr Speaker.

DR BARYOMUNSI: Thank you very much, Mr Speaker. I just want to provide additional
information that in addition to pronouncing that she was chosen by God, she has actually
made her office extremely difficult to access. I had an issue, which required her intervention
and for three months I attempted to go to her office but she basically blocked me and refused
that she does not want to meet Members of Parliament. Even when we at one time met at the
lift, I was advised that, “You cannot travel with her in the same lift -(Laughter)- in the
building there. So really to add to what hon. Butime is saying, she needs to be counselled
because it seems there is a problem in the way she handles the public and the way she
interprets her office to be.

I was shocked that if I, a Member of Parliament, cannot be given an opportunity to see her for
three months - I had to write to her and express my displeasure as a Member of Parliament
because I had an issue, which required her intervention but she refused basically and I was
even refused to move with her in a lift! I was told that once she comes, she travels in the lift
alone. I found it very strange. So really I want the Leader of Government Business to take this
issue as very serious because as Members of Parliament, we also need to be respected and
Parliament as an institution not only requires respect from Government officials but also from
the public. That is the information I wanted to provide.

MR OKUPA: Mr Speaker, I was personally invited for that function at Hotel Imperial
Royale but I was embarrassed that that is what I had been invited for. The way the judge
behaved was really not called for. The statements made about Members of Parliament, the
leadership of the Legal and Parliamentary Affairs Committee, the members of that committee;
it was not called for. If I did not have another meeting I was ready to answer her from there.
Unfortunately, I left earlier.

But the concerns raised by Members - the way it appeared in the papers – they even left out
other things, which were mentioned by the IGG. She alluded to so many things about the
committee. We know the committee is led by a legal person who knows the law, but for the


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IGG to go ahead and impute bad motives on Parliament and the leadership of Parliament was
not called for.

Our rules are very clear that if committees need to be clarified, they may call – we have even
met the President. If the committee can meet the President, who is the IGG to come and attack
Members of Parliament? This institution –(Interruption)

MR DOMBO: Thank you very much, Mr Speaker. There is something that is developing in
Parliament, which I do not understand. The institutional and legal framework clearly gives us
enough means of compelling compliance because we vote the money that the institutions use.
To what extent can Parliament continue appropriating money to an institution that cannot
come to account for activities to an institution that appropriates money? I just wanted to find
out: might it be useful in future to invoke powers to ensure compliance and cooperation from
other seats of Government?

THE SPEAKER: No. You see, there is a difference between an institution and an individual.
I do not know whether you are saying if you are unhappy with an individual holding an
office, you punish the institution. I think here people are talking about an individual rather
than saying, “Let us use this to punish the -(Laughter)- I think it is the public really that
suffers as a result.

MR OKUPA: Mr Speaker, she also went further that she has always communicated, she has
sent her reports to this Parliament and no single report has been debated; that this Parliament
is incompetent. At one time she forwarded a report to the Speaker, the Speaker sat on it until
she communicated again and that is when the report was acted on. So I think the Prime
Minister should help the judge. We have had I think Maj. Otafiire has got experience and I
really associate now with the comments the Maj. Gen. Otafiire made in this Parliament -
(Laughter)- Thank you.

THE SPEAKER: Maybe Prime Minister - there is the shadow Attorney-General.

2.54
THE SHADOW MINISTER OF JUSTICE, CONSTITUTIONAL AFFAIRS AND
ATTORNEY-GENERAL (Mr Erias Lukwago): Thank you, Mr Speaker. I would humbly
appeal to Members to handle this matter with a lot of care. It is true the IGG might have made
some unpalatable statements somewhere and –(Interjection)- yes, because we are relying
entirely on press reports. I sit on the Committee of Legal and Parliamentary Affairs and I
would like to inform this honourable House that we have been confronted with a number of
complaints from various circles about the Office of the IGG. However, at the same time the
way the IGG is being attacked by various Government organs is - there has been an on-going
wrangle, which has not been resolved up to now between the Office of the IGG and the
Attorney-General; up to now it has not been resolved.

Secondly, we have had a number of individuals who have tried to do whatever they could to
ensure that they bring down the Office of the IGG. So, we should handle it with a lot of care
and caution well knowing that the institution of the IGG is a creation of the Constitution and
it has got its own mandate. This matter we are talking about –(Interruption)

THE SPEAKER: Hon. Lukwago, here we are talking about harmony, harmony that should
exist between different agencies of Government. That is what we are talking about.

MR LUKWAGO: Mr Speaker, I am not disputing that but what I am talking about is this
issue which is still before the Committee on Legal and Parliamentary Affairs. You realise that
even the complainant refused to disclose his or her own particulars. The complainant said,
“This is an anonymous complaint against the Office of the IGG”, and it came before the


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committee. So the request I am making is that before we make observations and resolutions
here, I would request that we first get a report from the Committee on Legal and
Parliamentary Affairs on this matter.

THE SPEAKER: No. We are not talking about Legal and Parliamentary Affairs. That is a
different matter. You just came late.

MR OKUMU: Thank you, Mr Speaker, and I thank the honourable member for giving me
this opportunity to give this information. This is not the first time the IGG has attacked the
institution of Parliament. At one time when the Public Accounts Committee handled the
matter of Mega FM where a minister featured and Public Accounts in its work demanded that
the minister refunds the money and the minister effectively did so, the IGG went to the media
and attacked Parliament as a hopeless institution that left the minister; and yet what
Parliament did on its part, Parliament does not have the powers to prosecute.

If the IGG thought that there was anything to be pursued, she should have sought for help
from the Public Accounts Committee for more information for her to pursue the matter. But
as far as the Public Accounts Committee is concerned, what should be known is that Public
Accounts Committee basically works to advise Government to make systems in Government
work in order to deliver. We cannot prosecute.

It is unfortunate and it is really unbecoming for the IGG as a person because when she speaks
repeatedly, it reflects that the institution of the IGG is making a statement; and in this last
case, the IGG was not only attacking the committee on Legal and Parliamentary Affairs, she
actually - if you read the contents of her statements - she attacked the Judiciary, she went
further and attacked Parliament as an institution, that it is not effectively fighting corruption.
So it was not just a matter of the committee on Legal and Parliamentary Affairs. Her
appearance based on that anonymous reporting, it requires a lot of things. In my view, the
IGG needs some degree of caution because if you behave like a mad dog biting everybody, I
think that is unfortunate. (Laughter)

2.59
THE PRIME MINISTER/LEADER OF GOVERNMENT BUSINESS (Prof. Apolo
Nsibambi): Thank you, Mr Speaker. I think Article 227 is very clear. The IGG is answerable
to Parliament. So I suggest that you summon her and counsel her. I thank you. (Applause)

THE SPEAKER: I think enough has been said. However, there is a need on the part of the
Executive, which is on the top, to ensure that agencies of Government conduct their business
in harmony and respect to each other.

                             PRIVATE MEMBERS’ BUSINESS

   PETITION OF THE SITTING TENANTS OF BUGANDA ROAD FLATS AGAINST
  DISCRIMINATION BY NATIONAL HOUSING AND CONSTRUCTION COMPANY
                               LIMITED

THE SPEAKER: Which business do we start with; private Members’ business or a
statement, which was supposed to have been made yesterday?

HON. MEMBERS: Private Members’ business.

THE SPEAKER: Okay, but hon. Sempala is not here.

                             QUESTION FOR ORAL ANSWER



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         QUESTION 39/01/08 TO THE MINISTER OF LOCAL GOVERNMENT

THE SPEAKER: Hon. Nampijja is not here. Let us handle some other business.

                               STATEMENT OF BUSINESS

3.02
THE PRIME MINISTER/ LEADER OF GOVERNMENT BUSINESS (Prof. Apolo
Nsibambi): Mr Speaker, in accordance with rule 25 of the Rules of Procedure of Parliament I
beg to present the government business available for the House for next week as follows:
1. The Public Service Bill, 2007
2. The Local Governments (Amendment No.2) Bill, 2007
3. The Tourism Bill, 2007
4. Questions for oral answer.

I thank you, Mr Speaker.

                               MINISTERIAL STATEMENT

3.03
THE MINISTER OF STATE FOR TOURISM, TRADE AND INDUSTRY (Mr
Gagawala Wambuzi): I hope, Mr Speaker, that you already have a copy that we sent you
and also the Members [Hon. Members: “No”.] They were delivered here in the morning. They
were formally delivered to the Clerk to Parliament –(Interruption)

THE SPEAKER: Honourable minister, proceed. Members will get copies.

MR WAMBUZI: I thank you, Mr Speaker, for your ruling and I also thank you and the
House for giving me some minutes to make a statement on the EPAS. Members of Parliament
asked the question about EPAS before we went for recess and hon. Ekanya raised the
question on the Floor here. I took time off to explain in detail that this negotiation was in
progress and was on course because we did not want something to affect our traders.
However, since the question was asked yesterday, I would like again to brief the Parliament
what has been happening in the realms of the EPAS.

Mr Speaker and honourable members, you will recall that Uganda has been negotiating an
economic partnership agreement with the European Union. The negotiations actually started
in 2002 and for some time Uganda negotiated under the umbrella of Eastern and Southern
Africa (ESA) configuration. Three other partner states of the Eastern African Community
(EAC) also negotiated under this umbrella while other partner states negotiated under the
Southern African Development Community (SADC) umbrella.

Discussions on the aspect of members of the customs union negotiating EPAs under different
configurations and its impact on the customs union were held at the East African Community
summit level. At the summit of August 2007, the heads of state recalled their decision of 2002
that the East African Community should negotiate as a block in the multilateral and ACP–EU
trade relations and agreed that the EAC should explore possibilities of negotiating an EPA
with the EU.

Following this directive, trade ministers from EAC countries met to harmonise positions and
give guidance on the way forward. Subsequently, the EAC and the EC met at ministerial level
on 14 November 2007 and agreed that in view of the very short time remaining until the
expiry of the Cotonou Agreement trade regime on 31 December 2007, it would not be
possible to conclude a comprehensive EPA that fully addresses the aspirations of all the
parties. It was, therefore, resolved that EAC and EC should finalise their framework


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agreement as a stepping stone towards a full EAC–EC EPA that will comprise of trade in
goods and market access, development co-operation and fisheries.

The framework agreement furthermore provides for a mechanism of continuation of
negotiations beyond 31 December 2007. Accordingly, on 27 November 2007, the five partner
states of EAC and the EC initialled a framework agreement that covers one, market access;
two, development co-operation; three, fisheries; four, mechanism of continuation of
negotiation in other areas beyond 31 December 2007.

The essence of the framework agreement is to operationalise the market access offers made
by EAC and EC to each other. The EC market access offer consists of duty free and quota
free access except for rice and sugar for which transitional arrangement is to be put in place.
After 2010 all Ugandan exports to the EU will be duty free and without quota restrictions. I
think that is something, which had to be done. Implementation of the EAC community access
offer begins on 01 January 2008.

On its part, EAC also made her market access offer to UE that consists of 82 percent of
liberalisation of imports from the EU over a 25 year transition period. In effect, the first
liberalisation will begin in 2015, note carefully, and it is to be done in phases. The EAC offers
to liberalise 64 percent of her imports from the EU in 2010. The products covered in this
phase are already zero rated and do not attract any import taxes under the EAC Customs
Union Common External Tariff (CET). This is because they are either classified as raw
materials or capital goods.

From 2015 to 2023 there will be further liberalisation covering 14 percent and Uganda’s
imports from the EU will be undertaken. About one fifth, that is, 18 percent of our imports
from the EU are to be excluded from the liberalisation. The criteria for including products on
this list included contribution to rural development, employment, livelihood sustainability,
promotion of food security, fostering infant industries, contribution to Government revenue,
and protection of Uganda’s interests in the regional markets. Products which were deemed to
contribute or to have potential to contribute to increase production and trade competitiveness
were excluded from the list.

In addition, products which the EU cannot produce by virtue of its climate such as millet were
also offered to liberalisation because the EU cannot produce or export these products. This
approach helped us to shield as many sectors as possible of the economy from liberalisation
where competition would have been real.

The framework agreement also addresses issues of non–tariff barriers and trade defence
instruments. The latter allows Uganda to raise tariffs to protect domestic products against
imports of either goods that are being dumped or where an increase in imports is hurting the
local industry.

In order to prevent any trade disruption, the framework agreement maintains the same rules of
origin during the period of the negotiations for the comprehensive Economic Partnership
Agreement (EPA). The one significant exception to this is in the areas of apparels and
textiles. Here we have agreed with the European community on the simplification of the rules
of origin to allow Ugandan companies to source fabric from anywhere in the world and still
be able to export garments made into the European Union free of duties or quotas. It is
anticipated that the private sector will find this feasible given the proximity of Europe to
Uganda and the East African community in general.

With regard to inland fisheries, the provisions commit the European community to improve
our access to the EU market, attract capital inflows and investment into the sector, enhance
aquaculture production, remove supply side constraints and improve the quality of fish and


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fish products so that we meet sanitary and Quito-sanitary measures or standards in EU
market.

On this development, the East African community and the European community have agreed
that the economic development cooperation will be an entire chapter in the final EPA text.
Development co-operation will aim at addressing the supply side constraints or impediments
to business and to enable signatories, including Uganda, to build capacity to exploit trade
opportunities created by the EPA.

The European community side has confirmed that it will provide the resources to address
these constraints through their regular development aid as well as through the aid-for-trade
initiative and the European Union budget. Both sides agreed to continue negotiations in this
area next year. The implication of the EPA framework is that Ugandan exports to the
European Union will continue getting preferential treatment in form of duty and quota free
access to the European Union market. Unlike under the Cotonou Arrangement where some
products were excluded, all products will be covered under the EPA.

Honourable members, the East African community and European community have agreed
that the following areas of future negotiation will continue into next year. These are customs
and trade facilitation rules or origin technical barriers to trade and sanitary and Quito-sanitary
measures, trade in services-related issues, intellectual property rights, transparency in public
procurement, agriculture, dispute settlement mechanisms, economic development co-
operation and any other areas that the parties find necessary. In order to sequence this process
with the East African community market negotiations, we have agreed to finish negotiations
in this area by July 2009.

