Bank of Uganda Deputy Governor Michael Atingi-Ego

Allegations that he once served a jail sentence over internal fraud at BoU could surface to hurt his credibility

Since being appointed the Bank of Uganda (BoU) Deputy Governor and has been acting as Governor, Michael Atingi-Ego has now raised the indicative Central Bank Rate (CBR), twice to the current 8.5 per cent, encouraging commercial banks to also raise interest rates for borrowers.

Ugandan borrowers are not happy that BoU continues to raise the CBR with the excuse of controlling inflation. Local businesses are now discouraged to borrow from commercial banks, fearing the anticipated high interest rates charged.

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Remember that when local businesses fear to borrow from banks because of the rise in interest rates, production will be low, which means the Uganda Revenue Authority (URA) will collect less tax revenue at the end of the day. And some banks are losing business as well, in the name of following BoU’s claim of taming inflation.

We also know BoU is also behind the idea that the government should not subsidize commodities such as fuel, arguing that it is not sustainable in the long-run. At least Atingi has made this view known in the recent fora that he has participated in. Question for Atingi is, “Who should save Ugandan citizens from the high prices of fuel and other essential commodities? We know that other governments in the EAC where Ugandans belong have subsidized fuel, knowing that it plays an important part in the economy.”

Does Atingi and others who anti-subsidization know that some people have parked their vehicles at home because they cannot afford fuel, for example?

Worse still, based on the advice given by officials like Atingi that too much money should not be in circulation, the Finance Ministry sent lesser monies to government ministries, departments and agencies for the first quarter of financial year 2022/23. This means that the common man will not be able to have all his goods and services procured by the government, as the government agencies will be cautious to spend because of the little money received.

The Finance Ministry has slashed cash releases to institutions and local governments by over Shs4 trillion…aimed at taming rising prices of goods,” a leading daily reported on Wednesday. The daily went ahead to give figures, showing that Shs8 trillion was supposed to be released in the first quarter. That means businessmen will have less money in their pockets as the public won’t have the money to buy.

That aside, we also note that since Atingi came to BoU, the institution has cut off the printing expenditure, leaving some SMEs involved in printing its reports and other documents worried, yet BoU policies should grow the SMEs, the largest employers in the country. For instance, recently, through the announcement that publishing lending rates of the various financial institutions in Uganda will no longer be in newspapers, but on BoU website. This means newspapers and printers have lost this business.

As for supervision of banks, some financial consultants, Atingi is not creative enough to have his own methods of supervising banks and is relying on what the late Governor Mutebile left behind. We know that the BoU supervision role under Mutebile was not effective as some banks collapsed while others were closed unfairly- Crane Bank Limited, National Bank of Commercial and Global Trust Bank Uganda, all now defunct are the examples. Creative financial minds in Uganda say BoU needs external firms to help in its supervision function.

The financial experts in the country recently said the exit of Afriland from the Ugandan market showed weakness of BoU. BoU, they said, is supposed to ensure that banks remain operating in the country because they help in tax revenue, provision of direct and indirect jobs as well as offering loans to individuals and government, yet Atingi did not show any remorse when Afriland Bank recently exited Uganda. “What new measures has he (Atingi) put in place to ensure that Uganda does not lose more banks,” a retired financial expert who once worked in government asked.

Relatedly some economists are also wondering why Atingi is planning to control some SACCOs, even when commercial banks still have issues of supervision. They say Atingi and other government officials now want to kill the spirit of SACCO members who do things their own way and have been surviving. Big SACCOS like Wazalendo, EXODUS SACCO and others are not happy that BoU wants to control them since they were already under Uganda Microfinance Regulatory Authority (UMRA), which, according to some sources, is about to be scrapped by government, yet it was important in handling SACCOs. “What does BoU want from us? We have been surviving without their involvement for years and we are growing. Let them concentrate on banks,” said an executive of one of the biggest SACCOs in western Uganda.

He said that BoU’s greed of wanting to control SACCOs will lead to poor business as borrowing terms and conditions are likely to change, pushing the poor people into poverty. “There is a way we do our business as SACCOs. We fear that BoU could kill our systems,” he said.

Atingi at Luzira

It is further alleged that before his departure for greener pasture, Atingi at BoU had briefly been arrested and imprisoned at Luzira on allegations of internal fraud at Central Bank but the friendly forces under former Deputy Governor Louis Kasekende and former Executive Director Justine Bagyenda saved him from further exposure.