By Prof Wasswa Balunywa

  • What a waste? Keeping such a bright man in jail, Jamwa!

I read with sadness the upholding of the 12 year jail term for my student David Chandi Jamwa. I taught Jamwa on the BCOM in Makerere University. He was a bright student. I met him years later while he was the team leader of the PriceWaterHouseCoopers that was auditing the Bank of Uganda. I recommended him to undertake a study of the course per unit in Makerere University and subsequently, I recommended him for the job as Managing Director of NSSF.

Former NSSF boss being escorted to court by a prison warden. 

I don’t have lots of details on what his crime was but I will give my understanding of financial markets. In financial markets, there is a market for long term securities which is stock exchange and development banks. They lend money over a long term or facilitate issuing shares and buying selling shares. The short term markets also referred to as money markets are markets for short term securities. The main security for money markets is the Treasury bill.

There are also other securities like certificates of deposit and other short term assets. Some securities have a shelf life of overnight and may go up to 180 days possibly even a year. The NSSF is a financial institution with lots of cash. In this matter, it appears to have taken a short term security.

The logic is that you buy a security at a price lower than its actual face value and when you keep it to maturity you get the full face value of the security. The difference between your buying price and sales price is your interest or profit you make on the investment. In a highly organized and developed market, the various players buy and sell these securities, they don’t have to hold them up to maturity. A buyer may sell a security before the maturity date.

The proceeds the buyer gets from the security he sells will be the value of the security less the amount of interest that will depend on the number of days left before security matures. All this depends on investment policies and liquidity requirements of the buyers and sellers. It appears like NSSF under Jamwa bought a security and sold it before the maturity date. I am not sure of what exactly happened but NSSF was paid interest only up to the time it held that security which is perfectly normal. To find Jamwa guilty of executing a mandate he has would be erroneous.

As Chief Executive, he must have taken a decision to sell before maturity. This is not financial loss because NSSF did not hold the security until its maturity. Whoever held that security from the date NSSF sold to maturity took the interest for that period, If this is what happened, Jamwa should be out of jail. But it is possible that he may have disposed of the security with other objectives in mind. If that is the case, who am I to say he should keep out of jail.

Life has never been fair but if Jamwa is in jail for that reason, he should be pardoned even then unless if he is identified with profiting from the transaction, I would pick that brain and put it in the economy.

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