Mr Speaker, I understand that there are some views that Uganda as a least developed country
did not have an initial framework agreement since she is eligible to benefit from the
Everything-but-Arms initiative of the European Union.

Permit me to clarify as follows: predictability and transparency are prerequisites for private
sector growth and provision of this is an important element of providing an enabling
environment for the private sector. The EPA of Everything-but-Arms does not provide any of
these. First, the EPA is unilateral; it is just something done by the other side. That is, it was
not negotiated but simply given under terms and conditions decided by the European Union
unilaterally. This means it that can be withdrawn or modified any time at the convenience of
the European Union.

The EPA has a list of potential beneficiaries and some of the least developed countries have
been barred from using the EPA for having policies or practices, which the European Union
does not approve of. This kind of situation is not suitable for long or even medium-term
business or investment decision making. The lack of flexibility works against our private
sector and continues to undermine its competitiveness and efforts to move to invest in value
addition ventures.

Our private sector has pointed out to us that when we agree together, we could better resolve
these shortcomings through a negotiated arrangement.

Secondly, hon. Members of Parliament, it is important to note that currently, both the
Cotonou Arrangement and the EBA are available to Uganda exports, at least since 2001. An
examination of the utilisation of these two schemes indicates that up to 99.5 percent of
Ugandan exporters to the European Union prefer the Cotonou Arrangement over the EPA.
This is mainly because of the stringent rules of the origin of EPA compared to the other
agreement.



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Under the EPA we can only use components or inputs from either the European Union or
another least developed country, but not from countries such as Kenya. Our fellow least
developed countries also suffer from similar problems thus we cannot source inputs from such
countries. On the other hand Cotonou allows us to use material from countries such as Kenya.

Under EBA use of non-originating materials is allowed only up to 10 percent while under the
Cotonou Agreement it is 15 percent. It was, therefore, prudent to choose an arrangement that
builds on the Cotonou Arrangement in the form of EPS where more development friendly
rules of origin can be negotiated. A case in point is the rules of origin that will govern the
textiles and the apparels sector, which I have mentioned at the beginning.

The task ahead of all of us as national leaders is to develop response strategies to enable the
country take advantage of the opportunities created by the Economic Partnership Agreement.
Following Cabinet approval of the National Trade Policy, my ministry, headed by hon. Janat
Mukwaya and with my two other Colleagues, hon. Rukundo and hon. Prof. Kamuntu and you
who actually honourably appointed us to take charge of this aspect of the government, is
finalising the National Trade Sector Development Plan, which should help us to develop
capacity to take advantage of the various trade opportunities available to us. I thank you, Mr
Speaker, for allowing me to brief you on this important subject.

3.19
MR JOHN KAWANGA (DP, Masaka Municipality, Masaka): Thank you, Mr Speaker
and I thank the hon. Minister of State in charge of Trade for the statement. I wish it had come
earlier. I am seeking just a few clarifications. In the statement, on the first page, there is
reference to finding it necessary to reach some framework agreement and on the second page
the expression used is that on the 27th of November 2007, the five partner states of the East
African community and the European Community initiated a framework agreement that
covers market access, development cooperation, fisheries and so on. I want to find out from
the minister the implications of initialising this agreement. What is the legal implication of
this act of initialising this act?

Two; does the minister intend to make that initialised framework agreement available to
Members of Parliament so that they can know exactly what the agreement includes?

In the paragraphs below, there is reference to the East African Community offering to
liberalise 64 percent of her imports from the EU. Is it possible for the minister to make - or
give particulars of what these imports actually are? I am asking this because it goes on to say
that about one-fifth of our imports from the EU are to be excluded from liberalisation. What
are these supposed to be?

Yesterday, in the absence of the minister, I made reference to the MP’s statement, which he
delivered at a conference from 15 to 16 of October 2007 to the effect that there has been
limited interface between the negotiators on the one part and the EALA and national
Parliaments on the other part, regarding the likely impact of EPAs thus relegating our cardinal
duties of representation, legislation and oversight. I wonder whether the minister has the
intention of involving both EALA and the national Parliaments in the subsequent negotiations
that shall be taking place with regard to the EPAs. I thank you.

3.20
MR PEREZA AHABWE (NRM, Rubanda County East, Kabale): Thank you, Mr
Speaker. I want to thank the minister for at last bringing this statement, but also I must once
again register my disappointment to the minister for waiting until he was prompted by this
House to do his job. We wrote to the minister sometime back and we thought he would
respond, unfortunately he did not until we raised this matter yesterday. I do not know whether



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he wrote it at night, but I think it is important that people should learn do their work and
inform us in good time before we look as if we are at conflict.

Like I said yesterday, in the process of negotiating this agreement, the Parliament of Uganda,
through the Committee on Tourism, Trade and Industry and members from other committees,
was always brought on board and updated on the progress of these talks. At that time it was
under the East and Southern Africa countries under the auspices of COMESA as he clearly
states in his statement, but it was only I think this year – yes, early this year - when the
Summit of East African Heads of State agreed –

THE SPEAKER: No; if I may ask, are you comfortable with the statement? Have you
internalised it or you need time as a committee to study it before responding? Are you in
position to respond now or you want more time to internalise it as a committee before
responding?

MR AHABWE: Well, it depends on your guidance. Otherwise, as an individual I am very
sure that I know what I am talking about because I have been following what has been
happening even without being informed by the minister. I have all the documents with me; I
have a draft agreement with me and I also have statements from other sources.

My complaint, although I will agree with you that later on we can study it as a committee and
involve a wider section of Parliament, is that when Government decides at some point to
disengage Parliament, then it is suspect; that is my biggest problem. Why they shifted from
ESA-EU negotiations and started negotiating at the East African Community level and
reached a point of signing an interim agreement without putting us on board, is also suspect.

Mr Speaker, I want to assure you that reliable sources say that some of the officials from the
ministry have some kind of scare because they know that we have capacity to unearth some of
these things that they are hiding. I can give you an example. There was a study that was
carried out by consultants and the ministry about the potential impact of signing these EPAs
at the moment. From this study, and I am going to only give you one aspect of the impact on
Government revenue, by the end of next year 2008, Government will have lost Shs 170
billion in terms of revenue as a result of signing these EPAs. By 2012, Government will have
lost Shs 340 billion and by 2028 the government will have lost Shs 3.8 trillion -

THE SPEAKER: Honourable member, in view of the information that you are trying to give
us, don’t you think that the House and entire country can benefit from it if after receiving this
statement, you as a committee go to analyse it and come out with a report? Don’t you think
that is the best way?

MR AHABWE: Mr Speaker, as I said earlier, I do not think I will disagree with your wise
guidance. I was only trying to respond partially so that Members know the gravity of this kind
of action. Otherwise, I agree with you that the committee takes on this statement, looks at it,
invites the relevant technical people and the minister for interaction and maybe report to this
House as and when it will be ready. Thank you.

3.28
MR EMMANUEL DOMBO (NRM, Bunyole County, Butaleja): Thank you very much,
Mr Speaker. First and foremost, I would like to welcome your wise counsel on the guidance
you have just provided in respect of how best to have this issue compressively debated. But
before we come to that, allow me make some general remarks and some specific ones.

The general remark is basically to reiterate what my colleagues have already echoed. I want
to tell you honourable members that this complaint is not only in Uganda. In the recent
international meetings in which I participated, we discovered that there has been a persistent


                                                                                              10
omission from the government in conducting the negotiations and yet the repercussions of
these agreements are going to be major.

So at that level, Parliaments would wish to be brought on board. This is not fair and it is not
only in the Ministry of Trade, Tourism and Industry, but in many of the EU related activities.
For instance, honourable member you know or you may not know that we have a country
strategy paper, which is the basis for Government accessed funds through the EDF, but the
Ministry of Finance has never - even when you have asked, that document has never been
provided here. At one time we were required as Members of Parliament to go and meet the
head of the European delegation and the agenda was to discuss the contents of the country
strategy paper and this is the document we had never got. We finally accessed some draft and
this is going to be practically a problem and I know there are many Members of Parliament
who engage in international meetings.

You must go to those meetings when you are comprehensively informed so that you
deliberate as a person who is informed. For instance, in the recent meeting in Rwanda, there
was a joint parliamentary assembly and everybody was condemning East Africa for hurrying
to negotiate and endorse the economic partnership agreements when more time would have
made more concessions. I did not know what they were talking about. We tried ringing back
to the Ministry of Trade; we did not have any specific information. If we continue operating
like this, we are going to show a lot of disjointedness and disorganisation as a Government if
comprehensive information is not given in time.

Mr Speaker, on the specific issues, the details of the other things, we shall discuss them when
we consider the report. But that report will be incomplete if the minister does not bring the
copy of the agreement because in this report per se, he has nothing. It is the details of the
agreement that were initialised and its implications are impacts that the committee must come
up to assess vis-à-vis other documents and other policies that have been provided so that this
House can make a meaningful debate.

But if I can ask the minister a specific question: there is an impression which is created by the
recent leaders’ meeting in the EU Summit in Lisbon - an impression has been created that
ACP governments have been forced and pressurised to sign the economic partnership
agreements. Given the statements that we are provided, those who read the papers yesterday
should have read the response by Mendelssohn, the Commissioner for EU, I want to find out
from the honourable minister, is this impression created right that the East African region has
been pressured into signing because they wanted to access the EDF funds and also other
visions from the EU?

Secondly, I want to find out whether there are any other regions also that have concluded the
interim EPAs or the framework EPAs and what the implications of this will be.

I would have had many issues, but they will be more useful if the committee has received the
copy of the agreement so that we consider it with other arguments to make it a better debate.
But I want to find out from the minister whether there is also a mechanism in the agreements
or the framework that they signed for review and considering the impact and what should be
done should such a thing occur. I thank you very much, Mr Speaker.

3.33
THE LEADER OF THE OPPOSITION (Prof. Ogenga Latigo): Thank you very much,
Mr Speaker. I concur with the hon. Members of Parliament who have expressed serious
concern over the manner in which Government has handled this particular matter. I would
like to draw the attention of the House to maybe three things:




                                                                                              11
One, that we are faced with an international alignment in trade that beats Europe against
emerging industrial countries like China and India and, therefore, they are moving also very
fast to secure agreements with those countries that are willing to be bribed into quicker
agreements, which agreements will eventually seriously undermine our ability to benefit from
the trade opportunities that some of the emerging industrial countries offer.

It is so easy to say that we have secured a trade agreement with Europe, but that does not
mean that you have access to the market. Because this is about the product you have and
willingness of those who should buy and this has been our biggest problem, for example, with
AGOA. We got AGOA and we got nothing in the end and, therefore, in some of these
agreements, we should really fall back and ask, “What is our interest; what is our comparative
advantage relating either to Europe or to China?” - because even in terms of population, they
just swamp Europe.

Secondly, in China now they are transforming in terms of the kind of food they eat and the
real trade would be in agricultural produce, for example. It is very important that we as a
country also protect our name. We went to the Mexico Trade Negotiations and Uganda’s
name became very bad; that we undermine the alliance of the south to negotiate a fair trade
deal. Now East Africa, with Uganda in it, pulled out of the rest and the rest are again bitter
with us.

I remember the President actually urging that this agreement be signed and I think sometimes
even when something is really good, sometimes the decent thing to do is to move with
everybody else where bigger objectives will have to be dealt with. Because we isolate
ourselves; we can deceive ourselves that we have the capacity to trade with Europe but, I can
assure you, without the protection of a common position with those countries that are actually
able to supply to us and undercut Europe, you will have a big problem, and this is not
considered.

Finally, this is what I was alluding to in the first place. The final statement of the minister
says the task ahead of us as national leaders is to know development response strategies to
enable the country take advantage of the opportunities created. If you are not even ready, why
are you hurrying? What is the hurry for Uganda? What will we lose? Can the minister tell us
what we would have lost if we did not sign? Since we are not even ready, we are developing
strategies for the potential now. Can the minister tell us what the hurry is for? Thank you.

3.38
MS BETI KAMYA (FDC, Lubaga Division North, Kampala): Thank you, Mr Speaker,
for this opportunity. I wish to thank the minister for his presentation.

I note from the minister’s presentation that the EPA/EU negotiations began in 2002, five
years ago. The world has changed considerably, not least that things like global warming and
low carbon emissions are now key issues and taking centre stage in any negotiations,
particularly in trade around the world. Is it possible that things that were started in 2002 are
still relevant five years later and will be relevant whenever this agreement is expected to be
completed? It is not clear when - going by what we have heard - it could take another couple
of years. Is it possible that the things that were started will still be relevant?

Having said that, low carbon emissions, carbon trading, and a low carbon economy have
started being major considerations in every negotiation around the world. Fortunately,
Uganda and many African countries are still low carbon emitters whereas the developed
countries are heavy carbon emitters. And these are going to be major considerations in any
form of trade. I have not heard the minister or I would like to ask the minister whether in the
negotiations Uganda and East Africa are going to take serious advantage of the now



                                                                                             12
advantageous position of being low emitters negotiating with serious violators or polluters of
the atmosphere in this trade.

We have just attended a climate change workshop with hon. Dombo and the way the world is
going to move, this is going to be a key issue certainly in the very near future. I was listening
to Madam Nancy Pelosi, the Speaker of the US Parliament and she certainly said global
warming and carbon emissions are going to take centre stage and to be the nucleus of any
negotiations around the world. I would like to hear the minister make a statement on how
Uganda is going to take advantage of this.

Finally, in the past, Uganda and Africans have been disadvantaged in the agreements and
negotiations that we have participated in. A parallel has been drawn in many cases, in
Rwanda, for instance. I can also mention the exclusion of Mr Robert Mugabe from the
Commonwealth, from Lisbon because there is a certain category of members who are not
happy to have him when many African countries have been heard to think that he should not
be excluded. But the voices of inclusion did not have their rightful space in terms of the
numbers of members who would have voted for this.

