When Prof Ezra Suruma arrived at Uganda Commercial Bank (UCB) in 1993, the World Bank had one message: \u201cWe\u2019re here to help\u2026but also, we\u2019re bringing our people.\u201d Their financial credit terms required Uganda to accept a COO, Deputy MD, CFO and Credit Manager almost an entire leadership tier from without the country. As Chairman and MD, it felt a bit like being told, \u201cHere\u2019s your new team. Don\u2019t worry, they report to you – but technically they\u2019re ours.\u201d<\/p>\n\n\n\n
The arrangement was amusing: the expatriates would be paid using Uganda\u2019s World Bank (WB) loan, but on paper they were GoU employees – interestingly interesting \ud83d\ude02Actually, WB sent a shortlist of candidates and politely suggested, \u201cChoose from these.\u201dThey filled all positions except Deputy MD, which would have completely diluted the CEO\u2019s authority. A line had to be drawn.<\/p>\n\n\n\n
At that time in UCB cash-outs were roulette:A customer would arrive to withdraw money. Staff would say, \u201cPlease wait\u2026 for someone else to deposit.\u201d If the deposit gods didn\u2019t smile in time, the customer was advised to \u201cPlease try again tomorrow,\u201d unless they were very important\u2026or very loud.<\/p>\n\n\n\n
Unlike 2025 where the BoU has a robust risk management framework, the 1993 clearing house at Bank of Uganda was quietly covering UCB bounced cheques to avoid chaos in the sector. How?BOU would credit other banks & debit UCB, pushing their account further into the negative.Consequently BOU was increasing money supply simply to keep UCB afloat a polite financial life-support machine.<\/p>\n\n\n\n
UCB had ordered 12 zero mileage Toyota Land Cruisers from Japan at a time when they couldn\u2019t meet basic withdrawals! When he asked how they planned to pay for them, they uncovered a new financial concept: the \u201cliquidity illusion.\u201d Mgt treated depositors\u2019 money and bank earnings as one big pot labelled \u201ccash to spend.\u201d<\/p>\n\n\n\n
Prof. Ezra made a leadership decision: sell the vehicles to BOU. Eight were taken & UCB paid ; one would be his personal use, and the 3 for the expatriate consultants. Managers were stunned. Unfortunately, the surprises were just beginning.<\/p>\n\n\n\n
The root cause of UCB liquidity crisis was painfully clear: Branch managers were lending independently like mini-CEOs of their own kingdoms. Head office had no idea who was lending to whom, or how much. Worse still, recovery was almost nonexistent.Ezra Suruma had to reset the system as he retrenched close to 200 staff mostly individuals with loans over UGX 100M (a massive amount in 1993).<\/p>\n\n\n\n
Lending was frozen across all 189 branches and only the MD could authorize credit. Any manager who did otherwise was dismissed.The impact was dramatic: Within a week,UCB became liquid. By month end , the UCB massive debit at BOU was completely cleared.BOU jokingly named it \u201cThe Suruma Effect.\u201d<\/p>\n\n\n\n
Finally, UCB could operate like a real bank no longer hiding behind the \u201cskirts\u201d of the central bank.<\/p>\n\n\n\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
When Prof Ezra Suruma arrived at Uganda Commercial Bank (UCB) in 1993, the World Bank had one message: \u201cWe\u2019re here to help\u2026but also, we\u2019re bringing our people.\u201d Their financial credit terms required Uganda to accept a COO, Deputy MD, CFO and Credit Manager almost an entire leadership tier from without the country. As Chairman and…<\/p>\n","protected":false},"author":1,"featured_media":338,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"footnotes":""},"categories":[73,10],"tags":[76,78,79,77],"class_list":["post-340","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics","category-personalities","tag-bank-of-uganda","tag-ezra-suruma","tag-uganda-commercial-bank","tag-ugandan"],"yoast_head":"\n