By Najibu Mulema
An economist from Makerere university, Dr Fred Muhumuza has asked the government to urgently rethink a broader national economic policy that will shield all Ugandans from a roaming aconomic recession.
This is after the Bank of Uganda took over management of Crane Bank because it was significantly under capitalized, a situation that pulls the systematic risk from the entire financial system.
In 2010, the Central Bank revised the minimum capital requirement to shs25billion below which any bank cannot be allowed to operate.
Muhumuza says that Crane Bank loss is a sign of a bigger economic problem and that it was a very big mistake for the government to borrow from commercial banks investing the money in long term projects like roads and power dams which do not yield returns in a short term.
He therefore asked the government to strike a balance both in public investment and survival if the public sector.
“Government tend to over concentrate on bidding stocks and forgetting the flows. If your going to put all your money into infrastructure and leaving nothing for the working capital in business then you’re going to face this problem,” Muhumuza said.