I would like to hear from the minister – besides, many EU members are also members of
other associations around the world. For instance, members of EU with whom we are
negotiating are also members of the Commonwealth, are also members of the G8; I would
like to hear parallels drawn between our expectations and the way we are moving with similar
agreements on the same sector with the other equally interested parties like between EU and
EU countries.

An example I would like to give is the visa and migration arrangements. Whereas members of
the EU in Eastern Europe have free access to the UK, who is also a member of the
Commonwealth, members of the Commonwealth do not have free access to the UK. I would
like to hear whether parallels are being drawn to highlight the disadvantaged position that
needs to be clearly spelt out as we negotiate. Thank you, Mr Speaker.

3.44
MS BETTY AMONGI (Independent, Woman representative, Apac): Thank you, Mr
Speaker. I want to thank the minister for the statement and to state from the beginning that the
economic partnership agreement is an agreement that is not being contested that it should not
be signed. The ACP’s and the EU’s trade configuration from 2002 is under the Cotonou
Agreement and the Cotonou Agreement expires on 31st December of this year. Therefore,
there is need for a configuration within which the ACP countries can trade with the EU
countries.

The issue now is – before I say that, the configuration within which the negotiation was being
conducted in which Uganda belonged was ESA. Tanzania was under SADAC but then the
East African states felt that since we are within the same Customs Union, it is appropriate for
East Africa to negotiate as a block. That is why the heads of states agreed that Kenya pulls
from SADAC and the East African Community negotiate as a block. That is where we are in
the negotiations.

The issue now is that as East Africa, we do not know where Tanzania was with SADAC and
where we were with ESA and before the initial negotiations there should have been at least
the detailed agreement, which we were working on. I think it is important that we have the
agreement, which East Africa has been working on with the EU, what they had initialised
which my colleagues have already talked about, so that we discuss it.

Then the other issue is that the ACP countries felt that it would have been good to negotiate
as a block but the problem we have is that the East African Community has signed this initial.


                                                                                              13
Meanwhile there are many concerns that many ACP countries have that they feel should be
addressed. Let me highlight some of them.

One issue is the question of market access. Let me talk about Uganda; our trading percentage
is between 20 and 36 percent with the European Union, and over 60 percent of our trade is
with China and Asian countries. Now, the issue of market access would mean that goods
from the EU would come to our countries without the taxes and vice-versa, but the concerns
are about what capacity the Ugandans have. Can you imagine that if you opened the market
now the standard of our goods in Uganda could meet the market of the EU?

The concern from the ACP is that we should first develop the capacity for Ugandans and the
capacity for East Africans to access that market in the EU before we open up to that
percentage. So, there is need to phase up. They are not disagreeing on the signing; they are
agreeing that we negotiate but that this opening up of the market be phased. I have heard the
Minister talking of phasing. The unfortunate part is that we do not see the details of how you
want to phase in the 25 years. If you had told us, maybe we would not be debating. Probably,
you will have already addressed our concern of how the phasing will be done.

The other issue is, you have talked about agriculture but is not yet in the clusters that are
initialled. The other concern of ACP is that the EU is dictating what the priorities for the ACP
are. For a country like Uganda, our priority for development might be support for agriculture,
support for education and support for health care, while the EU says that our priority is human
rights, governance, peace and security. So, those are the contentions. What do we want to
bankroll the money for? Where should it go? Should it go to education, health and so on?
These are the intricacies that are making negotiations - prioritisation, standardisation and
phasing of access to the market.

The committee should examine the agreement as we have initialled so that all the
stakeholders can give their views. I am also glad that the Minister says that they have agreed
to continue negotiations. So, the committee will get the concerns of Ugandans so that as you
continue with the negotiations, which you intend to conclude by June or thereabout according
to your statement, our concerns are addressed. So, those are the issues. I support the idea that
we examine it through the committee so that we understand and get the concerns of the
people.

The information flow has also been very difficult; you want information but the ministry does
not want to give you the information, and yet when you go out there they start saying that
Ugandans or East Africans are letting down ACP positions. So, I thank you and I welcome
the fact that you have actually accepted to negotiate as the East African Community, because
originally Tanzania was under SADC and yet we are under the same trade confederation.
Thank you.

THE SPEAKER: Where will further debate on this matter take us? What do we intend to
achieve by debating further on this statement? We must have a goal we are aiming at. With
this kind of debate, where will we go?

3.52
THE FIRST DEPUTY PRIME MINISTER/MINISTER IN CHARGE OF EAST
AFRICAN AFFAIRS (Mr Eriya Kategaya): Mr Speaker, thank you for giving me the
opportunity. I suggest that the best way we can handle this subject, which is very wide, is for
the matter to be sent to the committee, and we commit all the ministers who are
knowledgeable about this case to discuss the matter and then come out and report to the
House.




                                                                                             14
From listening to the debate, I think there is a gap in terms of the knowledge that we should
have. For example, people have not looked at the interim agreement that we have or the
reasons why we thought we should discuss as an East African block; people do not know
about it.

Secondly, there is also the issue of time. As the lady from Apac has rightly said, if we do not
sign anything by now, in January our goods to Europe will attract tariffs straight away. The
bazungu gave us almost five years but people have been doing nothing and then they came
and asked for the time to be extended. These bazungu are wondering what type of people we
are! For five years we have done nothing and then when the time comes, we ask for it to be
extended again.

Mr Speaker, I do not want to bore the House. I think that the best way is to have a committee
and go to that committee with all the facts, and then we will come and inform the House. That
is my proposition.

THE SPEAKER: We have received this statement and our committee in charge of the sector
should receive it, analyse it and call whoever they want to call, including the technocrats, and
then come back and report to us. They will advise us on the way forward, rather than these
general comments on this and that without reaching a conclusion. I think we better send this
document to the committee.

MR DOMBO: The guidance I want is related to what you have just said. The Minister has
laid a statement before the House but he has not presented the agreement. Would it not be
right for him to bring the agreement either tomorrow or at an appropriate time so that it
becomes an official document and then it can also be considered together with the statement?

THE SPEAKER: If we agree to send this matter to the committee, the committee definitely
will ask the Minister for the copy of the agreement to analyse it. Definitely, it is an obvious
thing that the committee will have to have the document. Don’t you think that is the best
way?

THE MINISTER OF STATE FOR TOURISM, TRADE AND INDUSTRY (TOURISM)
(Prof. Ephraim Kamuntu): Mr Speaker, just for purposes of information, I want to thank the
honourable member from Apac for bringing the dimension of ACP. I want to thank you, Mr
Speaker; one time you appointed me to represent Uganda in the ACP Group, so one can share
this information.

The Cotonou Agreement referred to was signed in 2000. Within the provisions of that
agreement, by 31 December 2007 the provisions that allow us to export our commodities into
the European market will expire. The moment that expires, Uganda’s export will face very
stiff tariffs, which they are not facing right now.

Secondly, as the First Deputy Prime Minister has pointed out, negotiations have been going
on for five years and fortunately, the East African Community has almost all the relevant
institutions; they have a parliament, a secretariat, a customs union and an external tariff. So,
by all accounts, it was ready for signing. Why then would we move at the slowest speed when
we could set the pace?

THE SPEAKER: I imagine that when the committee starts to examine the matter, they will
benefit from your submission justifying this, that and the other. I think what you are saying
now can be later handled by the committee, which will report to us and then we will discuss
that report. Is that a way forward? Is it the consensus? – (Interjections)- The matter is sent to
the appropriate committee to expediently handle it and report to the House.



                                                                                              15
3.58
THE LEADER OF THE OPPOSITION (Prof. Ogenga Latigo): Thank you, Mr Speaker.
Yesterday I rose on the Floor of this House to report on an incident, which I thought was
important. This was the arrest of some of our colleagues in respect to the election, which is
taking place today in Bugweri County. The Leader of Government Business promised -
(Interjection) - Rt. Hon. Prime Minister, there was an acting Leader of Government Business
in your absence, who promised on behalf of the Leader of Government Business to make a
statement. I thought it would be important, but I also see that hon. Adolf is not here.

THE SPEAKER: Well, I have the answer. I made an inquiry with hon. Adolf about the
undertaking that he had made, that the Minister of Internal Affairs could make a statement on
this subject. The advice I have received from him is that he did communicate to the Minister
of Internal Affairs to make the statement and unfortunately, for one reason or another, the
minister is not here to make that statement. However, he has requested me to allow him time
so that he gets in touch with the minister so that this statement is made on Tuesday.

PROF. LATIGO: Thank you, Mr Speaker. When I brought the matter to the attention of the
House, my interest was to see that what happened yesterday could not jeopardise the smooth
holding of today’s by-election. Because I made the statement based on the information I was
given, I actually notified you that I would leave the House and go to Bugweri. I wanted to
know when the minister would make a statement so that I am able to also come back with
facts, so that where we agree or disagree, we can sort it out.

I went to Bugweri and I came back; you saw me a little late. In the morning everything was
fine. I got an explanation close to what was written in the papers, quoting the Inspector
General of Police. There are variations to that, but then that matter really was not too
important.

As I was coming back, I paid a visit to a number of polling areas to see whether there was any
tension or violence or anything. By the time I left at around 11.00 p.m., things were generally
calm. But then on the way, when I reached either Jinja or Lugazi, I received a telephone call
from hon. Harry Kasigwa, who was manning the area of Busembatya, that his car had just
been smashed. He and Martin Wandera, who is a former Member of Parliament, were beaten
up. The journalist who was taking the pictures was also beaten up and his camera was also
smashed. That is why this would have been very important.

I believe that if the people on the ground are really concerned that elections like this are held
in a free and fair way and without people perpetrating violence, they would immediately
communicate to the minister. Since I raised the matter to the minister, and I will raise it here, I
just thought that this is really important because it is about electing a Member of Parliament
who will be part of us here, and that election should by all means be as free of these things as
possible.

I went to the campaigns for the by-election that took place in Bukonzo East. We criss-crossed
the place with the honourable Minister of Defence; when the Minister of Defence is there he
needs adequate security but in spite of that, we stayed there very comfortably. There was no
incidence as far as violence was concerned, and I thought that from there we would have an
election like that. Now, if we have an election involving a minister who is supposed to be in
charge of national guidance and violence takes place in his by-election, it becomes very
difficult for the country to understand. (Laughter) That is why I thought it was important to
bring it up.

MR SSEKIKUBO: Mr Speaker, since-

THE SPEAKER: There is no other business to discuss. Let us follow the Order Paper.


                                                                                                16
   PRESENTATION, CONSIDERATION AND ADOPTION OF THE REPORT OF THE
    COMMITTEE ON COMMISSIONS, STATUTORY AUTHORITIES AND STATE
                     ENTERPRISES ON POST BANK

4.04
THE CHAIRPERSON, STANDING COMMITTEE ON COMMISSIONS,
STATUTORY AUTHORITIES AND STATE ENTERPRISES (Mr John Odit): Mr
Speaker, this is a report which covers a span of six years and it is quite big, but I have tried
my best to summarise my presentation while also doing our best to provide a detailed report
to the Members of Parliament. Some of our colleagues received copies yesterday and those
who missed out should be getting theirs now.

This is a report of the standing Committee on Commissions, Statutory Authorities and State
Enterprises on the performance of Post Bank on the basis of the Auditor-General’s report.

The committee drew its mandate from Article 164 of the Constitution of the Republic of
Uganda on enforcement of accountability of public funds, and rule 154 of the Rules of
Procedure of Parliament.

In our methodology, we had meetings with the Ministers of Finance, Planning and Economic
Development, both of General Duties and Microfinance, the Minister of State for Industry,
the Board of Management of Post Bank and the Commissioner of Co-operatives. The
committee also received written memoranda and held a meeting with the leadership of the
Uganda Co-operative Alliance.

The committee was able to carry out a familiarisation tour of the selected Post Bank branches
to appreciate its operations on the ground.

The committee reviewed and examined policy related issues and audited accounts for the last
six financial years, starting from 1999 to 2005.

The committee wishes to acknowledge the co-operation of all stakeholders.

I will begin by providing some comments from section 2 of the main report. Post Bank was
incorporated on 19 February 1998 to assume the services of the former Post Office Savings
Bank. This company was created as a result of the enactment of the Communications Act,
1997 that provided for the restructuring of the Uganda Posts and Telecommunications
Corporation.

Post Bank was consequently incorporated and Government owned 100 percent of its shares. It
was first licensed by Bank of Uganda under the Financial Institutions Act, 2004 as a
specialised commercial bank with the mandate of mobilising savings and putting them in non-
lending investments. The bank is now registered as a credit institution that allows it to
perform financial intermediations, that is on-lending savings and transactions.

Post Bank Ltd. now operates with a fully-fledged Board appointed by the Minister of Finance,
Planning and Economic Development.

Mr Speaker, I want to draw the attention of the members to section 3 on the general
performance of the bank. The committee highlighted landmarks in the bank’s performance as
follows:

In our observation, the present capital structure is not adequate to enable Post Bank to act as a
linchpin for the implementation of Government’s Rural Financial Services Strategy. Although


                                                                                              17
Cabinet has earmarked an additional Shs 6.5 billion as a capitalisation grant, the financial
demands of the bank seem enormous for efficiency and effectiveness to be realised. In
principle, if the Shs 6.5 billion is provided, the bank’s capital will stand at Shs 11.9 billion,
leaving a funding gap of Shs 3.1 billion to achieve the minimum threshold to help it rollout
effectively with new branches to cover the country at Shs 15 billion.

Post Bank may be swallowed up by the risk of getting into partnership with unregulated
financial organisations (Tier 4). Mr Speaker, there was a glaring experience especially when
we were in Soroti where Post Bank lent out Shs 300 million to a SACCO which was not
regulated. It has now landed into difficulty in recovering the Shs 300 million.

