The Constitutional Court has nullified sections 118 and 124 of the Financial Institutions Act that has been prohibiting Bank of Uganda and its employees from being sued directly, Watchdog News reports.

According to media reports, the sections were quashed by Justices; Muzamiru Kibeedi, Elizabeth Musoke, Egonda Ntende, Irene Mulyagonja and Cheborion Barishaki.

The five justices of Constitutional court in their ruling said it was unconstitutional for the Central Bank to hide under sections 118 and 124 to shield themselves from the law and yet under 21 of the same constitution, it gives powers of equal treatment before and under the law.

“This gives unjustified and arbitrary protection to the BoU, which is contrary to article 21 of the Constitution which provides that all persons are equal before and under the law in all sphere of political, economic, social and cultural life and every other respect and shall enjoy equal protection of the law. Given that BoU’s directives to freeze a person’s account have a bearing on the constitutional right to property, it is vital in safeguarding those rights that the courts retain the powers to scrutinize the actions of Bank of Uganda on their merits. This will ensure, not only freezing orders are not unjustly made but also that the BoU’s receives equal treatment as other persons who in similar circumstances will be amenable to legal proceedings,” the judges said.

The landmark ruling arose out of constitutional petition No 50 of 2013 of Peter Ssajabi and Swift Commercial Establishment Limited versus Attorney General and Bank of Uganda.

The petitioners challenged the constitutionality of provisions in certain acts of parliament and hence seeking court’s interpretation of the constitution so as to determine whether certain acts were allegedly done by the respondents in contravention of the constitution.

The petition was brought in pursuant to articles 2,137 (1) (1) & (4) and 150 of the constitution and the constitutional court.

Ssajabi, the National Secretary East Africa Beneficiary Association was arrested during the investigation of the pension scam, that engulfed the Ministry of Public Service in 2012 and accused of working with a one Mr Ssentogo of Cairo Bank, to create accounts for more than 1,000 ghost pensioners and at some instance, allegedly changed account numbers and transferred some of the funds to his accounts.

His accounts were then promptly freezed by BOU and remain locked seven years later. However, the Constitutional Court had now reversed this action of the central bank.

Mr. Ssajabi joined EACBA in 1994 to help put pressure on government to pay pension and gratuity to former workers for the East African Community.

The headline Stanbic Purchasing Managers’ Index (PMI) moved back above the 50.0 mark in August, posting 50.2 from 34.6 in July.

Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration. 

The growth is attributed to the partial lifting of the 42-day COVID-19 lockdown in Uganda which helped spur a return to growth of both business activity and new orders in August, with companies confident of further growth over the coming year. 

Ronald Muyanja, the Head of Trading at Stanbic Bank Uganda said, “a return to growth in output and new orders recorded in August gives hope that as lockdown restrictions are eased further, that will spur growth in business activity in the coming months.” 

Cautious Optimism 

However, Muyanja calls for ‘cautious optimism’ noting that despite the growth seen in August, the PMI reading is still below the series’ average as businesses remain reluctant to raise staffing levels or input purchases. 

“Notably, the employment sub-index is yet to recover,” Muyanja said. 

The PMI notes that while demand is recovering, post the June lockdown, it remains weak, with little indication that capacity is under pressure. It is likely that stronger demand in coming months will also drive the recovery of the employment sub-index. 

Despite the lifting of the lockdown and renewed increases in output and new orders, companies continued to lower their staffing levels, purchasing activity and inventory holdings during the month. There was little sign of capacity coming under pressure as backlogs of work fell again. 

Focus on August

The August PMI report indicated a growth in both business activity and new orders following the loosening of some of the COVID-19 lockdown measures. 

It was a refreshing development that will buoy the market through September, following two successive months in lockdown which had caused reductions in output and new business. 

A look at sectors showed that construction was the only one to remain in contraction territory, with growth recorded elsewhere. 

Output prices decreased for the third month running, although some companies raised charges in line with higher input costs, others lowered selling prices as demand remained relatively soft.

The lifting of the lockdown is expected to lead to further growth in business activity over the coming year with more than 80% of respondents optimistic in the year ahead outlook. 

