KAMPALA, April 24, 2024 – The rationalisation of the Non-Performing Assets Recovery Trust [NPART] and Departed Asians Property Custodian Board [DAPCB] will only be concluded after an audit of the entities is done, Members of Parliament have directed.
On Tuesday, legislators debated the Non-Performing Assets Recovery Trust [Amendment] Bill, 2024 that proposes to dissolve the Trust, the Board of Trustees, and the Sinking Fund under the NPART, which serves as an expedient mechanism for the eventual recovery of certain loans and investments made by the Uganda Commercial Bank [UCB], whose recovery is overdue at the time in 1994.
In 2001, UCB, a government-owned bank and largest financial institution in the country was bought by the Standard Bank of South Africa and merged with the latter’s exiting bank, Stanbic Bank Limited.
The Bill also sought to integrate the functions of the NPART into the ministry responsible for non-performing assets to align with the Government’s ongoing Policy on Rationalisation of Government Agencies and Public Expenditure.
Members of the Committee on Finance, Planning and Economic Development who scrutinised the Bill called for the need for transparency, pointing out the absence of an inventory list of the Trust’s assets.
The Committee Chairperson, Amos Kankunda, who presented the report said: “It is crucial for Parliament to receive a thorough inventory of the Non-Performing Assets Recovery Trust before repealing the law or dissolving the fund, trust, and board of trustees.”
Kankunda, also Rwampara County MP, highlighted concerns regarding the proposed repeal of the Non-Performing Assets Recovery Trust Act, emphasising the necessity of transparency and accountability, especially given the broader rationalisation efforts of government.
“We have repeatedly requested an inventory of the Non-Performing Assets Recovery Trust, but our calls have gone unanswered,” he stated during the presentation.
Kankunda warned that repealing the Act risks erasing institutional memory and failing to hold those responsible for past and present actions accountable.
Despite being overseen by the finance minister, the Trust operates differently, focusing on handling assets rather than human resources. “The proposed repeal and integration of the Trust’s functions into the Ministry of Finance are pointless without proper accountability measures in place,” Kankunda said.
The Committee report recommended that the dissolution of the Trust should not happen until those responsible for its operations are held accountable.
In light of these findings, the finance committee recommended rejecting the repeal Bill until a comprehensive inventory of the Trust’s assets is provided to Parliament.
The Maracha County MP, Denis Oguzu supported the auditing of the sinking fund, emphasising the need for transparency regarding the remaining balance of the trust fund account.
“Until these questions are answered, I believe it is premature to dissolve this fund… we must allow an audit of this non-performing assets trust fund account before rationalising, or else someone might hide under this,” he said.
The Minister of State Minister for Finance [Microfinance] Haruna Kasolo, the Minister of State for pleaded for time to conduct the audit following the committee’s identification of it as an issue.
The Pakwach District Woman Representative, Jane Avur questioned the prudence of proceeding with the Bill without knowing the extent of the assets involved. This led to the minister’s request to withdraw the Bill, which was granted, with a one-year period allocated for conducting the audit.
Likewise, the Assets of Departed Asians [Amendment] Bill, 2024 is also pending an audit of the assets.
The Bill seeks to dissolve the DAPCB established under section 4; and mainstream the functions of the DAPCB into the ministry responsible for finance in order to give effect to the Government Policy on Rationalisation of Government Agencies and Public Expenditure.
Speaker of Parliament, Anita Among, guided the minister to scrutinise the report of the DAPCB conducted by the Committee on Commissions, Statutory Authorities and State Enterprises to aid in the audit.
Kankunda asked the Speaker to ensure that even after the Bills are withdrawn, the committee’s recommendations are still observed.
UMRA safe for now
Government also withdrew the Tier 4 Microfinance Institutions and Money Lenders [Amendment] Bill, 2024, which aimed to rationalise the Uganda Microfinance Regulatory Authority [UMRA]. Currently UMRA regulates and licenses Tier 4 microfinance institutions.
According to the report of the finance committee report, over the past five years, the total contribution of tax and non-tax revenue collected by UMRA amounted to Shs 390 billion.
This, according to the committee, is significantly attributed to UMRA’s mandate through regulating and supervising of tier 4 microfinance institutions and money lenders.
The committee also observed that both the Ministry of Public Service and the finance ministry did not provide them with a proposed new structure accommodating UMRA staff within the ministry.
The committee thus rejected the rationalisation of UMRA into the finance ministry citing structural challenges within the ministry. They recommended that UMRA be adequately supported instead.
Speaker Among tasked the minister to present regulations standardising money lenders’ charges. “You cannot have money lenders charging 30 to 50 percent. What this House needs is not rationalisation but regulation,” she said.
Minister Kasolo formally withdrew the Bill and pledged to work on the regulations.
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