The governance, institutional and credit risks may affect the financial intermediaries, which
may lead to failure of the bank. The existing co-operative laws are inadequate to attract the
necessary resources to perform independent supervision of SACCOs. At the same time,
SACCOs are getting into partnership with Post Bank. The committee learnt that SACCOs
were not being created in Masindi District because of past experience where people’s savings
were lost by quasi organisations due to poor governance.

Currently, the bank has presence in only 17 out of 80 districts. It does not have countrywide
coverage and may not be able to implement the Prosperity for All Programme within a
reasonable timeframe. However, given an open timeframe, definitely they will be able to roll
out.

The committee also notes that the rapid expansion to cover all the districts may choke the
bank. The Shs 500 million released by Government to Post Bank for on-lending to the
SACCOs has not reached Masindi yet.

The committee noted that some staff at the branches did not have a clear understanding of the
Prosperity for All Programme. For example, the linkage banking staff members at the Jinja
branch had that difficulty.

Also, Post Bank branches are inadequately equipped and facilitated to deliver financial
services efficiently and effectively. The capacity is very strong at the headquarters but at the
branches out there, there are still problems. Branches do not have ATMs, means of transport
and other equipment.

The seven members of staff per branch on average, is not adequate to cover all the districts
under the branch catchment area. For instance, the Arua branch covers the districts of Arua,
Nebbi, Adjumani, Moyo, Koboko, Yumbe and Nyadri. This branch has one linkage banking
officer mandated to mobilise the SACCOs in this vast area.

The committee also noted that both the bank and SACCOs are having difficulty in managing
two different portfolios with different interest rates offered to the same market manager. This
scenario leads to discrimination and forceful market failure.

The gross margin of four percent per annum that the SACCOs are expected to earn in the
government policy arrangement is not sustainable. Four percent is far below the nine percent
and 13 percent that Post Bank charges, yet the bank is more efficient than the SACCOs.
Furthermore, the SACCOs bear all the risk of on-lending to the target clients who do not have
substantive collateral to act as loan security.

It is the opinion of the committee that the centralised system of registration of SACCOs is
cumbersome and expensive. It may not allow the fast tracking of the government programme
of having at least a SACCO in every sub-county throughout the country. The requirement is
that a commissioner of co-operatives is the one to consent to the existence of a SACCO in a


                                                                                              18
sub-county, and coming to Kampala causes some difficulty for some of our remote sub-
counties in the administration of these co-operations.

Recommendations.
The committee recommends that Government should increase the capital base of the bank to
Shs 15 billion. This will enable the bank to be competitive in the commercial banking sector.

The committee recommends that Government urgently puts in place some legal and
regulatory framework for Tier 4 institutions before massively rolling out a Post Bank-
SACCO wholesale lending arrangement. This law would ensure that operations of SACCOs
remain prudent, sound and sustainable for a reasonable period of time.

The Government should evaluate thoroughly all the implications of implementing the Rural
Financial Services Strategy with Post Bank. Coordination and institutional arrangement as
well as timeframes must be harmonised for the success of the programme to be realised.

The committee recommends that the bank should evaluate, document and implement
strategies to enhance information sharing with its stakeholders to avoid exposure.

The committee recommends that Government should urgently harmonise the interest rate
policy to ensure that SACCOs and target clients get favourable and sustainable offers.

Mr Speaker, let me now turn to the accounts, which is in section 4 of our report. These are on
the basis of the queries presented to us by the Auditor-General starting from 1999. Under this
year, the committee observed that the accounting software that the bank procured was not
adequately addressing the needs of the organisation with respect to improving efficiency and
effectiveness. A proper assessment should have been made before the procurement in order
for the system to suit all the organisation’s business needs. Thus, the procurement of an
incompetent system was attributed to poor management by Mr Winston Sibo, who was the
then accounting officer who should be held responsible and accountable.

It was further noted that the system has caused a loss of Shs 33 million to the organisation
arising from the difference in the computation of interest rates. The software was so erratic
that it would continue to award interest rates even to those who had already overdrawn their
accounts.

The committee also observed that management was not properly handling all the sources of
revenue. For instance, outstanding arrears, if recovered, could have enhanced the
capitalisation of the bank and subsequent expansion of investments and service delivery.

The failure to comply with VAT registration and subsequent collection could attract penalties
causing unnecessary losses to the bank. It was also observed that the bank’s annual rental
income exceeds the threshold of Shs 50 million required for VAT registration. Furthermore,
URA, in their letter dated 29 November 2006, confirmed that the bank had not met their tax
liability that included VAT, stamp duty and capital gains tax.

The above is evidence of the weak internal controls, which can lead to losses to the bank as a
result of fraud and transaction risks as well as mismanagement of financial statements.

Double payment for the same item is a fraud and should not be allowed to occur in any
organisation. For the case of Post Bank where housing allowance is paid, a bank official
should not be provided with physical accommodation. This is brought out clearly in the case
of the former accounting officer who was residing in a company house but he was also
pocketing housing allowance to the tune of Shs 400,000 per month.



                                                                                           19
Recommendations

The accounting software should be periodically evaluated and improved to capture and
analyse all the financial and business transactions of the bank. In the meantime, a parallel
manual system should be strengthened to track all the problematic areas of the computerised
system and a good backup system must be put in place.

Management must recover the Shs 33 million that the bank paid out to the savings clients as a
result of wrong computation of the interest.

The bank should draw comprehensive policy agreements for managing the rent collections
that should include:
• Which tenants should be sourced
• Penalties charged for late payment
• Cost effective methods for recovery from defaulting clients; and
• How the rent arrears are reported in the books of accounts.

The bank should monitor and evaluate all its operations including:
• The legal implications due to failure to comply with various relevant laws.
• Mechanisms for regular evaluation of the legal frameworks affecting all decisions of
  management and the overall business environment should also be looked into.
• The internal audit department should be strengthened to comprehensively monitor the
  operations of the bank.
• Management must register for VAT immediately and start collecting and remitting this tax
  to URA.
• Management must also recover the Shs 6 million from Mr Winston Sibo.

On the account for the year 2000, Mr Speaker, the committee observed as follows:

There was an error in the title for the bank’s property. Instead of indicating that the bank’s
property is found on William Street, the land title was registered under Salisbury Road. This
apparently means that these people were not very serious with checking their records.

Such variations are a sign of an incompetent finance and administration department as well as
lack of effective internal control systems. Officers were not educated to do bank
reconciliations among their core functions.

The bank does not have a comprehensive system of checking input data in order to avert
miss-postings and overdrawing. These are areas of potential fraud because clients can collude
with some staff to have unauthorised access and utilisation of cash.

Debt recovery is an area where fraud can be perpetuated in organisations. Often employees
can recover the money from debtors and deliberately decline to post such transactions into the
accounting system and later recommend such outstanding debt balances to be written off.
This has always been a practice in statutory enterprises.

The committee observed that the finance and administration department and the internal audit
department are not liaising very well through the pre-audit arrangements to make sure that
only staff that account for running advances are eligible to receiving more advances.

The committee observed that the bank should not enter into any inter-agency arrangement or
partnership without thoroughly evaluating the potential risks.

For the year 2000 audit report, these were the recommendations of the committee:



                                                                                           20
That management must correct the errors in the title within one month. I hope they have done
this already.

Management must strengthen the finance and administration department to be able to
expeditiously and accurately capture and reconcile financial transactions in a timely manner.
It should also document internal controls, clearly assigning responsibilities for management
of cash and cash balances monitoring.

A comprehensive system of internal controls to enhance better cash management should be
instituted, with clear punitive sanctions for cases of negligence and deliberate theft.

The bank payments must be pre-audited in accordance with the organisation’s policy as well
as best practices in handling financial transactions.

The bank should conduct potential risk evaluations before getting into business relations with
various stakeholders. A thorough risk analysis of partner institutions like microfinance
organisations should be done before the bank gets into linkage arrangements, lest the collapse
of the linkage partners could lead to the collapse of the bank itself.

During the year 2001 audit report, the committee made the following observations:

Persistent failure to reconcile accounts by Post Bank, which is a reflection of incompetent
staff and lack of substantive management systems to ensure performance of such an important
finance function, still remains a challenge.

The reconciliation between Posta Uganda and Post Bank (U) Ltd. accounts has taken a very
long time and there is a need for the two companies to expedite the process.

The committee recommends as follows:
The minister should intervene and ensure that the financial differences between the
institutions are resolved as a matter of urgency. This is important because he is the political
head and supervisor of the two otherwise sister statutory bodies, and he is the best arbitrator
to bring them together to a resolve this matter.

I draw the attention of the honourable members to the year 2002/2003 and 2004, which are
combined. In this report, the accounts for the three years running from 2001, 2002, 2003 to
2004 have been considered jointly because the queries raised by the Auditor-General were
similar. The following were the Auditor-General’s findings together with management’s
responses, the committee’s observations and recommendations for the period under review; I
selected the observations and recommendations exclusively:

The committee observed that there is no clear harmonisation between operations in the bank
branches operating online and offline yet the bank’s savings withdrawal policy allows clients
to access their savings from any branch. This scenario causes a very big risk to peoples’
savings as well as the bank’s cash balances.

The image of any bank highly depends on how best it manages peoples’ savings. The
committee observed that if the bank does not streamline mechanisms to ensure completeness
and accuracy of savings and interest expense records, her growth plans may be doomed.

Most importantly, one of the reasons people save is being able to realise that return on savings
in form of interest. Thus the bank needs to ensure that interest expense records are clearly
captured and communicated to the clients.



                                                                                             21
The committee recommends as follows:
The efforts to ensure that all the branches are online should be top on the agenda, most
especially with the anticipated drastic growth in the bank’s operations.

The bank needs to invest in information technology so that the peoples’ savings and
remittances are managed in a prudent manner.

Management should put in place a strong system that captures and reports interest expenses
accurately in both manual and computerised branches so that clients’ accounts and passbooks
are promptly and regularly updated.

Bank of Uganda is hereby urged to strengthen or improve its supervisory role to curtail the
irregularity currently persisting in the bank, especially the harmonisation of the activities of
the branches online and those which are offline.

Mr Speaker, we turn to the final account, which is for the year 2005. The Auditor-General
gave an unqualified opinion for the year ending 30 June 2005, in that, all the financial
statements were in agreement with books of accounts in this financial year. This in turn gave
the true and fair view of the state of affairs as at 31 December 2005. So, there were no serious
audit queries for this financial year. The committee was grateful for this effort and urged the
bank to continue in this direction for years to come.

In conclusion, we looked at some words of wisdom and opinion from the corporate world by
Michael Clemens, and I want to draw the attention of members to just two paragraphs; first,
that poor corporate governance in developing countries is a serious matter and the cost of
poor governance is very high. In the article I am referring to, it was found that well governed
firms trade at a premium of 160 percent compared to poorly governed firms. If this emerging
financial institution, the Post Bank Ltd., cannot attract its fixed capital, it will be doomed to
remain on a small inefficient scale. However, if it can struggle to grow, so will the poor
community, who are anxious to access its services in order for Bonna Bagaggawale to bear
fruits, prosper indeed. Mr Speaker, I beg to report.

THE SPEAKER: Thank you, honourable chairperson and members of the committee, for the
report.

4.30
DR FRANCIS EPETAIT (FDC, Ngora County, Kumi): Thank you very much, Mr
Speaker. I also want to take this opportunity to very sincerely thank the chairperson and his
committee for ably undertaking the task that Parliament mandated them to do. As you may
realise, the committee was dealing with a backlog of work, handling reports from 1999 for the
last six years. I think it was an enormous task, but I trust that they have come up with a very
informative report.

Because it is a backlog of scrutiny, I maintain that we have taken rather too long to get to
understand the things unfolding in Post Bank (U) Ltd. The whole report, from the beginning
to the end, gives me the impression of gross mismanagement. I am even beginning to develop
cold feet over the capacity of Post Bank (U) Ltd. to handle the Bonna Bagaggawale
programme because as we speak, it is reported that they have only 21 branches in the 17
districts where they have set foot throughout the country. They are in 17 out of 80 districts,
and out of the 17 we have 21 branches, and as if that is not enough, all the branches are
understaffed and yet the task before Post Bank is immense. In my opinion, Post Bank is not
an entity that will yield results if that is the status quo.

Mr Speaker, I am also concerned about the parameters or the indices that are used for the
SACCOs to qualify for the funding from Post Bank. Apparently, the parameters may not have


                                                                                              22
been properly grasped by the various SACCOs that would require access to such funding
from Post Bank. No wonder certain SACCOs, as per the report, have gained access to funding
even when their capacity to handle such funding was not properly assessed. That is why Post
Bank is finding difficulty in following up repayments of such loans.

I think hiding information generally and lack of capacity building of the various SACCOs
should not now be blamed on the individual SACCOs. Before accessing the funds, the
SACCOs must have built capacity. Who takes up the challenge now? I thought it would still
be the duty of Post Bank to satisfy itself that the SACCO they are dealing with has the
capacity to take up the task. However, now if monies are just disbursed to an entity whose
capacity is in doubt, how do we proceed? This arrangement of the Bonna Bagaggawale
programme through Post Bank, in my opinion, is going to be a very big flop.

Let me refer to page 30 of the report; some of the revelations in the report about the erroneous
transactions in Post Bank would give me the impression that Post Bank is even not worth
being called a bank. You can check bullet 1 on page 30; it says that on 13 October 1999,
deposits and withdrawals of Iganga were posted under Pallisa; then on 25 October the same
year, deposits of Kabale were posted under Hoima. What do you expect? Deposits and
withdrawals of Oboja were posted under Jinja region. Is that worth being called a bank?

A lot of customers are going to be crying foul because the capacity of Post Bank in itself is a
problem, to the extent that now a total of 10,800 accounts had a sum of Shs 191 million
overdrawn! So, I think that while Post Bank in itself is not worth being called a bank, it is
now handling SACCOs and sucking the various SACCOs into the problems of the poor
capacity of the bank. If anything, I think the managers- (Interruption)

MR WAMBUZI: Rt Hon. Speaker, I am sorry to interrupt the shadow minister. However, if
we condemn Post Bank to the extent that we should close it, I wish to inform the honourable
shadow minister that page 43 of the report of the committee shows the positive side. I beg that
as you condemn the bank, you keep in mind a typical Kisoga proverb, which says that if you
are beating your own son, you do not beat him flat but that you fold the hand so that it does
not hurt so much.