August also saw an overall rise in input prices following a reduction noted in July. This trend matched the picture seen for purchase costs where product shortages led to higher prices for a range of materials. But staff costs continued to fall. 

Sponsored by Stanbic Bank, the monthly PMI survey involving some 400 respondents is produced by IHS Markit and has been conducted since June 2016. It covers the agriculture, industry, construction, wholesale/retail, and services sectors. 

The headline figure derived from the survey is the Purchasing Managers’ Index (PMI) which provides an indication of operating conditions in Uganda.

It is a composite index, calculated as a weighted average of five individual sub-components: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stocks of Purchases (10%).

Regional Financial Services Group, I&M Group PLC has announced an increase of 33% after tax profit for its 2021 half year financial results up from UGX 102.5 billion to UGX 134.6 billion.

The Group’s Total Assets recorded a growth of 12% to close at UGX 12.2 trillion up from UGX 10.9 trillion in June 2020 bolstered by expansion into Uganda and increased private and public sector lending. The acquisition of Orient Bank Ltd (OBL) in Uganda has expanded the Group’s balance sheet by UGX 753 billion as at the reporting date. 

Net interest income recorded strong growth of 28% to UGX 285.2 billion up from UGX 221.1 billion in June 2020 attributed to increased interest income from government securities. The Group’s total Non-Funded Income reduced by 6% to UGX 124.9 billion from UGX 134.6 billion.

Net non-performing loans reduced by 8% compared to June 2020, to close at UGX 240.3 billion attributed to strengthened remedial actions in improving the loan book quality.

Customer deposits recorded a 10% growth from UGX 8.09 trillion in June 2020 to UGX 8.87 trillion as at June 2021.

Commenting on the Group's financials, Mr. Daniel Ndonye, I&M Group PLC Chairman confirmed that the Group’s focus on increased lending to both the private and the public sector was key in determining the bank’s growth at a time when economies world over were hard hit by the effect of the COVID-19 pandemic. 

This is on the back of strong capital and liquidity base at group and country levels reported all well above regulatory minimums. At Group level, capital adequacy ratios closed at 21% at the same level as previous year, while liquidity ratio was 48% well above the statutory minimum of 20%.

The period under review saw the Group finalise the acquisition of a 90 percent shareholding in Uganda’s OBL. This is part of the Group’s broader regional expansion strategy to serve the needs of all customers at local and regional level, while promoting trade flows within the region.

 “We will continue to focus on our customers across all the banking segments through a series of products and innovations that are tailored to enhance customers banking experience across all our subsidiaries;” he added

Key to note, the Group, during the period under review, also rolled out, through its wholly owned subsidiary, I&M Capital Limited, a host of Wealth Management solutions.  This is expected to boost revenue diversification through provision of customized investment solutions, Asset Management, Retirement Income and Financial Planning for high network individuals.

Additionally, the Rwandan and Tanzanian subsidiaries launched Whatsapp banking, a key milestone in the Group’s digital transformation journey to provide customers with freedom of modern banking.

“We will also continue to invest and offer cutting edge technologically driven solutions to our customers and expand opportunities to attract more investors,” Mr. Daniel Ndonye concluded.

The Group’s Executive Director, Sarit Raja Shah underscored significant investment made during the first half of 2021. “Along with innovation of market driven solutions, we have also made significant investments in new systems across the Group in a bid to increase operational efficiencies and improve our customers’ banking experience.”

Further, the Group progressed on its strategic effort to create long-term value for stakeholders, through continued investments in Environmental, Social and Governance initiatives as a means to building resilience as well as to mitigate against emergent operational, cyber and credit risk. During the period under review, the Bank invested in a new Risk Management infrastructure for Anti-Money Laundering, Operational Risk and Fraud Management, as a key step in protecting its customers from the threat of financial crime on the Bank’s systems.

Through the I&M Foundation, the Group collaborated with like-minded organisations to drive its shared growth agenda in key thematic areas namely: Education and Skills development, Environmental Conservation, Economic Empowerment and Enabling Giving.