Page 43 clearly shows that the bank has got a new image and has started moving forward to
address Bonna Bagaggawale. I beg to inform the honourable shadow minister.

MR SSEKIKUBO: Mr Speaker, I have been listening to the observations made by hon.
Epetait and the responses by the minister in charge of industry, hon. Gagawala. At this point
in time, I am seeking your guidance because on top of the serious commercial issues he was
raising about financial prudence, I was also looking at the legal and regulatory framework
under which Post Bank is operating.

My concern is, whereas I can appreciate the attendance of ministers, these are really matters
which are technical, particularly when it comes to issues like Tier 4’s. We would have
expected the substantive minister of finance to be around before this question or this item was
put forward, so that we can take these matters under serious grasp and we move on. The way I
see it, we shall be expressing opinions in the general direction of the debate but without
coming up with the substantive response that this matter deserves.

Yesterday we had the issue of Ebola and the Minister for Health had to be here. Today this is
a technical matter on finance - on bonna bagaggawale - and there is no substantive person to
take members’ concerns and give the necessary answers. What we have are general debates,
general observations and general responses from ministers. Are we being properly guided to
proceed in this manner?



                                                                                             23
THE PRIME MINISTER (Prof Apolo Nsibambi): Thank you, Mr Speaker. It is high time
some people learnt that I am always disaster prepared. I have already asked hon. Prof
Kamuntu to take charge. He is a very learned and very knowledgeable professor. I thank you.

THE SPEAKER: Whereas you are disaster prepared, I think the manner of procedure should
be that the minister responsible for the sector should contact a colleague and ask him or her to
stand in for him or her -(Applause)- instead of heaping this on you, because you may be
overloaded. So, in future I think if the minister is not going to be present - for example the
Minister of Education could ask hon. Gagawala to please stand in for her so that you are
spared this. (Laughter)

DR EPETAIT: Thank you, Mr Speaker. I would like to thank my honourable colleague, hon.
Theodore, for making that salient observation.

As for my honourable colleague, hon. Gagawala, whilst you quote that when you are
disciplining - he is not listening unfortunately -(Laughter)- I am talking to you - when you are
disciplining a son you do not really slap him hard but that you can twist him or pinch him a
bit, I think we are not going to allow any financial imprudence in any bank. How on earth can
a whole bank - the one you are saying is now beginning to move on well – have property
whose location it does not know? Check page 28, observation 4.2.12. Instead of the title
reading William Street, it is registered under Salisbury and they are keeping it and you call it
some prudence of some sort!

Finally, Mr Speaker, my submission is that we need to rethink how to manage this
programme. Otherwise, Post Bank, in my opinion, does not have the capacity to manage the
mandate that has been tasked to it. Just check for the thin spread throughout the country - 17
districts out of 80! Remember 2011 is around the corner. The agenda was Bonna
Bagaggawale; 2011 is around the corner and I do not know whether at that pace all will be
reached. Thank you, Mr Speaker.

4.43
MR ANTHONY YIGA (NRM, Kalungu West, Masaka): Thank you very much, Mr
Speaker. I would like to thank the committee for their report and I would like to make the
following observations.

I recognise that there has been a backlog as far as discussing the Auditor-General’s report
regarding Post Bank (U) Ltd. is concerned. Although in the past their performance has not
been good, according to the report of the committee, we are actually seeing that there is
improvement especially when you look at the latest report which they discussed of 2005.

Maybe what the committee should have really brought to light is whether Bank of Uganda
really carries out its supervisory role over Post Bank as it does with other banks in this
country. Maybe if Bank of Uganda was actually doing its work vigilantly, some of these
omissions would not have been there. However, now that they have persisted all along, it
shows that Bank of Uganda should also be brought into question so that it actually supervises
like it does to other banks. If it was a private bank, some of these omissions would have
maybe led to the closure of the bank. Now that this is a Government-owned entity, maybe that
is why they are turning a blind eye. We should impress it upon Bank of Uganda to intensify
supervision so that we have more effectiveness in the banking sector.

Mr Speaker, we are now looking at these omissions, which have been unearthed by the
Auditor-General in light of the pending Bonna Bagaggawale programme. I would also like to
complement what hon. Ssekikubo had said, that we are discussing this very important subject
when we do not have any substantive minister from the Ministry of Finance.



                                                                                             24
Bonna Bagaggawale as a programme has got confused. We do not know even what it is. We
do not even know the criteria for accessing money. Recently, the Ministry of Finance went to
Masaka and they met various SACCOs from Sembabule, Masaka, Rakai, Kalangala and they
concluded without agreeing. So, in Masaka that programme has been put to a halt; nothing is
moving. This shows that we have not really agreed on how this programme is going to be run.
We should not rush to blame Post Bank; I do not blame them. As Parliament, we do not know
the modalities of managing the Bonna Bagaggawale programme.

Secondly, Post Bank, like any other banking institution, is used to lending to individuals and
organisations with security. Now, here are SACCOs, which are coming to borrow money
without security. Their security is politics. (Laughter) Now, really, how can you rush to
blame Post Bank? The best thing that you should tell Post Bank is that they are lending
money to these SACCOs but they are actually giving them grants. This is because there is no
guarantee that those SACCOs will be able to recover money and pay back. So, if you are
going to be very stringy that Post Bank should be efficient to borrow and recover the money,
it may not really be realised. I can guarantee that.

We should not rush to blame Post Bank for Bonna Bagaggawale, but I think we should come
back to Parliament and agree on how Bonna Bagaggawale is going to be implemented in this
country. Otherwise, as of now we are far from that.

Mr Speaker, on the issue of capitalisation, I support the committee that the time has come for
us to capitalise Post Bank, supervise it and empower it. We rushed and liquidated UCB, the
Co-operative Bank was also liquidated and now as a Government we are stuck. As for Bonna
Bagaggawale, which we want to implement at the meagre interest that we are proposing, no
commercial bank can accept such a programme. These commercial banks cannot accept to
manage Bonna Bagaggawale. So at the end of the day, we should have a Government-owned
bank to manage the government programme at such a meagre interest rate.

I would like to end there and thank the committee for their report. However, we should not
bash Post Bank (U) Ltd. in light of Bonna Bagaggawale. We should come back here to
Parliament and refine this Bonna Bagaggawale before we rush to blame Post Bank. Thank
you.

4.49
MS MARGARET BABA DIRI (NRM, Woman Representative, Koboko): Thank you
very much, Mr Speaker. I would like to thank the committee for giving us this comprehensive
report. My concern is mainly on Post Bank. When the President first announced that Post
Bank would be the one handling the money for Bonna Bagaggawale, I was a bit concerned. I
have known this Post Bank for handling small monies that are sent to and fro and for students
putting their money there, not big money. (Laughter)

Secondly, in Post Bank we had problems. Money was getting lost from time to time; it was
not reaching the owners. That is true and I witnessed it. If it did not happen to you, I did
witness it.

Thirdly, Post Bank has very limited staff, as indicated in the report. Now we have given Post
Bank the very big responsibility of handling millions of money for very many micro-finance
co-operatives and yet we have not expanded the staff or given them adequate training to do
their work like other banks.

By the fact that Post Bank is Government owned 100 percent, - if I heard correctly - I think
Government is running away from running its institutions. Our good Uganda Commercial
Bank was sold because we were not managing it well and our good Co-operative Bank, which
used to go down to the grassroots, was closed because of not handling money well, and we


                                                                                           25
thought this would be the right bank to handle money. Now we have decided on Post Bank;
what miracle will Government perform to ensure that this Post Bank will perform very well to
serve its purpose?

Mr Speaker, Post Bank branches are very few - only 17 as mentioned - and yet we have over
thousands of sub-counties with SACCOs. If I take the example of Koboko District, we have
six fully-fledged SACCOs and we find it very difficult to travel all the way from Koboko to
Arua to bank our money. One SACCO has managed, that is Lobule SACCO, and it takes two
to three days before you can come back for the money, let alone the risks the person takes to
bring the money to the SACCO. So, I think if we are to endorse this Post Bank to serve the
micro finances or the SACCOs, they must be decentralised to all the districts rather than risk
losing our money to thieves.

Also, Mr Speaker, we are trying to develop these SACCOs into banks, so I think we require
massive training of the management and the executive committee members of the SACCOs.
You know, once you collect people’s money, you need to have the skill to give it out,
multiply it and make sure that you recover it. With the limited skills that the managers have, it
will be very difficult to operate these SACCOs very well.

I understand Government is training sub-county chiefs to monitor them. You can train
somebody to monitor, but what about those who are managing. I think Government should
lay emphasis on training managers and accountants of the SACCOs so that they can handle
this money well. Unless we emphasise this training, we shall not recover our money.

I also recommend that instead of giving bicycles to sub-county chiefs, the bicycles should be
given to the loan managers. Rather than giving the motorcycles to sub-county chiefs, give
them to the ones who are monitoring the loans, the ones who are running after clients. We
need to support the SACCOs if we want to see them perform and serve our people. Thank you
very much, Mr Speaker.

4.55
MR ERASMUS MAGULUMAALI (Independent, Kooki County, Rakai): Thank you
very much, Mr Speaker and honourable members. I thank the committee for this informative
report.

I would like to inform this House that we should be very careful. We have been given the
evidence in writing and we have read and understood it, so it is now up to us to take a
decision to ditch the interest of Ugandans and poor peasants who we are supposed to serve.
Why am I saying this? Bonna Bagaggawale is embedded in the President’s Manifesto.
Regardless of which party you belong to, we all want our fellow Ugandans to do something to
improve their status of life.

Here we are with Post Bank, condemned already with your written evidence, and we are still
persuading ourselves and saying, “No, let us give it a chance”. Whose money are you playing
with? Which district is going to wait? Only a few districts are covered; which district is going
to wait to become rich with Bonna Bagaggawale? Even my people in Kooki County want to
become rich but there is no Post Bank there. For how long do we have to wait?

Secondly, we belong to a global village. It is sad because if I remember properly, it is this
very House that at one time in its history passed a law setting up the Privatisation Unit for
those parastatal bodies which were not performing. Why don’t we privatise Post Bank?
Because you cannot recapitalise Post Bank, then you go ahead and risk the interests of the
people. We have got the history of co-operatives in Uganda and it really stinks. Now, we are
trying to set up these SACCOs and you subject them to the same conditions; we shall wind up



                                                                                              26
in the same situation. For how long shall we keep explaining to the people, “oh, the
government is trying to do this; we allowed Post Bank to operate but your monies are lost”?

Thank you very much, Mr Speaker and members. Let us seriously consider this. I am just
suggesting, although the professional person is not here, the minister of – (Interruption)

MR KATURAMU: I thank you, hon. Magulumaali, for giving way. Mr Speaker, I would
like to seek clarification from the honourable member holding the Floor. He has advocated for
the privatisation of Post Bank just as it had been done for some banks in the country. At the
same time, he is also advocating for the poor peasants to access money to alleviate poverty.
Now, if Post Bank is privatised, it will then work on the forces of demand and supply and the
interest rates are likely to be higher. How will that be reconciled with the interest you have to
alleviate poverty among poor people?

MR MAGULUMAALI: Thank you very much, my colleague. Definitely, I hope there are
people who are competent enough; I was only advising the government to work out a private
arrangement with banks which are competent, which are in existence all over the country, so
that Bonna Bagaggawale is kicked off at the same time because nobody is going to wait. You
cannot risk Government funds in an incompetent body like Post Bank. That is all I am
expressing. I thank you very much, Mr Speaker.

MR TINKASIIMIRE: Thank you very much, Mr Speaker. I also want to inform hon.
Magulumaali, although he had finished his submission, that not all is going well with us in the
way of privatisation. There are many Government parastatals that were privatised with the
hope of saving us from mismanagement but we have not seen the best. As we talk now, we
are suffering with Nytil; it is a living example. We have so many problems with many
industries that we privatised. We are actually even regretting it. It is possibly the only bank
Uganda is remaining with that we can talk about.

I would only think that if the issue of management is becoming a problem, we step in because
we have seen certain institutions surviving. Currently, The New Vision is running well, the
water sector is running well, URA is running well, why can we not have another manager
prudent enough to handle this institution to our best expectations other than advocating for
policies that have been proven to fail? Thank you very much, Mr Speaker.

5.02
MRS CECILIA OGWAL (Independent, Woman Representative, Dokolo): Mr Speaker, I
was a bit confused about the procedure. I thought people speaking were giving information to
the person on the Floor. I do not know how they can give information when the person has
already finished. Thank you, Mr Speaker. (Laughter)

Mr Speaker, I have read the report and I want to thank the committee for the good report. But
as a Parliament, I think we need to understand what we are supposed to do with the various
reports that we get from the oversight committees. The committee has done post audit
analysis of the various accounts of Post Bank. What are we supposed to do with that? And the
committee has not told us the action that has been taken to address those issues. Now, for me
it leaves me a big gap that I find myself incompetent to talk about Post Bank as a going
concern because if the management is that bad that a banking or a financial institution is not
in a position to know who the debtors are, then that leaves us with a very serious doubt that
this bank can actually carryout its banking responsibilities. So, I think we need to find out
first of all, what we should do as a Parliament as far as the management and the status of the
bank are concerned.

I fear that if we inject the Shs 6.5 billion or whatever gap, which the committee is talking
about when the issue of management of the bank is not addressed, we are about to lose that


                                                                                              27
money. And I would not want this Parliament to encourage a situation where Post Bank will
become another UCB. It will be disheartening because all of us are now involved in ensuring
that Post Bank is strengthened; Post Bank is financed in order to carryout some duties which
should have been done by UCB if we had not sold it. So, what led us to selling UCB may be
is on the way coming; that is my fear. So, I would like the committee to clarify to me why it
did not come out with the final recommendation of what they expect Parliament to do with
the information they have given us?

The second point I would like to raise is that, we should not confuse the issue of Post Bank
with the issue of Bonna bagaggawale otherwise, we would lose our path. The issue of Bonna
bagaggawale must come to this Parliament as a programme of Government to address the
issue of poverty in rural areas. We want it to come to Parliament as a programme. If we
confuse it with this Post Bank issue, we will never be able to understand what this Bonna
bagaggawale is supposed to do for us.

We read in the papers that so many Savings and Credit Co-operatives (SACCOs) have been
formed; money has been sent to rural areas through these SACCOs but we do not know under
what system this money is going to the various SACCOs. We know some of us as Members
of Parliament have tried to help our people; we have tried to have SACCOs registered but
what is the procedure? What is the guideline? What are we supposed to tell our members? So,
I think Parliament should insist that the Minister of Finance should come to this House with a
full report and a full guideline of what is supposed to be done if we are to access this Bonna
bagaggawale fund - if it is there at all.

Finally –(Interruption)

MR BYANDALA: Mr Speaker, allow me to inform hon. Cecilia Ogwal that Bonna
bagaggawale programme is there. Thank you.

MRS OGWAL: Mr Speaker, I understand there is this NGO, which is recording who speaks
in Parliament. So, I hope some people are not going to be misguided by just standing up to
speak. (Laughter)

We have read a lot about Bonna bagaggawale; all I want to know is, how much money has
been budgeted for? Where is it? How can I access the money? Mr Speaker, if me as a senior
Member of Parliament, in my status, I do not know where to get the money, I do not know
how to access the money, how can my colleague really convince me now that the money is
there? I know the programme is there but it could be air!

So, Mr Speaker, I would like to plead with Members that the oversight committees have done
a very good job; almost all the committees have done a good job but as Parliament, we have
to take a position; what are we supposed to do with that information? And if we are just going
to unearth theft and leave it there, what is the use? We would like to see some of these people
arrested; we would like to see money returned so that we know that this Parliament has done
something –(Interruption)

THE SPEAKER: Madam, these committees are committees of Parliament. They are
supposed to carry out their work and report to us to own their work. They do not execute their
work without your blessing. So, all committees should report to Parliament so that you adopt
the work which they have done otherwise, it cannot remain in their offices.

MR ODIT: What I would want to inform this House about is that, we make
recommendations, as the Speaker has guided and action is taken by Government. This
morning, we were more than pleased in our committee to discover that the first statutory body
that we investigated and Parliament debated its report and made recommendations and


                                                                                            28
presented them to Government was National Medical Stores, where we found a lot of fraud.
The IGG was also involved in investigations, a special audit was carried out and individuals
were implicated. We recommended actions, just like in this one we have specific actions
recommended. Now, the Directorate of CID has already taken action on some of those
individuals.

We were given the report from the Office of the Inspector General of Police on how they have
already started investigating some of those individuals implicated by the reports and they
totally agreed with both the findings and our recommendations. So, I think it is really in good
spirit that Government listens and considers the areas upon which they should take action. For
us we report to Parliament and that is what we are doing.

As for which institution is mandated to implement this programme, we were told in our
committee that Government identified Post Bank as the agency to implement this Prosperity
for All, and that is the very reason we also wanted to find out whether they have the capacity.
I think we have done our part. Thank you.

MRS OGWAL: Thank you, Mr Speaker. I think I was very clear in my preamble. I did
applaud the work being done by the oversight committees but the explanation given by the
chairperson of the Statutory Commission is not convincing. What I would want to see is that
after these reports are given to us, what action do we take as a Parliament? That is my
concern. I know the committee is doing its work and there is nothing else they can do beyond
that other than informing us. But my problem is that after getting this information, what is the
way forward? We should not just leave it there. Last year, the reports were given, this year we
are receiving reports; then what?

THE SPEAKER: You see, when we adopt a report, there are other agencies of Government
responsible for a particular subject as well as our decision. These agencies then take action.

MRS OGWAL: Mr Speaker, perhaps at this point I would like to say that the various
ministries should also come to the House to tell us what action has been taken about some of
these issues which are being raised by the oversight committees so that we feel obliged to
follow up some of them. I thank you.

5.13
MR PETER OMOLO (FDC, Soroti County, Soroti): Thank you very much, Mr Speaker. I
thank the committee for the work well done. However, I wanted the chairman to help me to
restore my hope or to lose hope completely. They went to Masindi after the launch of bonna
bagaggawale with the Shs 500 million as I am seeing in the report. But I would wish to know
from him, has any group got the money so far? And if none has got, when do we, who have
not been visited, expect to get any money? Perhaps the Masindi MP has some information.

Mr Speaker, I would like to reassure the House that in my place, bonna bagaggawale has
been highly politicised to the extent that people imagine that Government is going to dish
money freely to the people. That is the impression down there and I ask those ones
responsible to go and realign the thinking of the people otherwise some SACCO groups like
the ones in Gweri sub county have collected the money to the tune of Shs 15 million and they
are seated waiting for money that they expect from Government- (Interruption)

MS BINTU: Thank you very much, Mr Speaker and honourable member for giving way. Mr
Speaker, I want to inform the honourable member and this august House that after the launch
of the bonna bagaggawale in Masindi, and after being given a dummy cheque, to date there is
no SACCO which has received any single coin and – (Interruption)

THE SPEAKER: Well, did you bank the dummy cheque? (Laughter)


                                                                                             29
MS BINTU: Mr Speaker, the dummy cheque was used for publicity and it was a big one. It
was publicised everywhere and in the newspapers but to date we have never received the
money and I want to say that although the committee – (Interruption)

THE SPEAKER: The Minister of Finance is here -(Laughter)

PROF.KAMUNTU: Well, temporarily. The information that I want to give to hon. Jalia
Lukumu is that, the funds given to Post Bank Masindi branch do not need to be deposited in
the bank because they are earmarked electronically. Any time they want it, it is just switching
a button -(Laughter) I am telling you the truth. Post Bank is electronically connected. That is
the information.

But secondly, money has been disbursed - (Interruption)

MR OWORI: Mr Speaker, I feel offended when Prof. Kamuntu, whom I hold in very high
esteem, stands up and makes such a dummy statement. (Laughter). Gen. Saleh has been
telling everybody that there is money in Masindi, Shs 500 million, and that the SACCOs in
Masindi are just asleep. So, is the hon. Prof. Kamuntu in order to speak without the proper
authority of his substantive minister and make an allegation that is very false?

THE SPEAKER: Well, as far as I see, the kind of explanation or the statement you made is a
statement of fact. But you have said that Gen. Saleh said the money is there, but have the
SACCOs tried to go where the money is and failed to get it? My understanding from Prof.
Kamuntu’s explanation was that, Post Bank can get the money once they present the dummy
cheque. But have the SACCOs in Masindi District gone to the Post Bank to demand money
and been told by the bank that the bank has no money? That is what you –(Interruption)

Well, there is another minister –(Interruption)

PROF. KAMUNTU: I only wanted to finish giving this information to my honourable
member. Actually, the Shs 500 million earmarked for Masindi is there. I am also confirming
to you that money in modern banking need not be in Masindi branch – yes, I am telling you!
These are the facts, I would not tell a lie to the distinguished House. I am informing you
factually that there is no co-operative society that has come to Masindi branch or Post Bank
and has been told that there is no money. This is simply because money can be sent
electronically to the branch immediately it is loaded and that machinery is there.
Electronically, Masindi branch is connected to the centre and that is a fact.

MS CHEKAMONDO: Thank you, Mr Speaker and honourable members. I wish to inform
the august House that on 11th of this month, we had a meeting with all the banks that are
involved in ‘Prosperity for All’ and I am amazed when I hear hon. Bintu saying that the
money was not put in Post Bank.

To prove this, on that day if there was no money in that bank- I remember Gen. Saleh
questioning the General Manager of Post Bank as to why he had not given out the money that
was meant for Masindi and his answer was that nobody among the SACCOs had gone there
to pick any money. So, when she says that there is no money- I think that day that man would
have said, “Please, you told me so but we didn’t see the money.” He was given directives and
instructions on how to go about this. So, I want to put it clear that the money was put there
and it is still there. Thank you, Mr Speaker.

THE SPEAKER: Honourable members representing areas in Masindi District, you have
heard from the Minister of Finance to the effect that if your SACCOs approach Post Bank, the
money will be there. Go and tell them - well, we have to start and then come back and report


                                                                                            30
next week otherwise, how are we going to verify your story and hers? You rather approach
your SACCOs in your district, advise them on what the minister has told us here today on
13th and come back and say, “Yes, there was a trial and they have been told this.” That is
when we shall listen to you. Otherwise, why should I believe your story and disbelieve hers
for the time being? Please, do that. Who was on the Floor?

MR OMOLO: I have to thank the hon. Member for Masindi for giving that information. But,
Mr Speaker, whatever the case may be, whether the money arrived yesterday or this morning,
the money has not been there according to reliable sources. What I am trying to say is that, let
us not use this political language of trying to convince people and call it a Government
programme. In 1996, we had ‘entandikwa’ and it went its way. In 2001, we had
modernisation but I have not seen anything so modern especially in agriculture. In 2006, we
have Bonna bagaggawale. I don’t know if all Ugandans will become rich at the end of the
day. But all in all, let us do what we say so that we guide this country to success. Thank you,
Mr Speaker.

5.24
MR JAMES AKENA (UPC, Lira Municipality, Lira): Thank you, Mr Speaker, for this
opportunity. I want to begin by thanking the committee for this important report on the
operations of Post Bank, but I worry that we are actually flogging the messenger and the
messenger being Post Bank who is to deliver the message of ‘Prosperity for All’ yet the
problem seems to be a lot bigger than Post Bank.

When we are dealing with SACCOs, we are not looking at the whole aspect of co-operative
societies. In the past, when we had co-operatives, they were involved in production, storage
and marketing. We now have a situation where we are only looking at the credit aspect and I
don’t know where poor Ugandans are going to get savings from in order to contribute to this
whole scheme.

So, under the circumstances, I worry that by relying on Post Bank, which the report says may
be highly incapable of rolling out this programme to the 1,000 plus sub counties, we are going
to end up in difficulties; lose the money and also end up with a problem concerning the future
of Post Bank.

On the issue of whether Government can operate an institution effectively, I have been seeing
recently on Kampala Road that the Kenya Commercial Bank is opening a branch. In our
particular case, it seems we have problems with the management of this institution. We had a
specialised bank dealing with co-operatives in the form of the Co-operative Bank. I think we
need to assess carefully what caused Co-operative Bank to collapse.

The little information I have got on this states that the problems were not caused by the
people involved in the co-operative societies. Therefore, if we don’t put safeguards, a lot of
this money, which is supposed to go and help the poor, is also going to be lost through similar
processes.

Rather that flogging Post Bank, let us really address the bigger problem, which is, how are we
going to work out this policy of wealth for all through SACCOs? I think the onus is on the
government to come out clearly on how this is going to be done. As it is now, I fear for what
will happen to the people of Uganda. Thank you, Mr Speaker.

5.28
MR HOOD KATURAMU (NRM, Representative Persons with Disabilities, Western): I
thank you, Mr Speaker, for giving me this opportunity. I also thank the committee for this
post mortem report that they have made on the status of Post Bank in view of the
responsibilities it has been bestowed to foster particularly, ‘Prosperity for All.’


                                                                                             31
As stated in this report, Post Bank has been identified by Government to spearhead and
implement this micro-finance component of ‘Prosperity for All’ and the reason given was the
good performance of the bank as per Bank of Uganda rating. Mr Speaker and honourable
members, we are aware that presently, all banks in which Government had a stake like
Uganda Commercial Bank and Co-operative Bank have been privatised and it has been our
wish as a country to have a bank where the interest of the poor Ugandans can easily be
safeguarded.

The chairman of this committee has reported that there is 100 percent share holding by
Government in Post Bank. So, wanted to know; since there is 100 percent shareholding in this
bank, what are the core opportunities that can be passed on to Ugandans particularly those
related to development and investment? This is very vital.

One of my colleagues here mentioned that it may be very difficult for Post Bank to make apt
and timely recoveries of monies from SACCOs because the way SACCOs are going to be
run, there is no strictness in providing collateral security and in the absence of collateral, Post
Bank is faced with a very big challenge of depicting itself as a successful financial institution
and at the same time fostering a Government policy to fight poverty in this country.

When I saw the report of the Auditor-General, it raised rays of hope to me that Post Bank may
indeed be a viable institution to carry out these important functions mentioned in this report.
However, I wanted to read in this report that it had been reported that because of inadequate
capital, Post Bank was not able to carry out its commercial functions efficiently and that it
had not yet been able to secure a commercial banking licence. Now, may I know from the
chairman whether after the Auditor-General’s report which depicts success and hope, the
commercial banking licence is ready with Post Bank? And if it is not, what are the
impediments? Is it the share capital demanded by Government? This House desires to know
the impediments that are making Post Bank not to have a fully commercial banking licence.

When I listened to Prof. Kamuntu explaining that the physical presence of money in Masindi
is not relevant and that if the SACCOs in Masindi and any other district in Uganda need
money, it is a question of connecting to Kampala then the money will go there. I ask myself,
“What is the relevance of opening structures in the districts?” This committee has mentioned
that we currently have 17 branches in the country and we opened them at a cost and our
policy is to take services nearer to the people. Why shouldn’t the money be in these
structures/facilities where our people who are poor and who are the beneficiaries are located?
(Interruption)

MR MUKITALE: Honourable colleague, thank you for giving way. Mr Speaker, I have
information to the effect that the money which was dispensed to Post Bank Masindi was not
meant for the SACCOs because there was an intention to outsource a capacity building –
(Interruption)

THE SPEAKER: What is the source of your information?