Key to note was that the Foundation partnered with the Kenya Community Development Foundation to drive environmental conservation initiatives spearheaded by the youth in Narok and Kilifi counties. The Foundation continues to support education scholarships for bright but financially constrained students at Strathmore University and the Palmhouse Foundation.  Additionally, the Foundation donated towards the Maa Trust’s Mau Bead-Work project, to cushion the Trust’s beneficiaries from the impact of the COVID-19 pandemic.

Meanwhile, the Group’s Rwanda and Mauritius entities received accolades during the period under review. I&M Bank (Rwanda) PLC was recognized as the best bank (2021) by Capital Finance International (CFI.co), a print and online journal reporting on business, economics and finance. The Award recognized the Bank’s product offering, strategy, short-term and medium growth plans as well as client diversity. The Bank was also recognized for its technological innovations such as Near Field Communication (NFC) enabled ATMs with contactless technology enabling for operational efficiency and enhanced user experience. The Awards judges’ report also heralded the Bank’s growth strategy driven by a three pillar approach – driving business, building resilience, and optimizing the operating approach. In addition, the Mauritius joint venture, Bank One Limited, was awarded the Best Bank in International Banking Services and Best Custodian Bank, wherein the Bank was recognized for its role in supporting businesses in Sub-Saharan Africa based on its unique onshore and offshore capabilities.

The high court in Jinja City has ruled that property developer Tirupati Development Uganda Ltd are the rightful owners of a 13-acre piece of land situated on plot 24 Kyabazinga Way, in Jinja City.

In the court ruling, Tirupati Development defeated controversial deal maker Thummer Jay Maganlal Patel, the proprietor of Nile Agro Group of Companies who was falsely laying claim on the prime land using his corrupt connections within the leadership of Jinja Municipality, now a city. 

Evidence and testimonies presented in court overwhelmingly put victory into the hands of Tirupati Development owned by businessman Harshad Barot, a real estate mogul based in Kampala. 

On the disputed land, according to sources, Tirupati’s Barot plans to set up one of the biggest modern multi-billion shopping malls that will be the first of its kind outside Uganda’s capital, Kampala. Tirupati Development has over the years demonstrated that it has the capacity to take on multi-billion dollars projects in Kampala. 

The ruling now puts to end a long legal battle that has stalled the development of the said land. Tirupati Development now retains its 25 years lease it attained from Jinja Municipality, now a city.

The court battle had sucked in some of the leading political and business leaders in Jinja; many of whom appeared before presiding Judge, Lady Justice Jeanne Rwakakooko to be cross-examined and to testify. The majority exposed the corruption within the leadership of Jinja which dubious Patel has been using to enrich himself. 

During the recently concluded witness testimonies and cross-examinations, Tirupati Development lined up the Nalufenya B Village chairman, Nicolas Elwangu, outgoing Mayor Majid Batambuze, and former Jinja District Land Board Chairperson, Innocent Ndiko Ngobi who argued that the whole processes were “littered with irregularities and illegalities”.

The Tirupati – Patel land saga hit the headlines in 2019 when it became a subject of investigations by the Commission of Inquiry into Land Matters headed by Lady Justice Catherine Bamugeirere.

For more than 120 minutes in the witness dock, Ndiko who also appeared before the Commission described the Jinja Land Board as ‘problematic’, adding that minutes used in the allocation of land had numerous flaws making land transactions questionable.

The outgoing Jinja Mayor, Majid Batambuze testified against Patel maintaining that Tirupati Development which has several business outlets in Kampala still has a valid running sub-lease granted by the Council.

Batambuze told the Court that controversy broke out after a group of individuals acquired titles over the same piece of land in 2018, allegedly with consent from both Jinja Municipal Council and Jinja District Land Board.

Former Jinja West Member of Parliament Moses Grace Balyeku while appearing before the Commission of Inquiry into land matters in August 2019 claimed he had spent '2.4 Billion shillings to buy off interests' in the contested land.

He told the Commission that he bought the interests for him and his business associate  Thummar Jay Maganalal Patel to utilize for setting up a shopping mall, private university, and offices for rentals.

Balyeku said he ended up registering the land in Thummar Patel’s name to give the investor confidence after the cancellation of the 25 years lease of the first investor, Tirupati Development Uganda Limited by the Ministry of Lands, Housing and Urban Development in 2016. This, the Commission said, was wrong.