MR MUKITALE: Mr Speaker, I am coming to that. The money was intended to outsource
capacity building institutions to go down to the SACCOs but not to be benefited from by the
individual SACCOs. What I would like to request the minister, possibly as we are also being
told to go and clarify from the ground, is that, was this money supposed to build the capacity
of the SACCOs or are we trying to get micro-finance institutions in the centre to build this
capacity?

THE SPEAKER: Honourable members –(Interruption)



                                                                                                32
MR MUKITALE: I got this information from the ministry.

THE SPEAKER: Honourable members, let us be structured in the way we proceed with our
work here. You stood to give information and so you cannot start questioning in the same
breath. You stood to give information and we wanted to verify your information by asking
you the source because anybody can stand here and say that he has been informed when he
has no basis of that information. What is the source of the information?

MR MUKITALE: Mr Speaker, I want to thank you for seeking further clarification. I was
only developing my point and I am saying that this explanation also comes from the Ministry
of Finance. So, I am surprised that we are now beginning to blame the local SACCOs yet the
dispenser is Ministry of Finance and not Post Office. Post Bank will only give us this money
if Finance has done its work. There is no way Post Bank will start giving money if there are
no procedures, structures or frameworks. The framework is the responsibility of the ministry
concerned. Post Bank is just a dispenser; it is just a courier. The policy is not made by Post
Bank – (Interruption)

THE SPEAKER: Honourable member, I detect that you stood just to make your contribution
not to give information. And it is a tricky way of making contributions. Can we proceed with
your contribution?

MR KATURAMU: Thank you, Mr Speaker. (Interruption)

MRS KIRYAPAWO: Thank you, Mr Speaker. The clarification I am seeking is about
Masindi. The minister has told us that the money is there and that you can access it by using a
button. If the SACCOs in Masindi are not ready to access that money, can other SACCOS in
Uganda which are ready access that money if it is there? Thank you.

MR KATURAMU: I thank you, Mr Speaker. In my conclusive contribution, I wanted to talk
about co-ordination and institutional arrangement as a way forward for the success of this
Post Bank responsibility. The committee has informed us that Post Bank has a strategic plan
and that this plan has a strategy of networking with other stakeholders. What is evident is that,
even in the traditional commercial banks existing here in Uganda, there are also networking
with other stakeholders to improve efficiency in their services.

For instance, the ATM machine may serve Tropical Africa Bank customers at a petrol station
and the people access these services. Since Post Bank has not covered the whole country and
there are local commercial banks in this country like Centenary Rural Development Bank,
which has many branches covered country wide, can there be a legal and institutional
framework to enable Post Bank to work with these existing commercial banks in order to
improve service delivery? We feel that these are the areas where we do not look at Post Bank
despite the lack of capacity as a new financial institution so that it can really reach out to
many districts and then they work and collaborate with other commercial banks who have
branches in Uganda. Thank you, Mr Speaker.

5.40
MR JOHN EMILLY OTEKAT (Independent, Serere County, Soroti): Thank you, Mr
Speaker. I would like to thank the committee for this very good work done. I would like to
seek a few clarifications from the committee and also guidance in a number of ways.

We are talking about a conveyor belt. May be I will talk about that because I am a pilot. I
would equate Post Bank to a conveyor belt. When you discover that the conveyor belt cannot
carry the capacity of the luggage of the tourist coming with British Air Ways- (Interruption)




                                                                                              33
THE SPEAKER: But, honourable members, this report is not only for Bonna bagaggawale.
If really a point has been made in effect of inefficiency of the bank to deal with Bonna
bagaggawale, I think you can move on another point other than repeating the same point that
has been spoken over many times.

MR OTEKAT: Mr Speaker, thank you for the guidance. The other one on which I wanted to
get guidance from the committee is the issue of SACCOs registration and supervision. Mr
Chairman, you proposed in your recommendation that it should be decentralised to regional
level. I would also like to propose that it should be further decentralised to sub regional level
because if there are 17 districts, I am sure those districts must have come from all over the
regions of Uganda and all over the sub regions. There are 13 sub regions: Teso, Kigezi, Sebei
and others. Can we go down to sub regions so that registration supervision does not take place
only in Kampala but at sub regional level and the 13 regions are there? That is your
recommendation on page 17 of the main report.

Then the other one is still on strengthening branch management. You gave the example of
Arua which has six to seven districts being managed by one linkage banking officer whose
duty is to identify, appraise and supervise SACCOs in that area. I think the best would be to
increase the linkage bank officers to the number of districts in that area. Each district should
have one linkage officer. If there are seven districts in Arua instead of having one, they
should have seven so that each linkage officer is attached to one district. That is what I
thought I would strongly recommend.

The issue of Shs 500 million has been touched. I am sure the Minister of Finance will go back
to that. But my other interest is, even if the money has been banked in the bank, it has stayed
there for a long time and eventually it is generating interest. Will that interest be given to the
SACCOs? We have had this for long - Shs 500 million is now given out and the interest goes
to whom it may concern.

Lastly, just like hon. Jimmy Akena mentioned; we are flogging the transmission line.
However, the major problem is with the Ministry of Finance. These are the persons who
should be feeding Post Bank with these monies. Prime Minister and honourable ministers,
unless you sort out that confusion in the Ministry of Finance, Bonna bagaggawale is likely to
fail, because you are not coming with proper guidelines. When I go to Soroti it is very
difficult like hon. Peter Omolo mentioned. It is very difficult for me to explain the SACCO in
Kateta because in my constituency it is only one, although it has been mentioned that all sub
counties should have at least one. In serere it is only one.

It is very difficult for me to answer questions when I am asked, “Capt Otekat, when is the
money coming?” “Captain Otekat, how much money are we getting?” “Captain Otekat, how
are we supposed to distribute this money?” It is very difficult for me to answer, because even
Parliament has not been given that kind of guideline at all.

THE SPEAKER: Hon. Otekat, sorry to interrupt your contribution. Hon. Minister the point
which I have gathered here is that, even we Members of Parliament are not well informed as
to how the programme is going to be run and, therefore, I think it is necessary on your part to
come and give us comprehensive details so that we can be able to explain to our
constituencies about - (Applause) – otherwise, if we are ignorant ourselves then you can
imagine the people we are representing. (Laughter). So, we could assist you as a ministry to
sensitise people about the running of this programme.

MR SSEKIKUBO: Mr Speaker, hon. Kamuntu, the minister who was assigned by the Prime
Minister, should let the minister concerned with finance know that there is a big problem and
that they also need to move out - for example, Soroti, despite it having many radio stations,
we have never, at any one moment since Bonna bagaggawale was initiated, had a minister or


                                                                                               34
any officer from the Ministry of Finance come to explain to the people what the word Bonna
bagaggawale means. You can see that we even struggle to pronounce it. So, Mr Speaker, I
just wanted to inform the Minister of Finance that as a ministry, they need to go and sensitise
the public about bonna bagaggawale. I thank you.

THE SPEAKER: Honourable members, I am about to close this debate because of a
personal problem, but I had already identified hon. Ssekikubo and I think to balance, we shall
have my Member of Parliament and one on the other side before the chairman and the
minister come to wind up. I am sorry I cannot tell you the problem, but I have something that
I have to attend to.

5.48
MR THEODORE SSEKIKUBO (NRM, Lwemiyaga County, Sembabule): Thank you
very much, Mr Speaker. You will appreciate that why we are rising up and yet you had
guided that we move away from bonna bagaggawale, is the fact that apparently Government
did not come out to tell us, as representatives of the people, the essence of bonna
bagaggawale being tagged to Post Bank. It is a matter that Government needs to address, but
not to ambush Parliament on; not to smuggle in such an important topic, which has somehow
only been landed on by a committee of Parliament and now Government starts to respond to
Members’ concerns.

For instance, Post Bank is a bank that only had capital of Shs 3.4 billion. In May this year,
according to the report, another Shs 2.0 billion was added on as its capital and yet the
committee tells us that the average of other banks is Shs 15 billion. If you look at the
committee’s report, you will notice that in the financial year 2005/06, it just managed to make
a profit of Shs. 313 as if it is a Lwemiyaga bank and this is the bank you are entrusting with
the gigantic task of managing bonna bagaggawale?

So, Mr Speaker, it is high time Government stopped ad hocking, stopped smuggling issues on
the Floor of this Parliament. We need clear policy statements. In the first place, how did
Government chose Post Bank? When was the decision that Post Bank be the harbinger of our
bonna bagaggawale programme, made? We have never been told about that and to me, Mr
Speaker, I would like, with your permission, to remind Members that the best way to guide
this bonna bagaggawale or SOCCOs is to apply Tier IV and when we were passing the law –
(Interruption)

THE SPEAKER: Hon. Ssekikubo, it is consensus that the bonna bagaggawale issue has
been exhaustively dealt with. Can you deal with another issue?

MR OKOT OGONG: Mr Speaker, I am getting a bit confused and I need guidance from
you. Post Bank (U) Limited is a public institution; a company guaranteed by shares and
owned by Government 100 percent. According to our laws, it is Bank of Uganda that has the
responsibility of supervising and monitoring all the banks in the country. So, I find it so
difficult that this Parliament now has started to interfere with the business of Bank of Uganda.
I am saying this because Bank of Uganda has the mandate to supervise and monitor all the
banking institutions of which Post Bank is one. If we are to debate this matter, we should
separate the two. If we are debating the capacity of Post Bank, we should separate it from its
capacity to manage bonna bagaggawale. This should be a separate matter.

I am saying this because as per now, Parliament has not been officially informed that
Government has agreed that Post Bank should manage bonna bagaggawale. It is still a
rumour. Government of Uganda has not informed us as Parliament; we have only been
hearing rumours. It has to come here as a policy for us as Parliament to agree on it.




                                                                                             35
So, for us to enter the management and supervision of banks, I think shows that we are not
handling this matter correctly. We should leave the issues of monitoring and supervision to
Bank of Uganda so that they do specifically that duty. So, for Parliament to come with a
report on banks is not correct at all. I understand we have shares even in Stanbic Bank. So, are
we going to have a report on Stanbic Bank because we have shares there? So, I think we need
to separate the two.

THE SPEAKER: Okay, may I ask the chairman of the committee; is it the intention of your
committee to take away the mandate of Bank of Uganda in respect of this? How did you deal
with this one?

MR JOHN ODIT: Mr Speaker, I think you are right. We need to internalise whatever
submissions that are going to be made here. There are too many banks in this country but the
question is, why is it that only Post Bank is appearing in Parliament? Probably you should
have asked that. We have made it clear in our report that this is a public bank; it is owned by
Government and by Constitution and all our laws, all public institutions, which are audited by
the Auditor-General, have to appear here. It is not by accident; it is by law. We have never
made any attempts to do the job of Bank of Uganda! We have our own role which is clearly
spelt out. We examine the Auditor-General’s report and familiarize with the field programmes
before we come to submit our report. I thank you.

MR OKOT OGONG: Mr Speaker, from the report of the committee it is clear that Members
went into the details of the bank. They talked about staffing of the bank, its capitalization, the
loan portfolio of the bank and its capacity to mobilise and recover money. I think that this was
going beyond our parliamentary mandate. If we are to do our things correctly, we should
actually get such information from Bank of Uganda because it is the autonomous institution
to perform those functions. But for us, as Parliament, to indulge and try –(Interruption)

THE SPEAKER: No, let me ask you something for purposes of clarification. You said that
the mandate to supervise Post Bank is that of Bank of Uganda. Agree? Now, when the bank
that supervises makes a report, does it tender that report to any person or authority? If it does,
then can’t the committee use the report tendered by Bank of Uganda to make its report? So,
what is the contradiction?

MR OKUPA: Mr Speaker, I just want to help hon. Okot Ogong. I am a Member of this
committee and I was involved in this work of looking at the Auditor-General’s report, which
makes observations and recommendations.

In the Auditor-General’s report are the audited accounts which have the income statement, the
cash flow and the balance sheet. The balance sheet will talk about assets and liabilities; it
talks of accumulated funds; it will talk of the capitalisation money and make comments. It is
from that that the committee picks this information. It even goes ahead to make comments on
the human resource capacity. So, it is based on the Auditor-General’s report because it covers
all these issues of financial nature and internal controls. So, the committee and the House are
not out of order to mention those issues.

Hon. Ogong, if you can have time with me, I think I have some little knowledge in this
accounting, I will be able to help you. Because if I went on here to explain these issues about
the net-flows, the gross profit, the rate of return here, we will end up getting mixed up
because all these issues are mentioned here and the professor here knows these issues and he
can even supplement and clarify further in these areas here. So, Mr Speaker, the committee
and the House are not out of order.

THE SPEAKER: Okay. You see, Article 163 says: “The Auditor-General shall audit and
report on the public accounts of Uganda and of all public offices including courts, the


                                                                                               36
central and local Government administrations, universities and public institutions of like
nature, and any public corporation or other bodies or organisations established by an Act of
Parliament.” So, in the report which they gave us, they were dealing with the Auditor-
General’s reports in a number of years, that is how I think the committee came to be charged
with this particular subject. Apparently, the Auditor-General had invoked the mandate and
audited this. But I think let us not go in the arguments. You made a point; we are going to
examine it.

MR MUKITALE: Thank you very much, Mr Speaker. Honourable colleagues, I seek
clarification from both the chairman of the committee and possibly also from the speaker
holding the Floor. You are all aware that as a country, because of our development partners’
structural adjustment policies, we lost our UCB; we lost our Co-operative Bank. Now, as a
country we are faced with the challenge of consciously and deliberately bringing in force a
rural development initiative and the only institution which we have, owned by the state, is
Post Bank.
The clarification I am seeking is, should we give up in terms of Government owning
institutions and building capacity to make sure that if we need a network and a structure
which we lost from the Co-operative Bank and UCB, this time round we can build the
capacity of the Post Bank to provide the much needed agro-rural related structure of financial
service delivery?

THE SPEAKER: I think that is a rhetorical question. You know the answer, and now you
are seeking information. I think you should have given clarification. I intend to close this
debate within five minutes.

PROF. KAMUNTU: Mr Speaker, the information I am going to give is, under the Financial
Institutions Statute, 2003 repealed by the Financial Institutions Statute, 2004, all commercial
banks and indeed Post Bank included are licensed by the Bank of Uganda. But because Post
Bank is owned, 100 per cent, by Government, its books are clearly audited by the Auditor-
General and consequently its accountability to the committee. But those other banks which
are not owned by Government 100 percent need not go to the committee for accountability in
this House. Therefore, this report is in accordance with the Constitution of the Republic of
Uganda and the Rules of Procedure of this House.

MR SSEKIKUBO: Mr Speaker, I would like to end my submission by requesting
Government to give us a timeframe within which they can bring before this House the Tier IV
under the micro finance institutions, because it is that one that will guide us about the
outcomes of the Post Bank.

As I mentioned, Mr Speaker, you will appreciate that why we are studying here and why we
take interest in Post Bank is that, it has metamorphosed into a dispenser of a very important
credit line to the rural areas. So, it is for that matter that we are here patiently waiting when
we can regularise the SACCOs because according to the committee, the current capacity of
the bank is still nascent such that if it expands to the rural areas, it is going to choke up. So, I
would really like us to have a strong bank to distribute Bonna Bagaggawale, but most
important, Government to bring to us the regulated framework for the Tier IV which will
guide the SACCOs rather than handling them ad hoc.

Lastly, Mr Speaker, there has been a contradiction. We clearly launched Bonna Bagaggawale
and the Shs 500 million to Masindi. To me, somewhere somehow, someone could be having
this money and scheming it off. Whether Government is telling us the facts or not, that is not
the gist. Because if by yesterday, money was not in Masindi yet, what causes this delay? Is
someone harbouring that money, scheming it off? We need to have some sincerity on that
point. I thank you.



                                                                                                 37
6.05
MS BETI KAMYA (FDC, Lubaga Division North, Kampala): I thank you, Mr Speaker,
and I wish also to thank the committee for this very good report that has given us a lot of
information.

Mr Speaker, in my two minutes, I will begin with the vision of Post Bank. Visions and
missions have a purpose; their purpose is to inspire an organisation in a direction. They put
the map and display them for a purpose. It is not because it is fashionable to do so. As the
vision of Post Bank is given, “To become the leading financial institution for the mass
market”, I find it self-centred, not client sensitive and cannot adequately inspire the bank to
serve its clients. I would recommend that the vision be defined in terms of the customer, the
client, rather than in terms of the bank itself. That way perhaps the bank will be inspired to
think in a more customer-oriented than bank-oriented way.

Having said that, Mr Speaker, yes Post Bank is a weak bank and needs strengthening. But the
problem does not start with Post Bank; the problem started with selling of UCB and Co-
operative Bank. As a peasant and rural economy, Uganda will for a long time need a public
bank even when FDC comes into power in 2011. It is a pity that we are mourning UCB and
Co-operative banks! But the lesson should be to strengthen the only public bank that we have
and Post Bank is a good start; it is the only start in my opinion.

Mr Speaker, so much has been said and it is not my intention to repeat what has been said. I
just wanted to emphasise the fact that as a rural economy, we must have a public institution
and Post Bank is the only one we have. We must strengthen it and we are happy for this
report, which then should help the Executive or whichever institutions responsible to
implement this or take this decision to do so. Thank you, Mr Speaker.

6.08
MR CHARLES ANGIRO (Independent, Erute County North, Lira): Thank you, Mr
Speaker. My first concern is about the capitalisation of the Post Bank. We have been told that
this is a Government institution and I am wondering how broke it is, yet in order to strengthen
the interests of the public, it should have reached that target of Shs 15 billion. May I know
what is wrong? Is it a Government institution which we are calling the Post Bank or
somebody owns it and we do not know? Because if it is a Government institution, it should by
now be having full amounts of money that should make it run - that is Shs 15 billion.

In fact, the committee has pointed out that the district commercial officers are in place to
ensure that the SACCOS are running smoothly. But may I inform the House that in some
districts there are no commercial officers, including Lira where I come from. May I know
from the Minister of Finance and the Minister of Tourism, Trade and Industry why these
districts have no commercial officers who should have been linking the SACCOs with the
Post Bank? And then, how the Post Bank is related to “Prosperity for All”.

I am glad money for Masindi should be somewhere, maybe the minister will take it up to go
and sensitise the people of Masindi on how to access it. But may I know when the other
districts will also get their portion because we desperately need it say in the case of Lira?

Finally, in Lira there is a very big women’s SACCO which actually is almost collapsing
because this has been handed over through the state house and they raise something over Shs
80 million. But the information available is that, only Shs 40 million is in the bank. Please,
can you take it up? In my constituency where over Shs 1.0 million was raised, members are
complaining that since then, they have not benefited from this SACCO business. Can you find
out what is happening with the women’s SACCO of Lira District?

6.11


                                                                                            38
THE MINISTER OF STATE (INDUSTRY) (Prof. Ephraim Kamuntu): Mr Speaker, I
just want to express my appreciation to the chairman and his Members of the committee for a
comprehensive report they have submitted to the House. In doing so, I want to respond based
on evaluating the Post Bank from the perspective of its capitalisation, the quality of its assets
as well as the quality of its management. Then I will answer specific issues that have been
raised on the Floor to put the record right.

THE SPEAKER: I will ask you to be very brief because I have got another engagement
where I have been invited.

PROF. KAMUNTU: The first point is, if you look at this report and you look at the
methodology, you will realise that in the committee’s meetings, they had a series of
institutions and people they met relevant to the accountability responsibility but they omitted
Bank of Uganda which is a vital institution when it comes to evaluating the performance of
banks. And I am saying, if you had not omitted the Bank of Uganda, which is charged with
the oversight responsibility of banks, your work would have been immensely enhanced
because Bank of Uganda does not only supervise but they have the fit and proper criteria of
testing the staff to be recruited in these banks. Even opening branches is authorised by the
Bank of Uganda. Some of these issues that you were raising could have been answered by the
Bank of Uganda itself because that is part of their responsibility.

Second, when you look at page 9 of the report, on capitalisation of the bank, you will realise
that the Post Bank has been capitalised by the Shs 2.0 billion which has been transferred to it
and it is also recorded in the reports that Shs 6.5 billion in support of this bank is also on line.
So, the capitalisation of the bank is part of the government programme. Post Bank is going to
be capitalised in order to meet the capital adequacy requirements of banks under supervision.

The second point which I think is very significant in evaluating the performance of Post Bank
is to note that the report is from 1999 to 2005. Consequently, some of the criticisms that have
been raised in the reports have been addressed over time and if you want proof of that, you
look at the audit report of 2005 on page 43. This should allay fears expressed by Members
because in that audit report on page 43 of the report of the committee, the Auditor-General
gave unqualified opinion for the year ended 30th June 2005 in that all the financial statements
were in agreement with the books of accounts. This in turn gave a true and fair view of the
state of the bank and the committee was satisfied that there are no serious queries raised. This
means this institution is recovering. So we take note, over the past, their performance was
very poor but we are also encouraging this institution. We note they have responded to this
weakness and indeed on the last audit report it shows the bank is on the amend.

On the asset quality, the quality of the accounts of the bank, it is also answered by the audit
report.

When it comes to management, again I just want to share with Members that management of
banks has changed over time. Because of information technology, you will notice in the
industry right now, the heavy emphasis is on your capacity technologically to be able –
incidentally, I will just come to this specifically on the question of Masindi because it became
an issue.

Money these days is no longer carried in billions and indeed the management of banks
incidentally, I should also emphasise, is a function of Bank of Uganda. Before you can be a
chief executive of any bank, the Bank of Uganda must test you and in the fit and proper
person criteria of testing, they look at your knowledge in the field, they look at your integrity,
they look at what they call fiducially responsibility, how committed are you to the institution
and the whole question of integrity and loyalty. I would trust that if the Bank of Uganda has
given that seal of approval to the management of this Post Bank, you should be comforted


                                                                                                 39
that then the bank is in competent management only that they are responding to past mistakes
which they are putting on track.

Also Post Bank is the only institution owned 100 percent financial by the government. The
bank is going to be capitalised.

On specific questions, which have been raised on the Floor of the House, the first question is
regulating Tier IV. Yes, for those who were in the last Parliament, Tier IV is financial
institutions where the savings and credit institutions belong. You have Tier I, which is
commercial banks; Tier II, credit institutions; Tier III, micro deposit taking institutions and
Tier IV are the rest, that is, the savings and credit and so on. These are not centrally regulated;
they are not licenced centrally and therefore their supervision is left.

It is becoming increasingly of concern even to Government that you could have these
institutions having so much money and they can have serious bearing on the integrity of
financial systems. This issue I am sure the Leader of Business will confirm to you that
Government is addressing, and the law is going to come before the House to regulate these
institutions.

The question of Masindi became quite difficult. I want to confirm that only yesterday –
(Interruption)

MR OKELLO-OKELLO: Thank you, Mr Speaker. Before the minister finishes, I want a
small matter clarified. We had “Entandikwa”, which was a national programme. Now, we
have this “Bonna Bagaggawale”, it is again a national programme. My concern is with the
terminology which is difficult to some people. If it is a national programme, why don’t we
use words which are easily understood nationally because we have “Bonna bagaggawale”,
then you have a person called Gagawala, it is very confusing to some of us. Why don’t we use
a national terminology?

THE SPEAKER: But you see, I had earlier asked the government to come and give a
comprehensive statement on “Bonna Bagaggawale” or “Prosperity for All” policy. This
“Bonna bagaggawale” came as a by-the-way when they were probing the activities of Post
Bank which includes that one. So, I would rather suggest that when the minister comes
specifically to deal with this programme, he deals with that one so that we now deal only with
the activities of Post Bank disassociating it from the “Bonna bagaggawale” which will be
addressed maybe next week.

PROF. KAMUNTU: Mr Speaker, you have explained that much clearer than I could have
done and, therefore, I can specifically go to the specific issues that were raised. But for hon.
Okello-Okello, if “Bonna bagaggawale” is so difficult to pronounce, simply go English and
use “Prosperity for All.” And you can translate it into your own vernacular so that it is easy to
pronounce. It should not be an issue really. Or you can use either Swahili or English and that
is it.

Coming to specific issues, on page 6 of the report, we talk about the –(Interruption)

THE SPEAKER: I have a problem of time.

PROF. KAMUNTU: Yes, there are 22 branches and the Post Bank has now introduced
mobile banking. As I talk to you, this mobile banking was introduced in the east and it can
cover more districts that have no banks established.

The second point which I also want to clarify relates to the Post Bank with its relation to
savings and credits. I want to confirm that Post Bank is a linkage bank; meaning, it will only


                                                                                                40
link to established savings and credits institutions. Consequently, when there are no credits
and savings institutions established, there is no link between Post Bank and those institutions.
In other words, the money that went to Masindi, this is how it should be understood. The
money that was sent to Masindi could only be accessed by established savings and credits
societies. You would not access it, hon. Otada, if you did not have those institutions.

THE SPEAKER: Please bear with me.

PROF. KAMUNTU: Yes, I will be very quick. Therefore, linking banking to established
SACCOs requires them to be established and that is part of the challenge that we have to
establish these SACCOs before they can be linked to Post Bank.

Lastly, in modern banking, we can share this experience. Electronic banking environment
does not require that you have money sitting in your branch. I can challenge you. Some of
you Members have children all over the place, do you take money to America for your child
or the money can be sent from here and they pay your school fees? The same reasoning
applies here. I can sit in Kampala and money can be electronically sent to Masindi as
immediately as it is required there.

So, the truth is the following: For Masindi, Shs 500 million was earmarked to be accessed by
savings and credits institutions. As of now, one credit savings institution was formed and it
has accessed the money. As soon as the rest are formed and they meet the criteria, they will
also access the money. But the money would not have needed to be in Masindi for this to
happen. This is true because Post Bank has a computerised centralised electronic system and
it can be reached.

I thank the Members and I thank the Prime Minister for the opportunity he has given me.
Thank you.

6.25
THE PRIME MINISTER (Prof. Apolo Nsibambi): I think you are now satisfied that the
person I asked to hold the Floor is eminently qualified and hon. Chekamondo is going to
answer the remaining issues. I am very proud of you.

6.26
THE MINISTER OF STATE (PRIVATISATION) (Ms Lukia Chekamondo): Mr
Speaker and colleagues, I want to appreciate the work done by the committee on Post Bank
and I want to appreciate the issues raised by honourable members on “Prosperity for All” and
Post Bank. Actually, I want to answer a few items that I have an idea on and I want to
appreciate that this august House is supposed to get a statement on “Bonna bagaggawale” or
“Prosperity for All”.

I wish to assure the House that on 11th we were on this thing trying to finalise it so that a
statement could be brought to the House and I am sure it will come. I do not want to pre-empt
what was in it. I want to assure you that the minister concerned is coming with collected
information - because some things were lacking, it would already be here. I am not going to
tell you the time because I do not know what time he will require. I want to assure you that
guidelines will be brought here and also a statement will be brought to the Members of the
august House.

Secondly, there was a Member who said that in his district there was no commercial officer. I
thought this was decentralised and it is the district to handle the appointments. They have to
first advertise, then people apply, the district service commission interviews, and those who
qualify are appointed. I think it is not the Ministry of Finance that is assigned that duty.



                                                                                             41
Members, I want to assure you that a statement will be brought here. We appreciate your
concerns and I thank everybody for this. Thank you, Mr Speaker.

THE SPEAKER: The motion is that this House adopts the report of the committee.

                              (Question put and agreed to.)

                                    (Report adopted)

THE SPEAKER: I thank you, and I thank members of the committee.

We now come to the end of today’s business. The House is adjourned until Tuesday 2.00 p.m.

 (The House rose at 6.29 p.m. and was adjourned until Tuesday, 18 December 2007 at 2.00
                                          p.m.)




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