BoU: We Are Studying Ham-DTB Court Ruling

Bank of Uganda (BOU) has said it is studying the court ruling which declared syndicated loans ‘illegal’, throwing the financial sector into panic and threatening the future of the entire economy.

“Bank of Uganda has taken note of the judgement of the Commercial Division of the High Court in Misc. Application no. 654 of 2020 and High Court Civil suit no. 43 of 2020 involving M/s Ham Enterprises and others versus Diamond Trust Bank (U) limited and another which was delivered on October 07, 2020,” said Bank of Uganda Governor, Prof Emmanuel Tumusiime Mutebile in a statement on Thursday night.

“We wait the detailed written judgment of the Court to assess its implications and to determine an appropriate response thereto, including any future actions with regard to the matter,” he added.

The High Court Commercial Division judge, Henry Peter Adonyo on Wednesday 7th October 2020 ruled that DTB Kenya acted illegally in lending money to Ham Enterprises owned by city businessman Hamis Kigundu (Ham) through DTB Uganda.

The syndicated loan facility totaled 39.7 billion shillings which Ham acquired to facilitate his businesses and defaulted on payment.

In his ruling, the judge said DTB Kenya could not lend money to Ham because it had not been licensed to conduct business in Uganda.

The Finance Ministry yesterday said it had “received concerns from different development partners and financing institutions regarding its position on syndicated financing arrangements and public debt obligations (external and domestic).”

In this regard, government reiterated its “commitment made to all its financing partners in respect to all procured and future syndicated loans and assure them that it will undertake all its obligations and duties under the different frameworks in line with Article 160 (1) of the Constitution of the Republic of Uganda and Section 38 of the Public Finance Management Act (2015).”


Uganda Bankers Association (UBA) said the ramifications of the judgement have sent shockwaves across the entire industry and related stakeholders premised on the following five preliminary areas of assessment;

“As a result of the judgement and its implications, the syndicated portfolio currently at risk seated with commercial banks is over Shs 5.7 trillion (1.53 billion USD) of running facilities across various sectors including real estate, road construction, energy covering hydroelectric power, oil and gas and manufacturing among others,” said UBA.

“The wide sweeping nature and sheer weight of shockwaves the judgement has sent to our international partner agencies and lenders and the implications for the country as an investment destination,” added UBA, emphasizing, “The message this judgement is sending to other borrowers with foul intention who can now anchor their default on this judgement that declared syndication illegal.”

In his ruling, Justice Adonyo issued directives to Bank of Uganda which is the implementing authority under the Financial Authorities Act 2 of 2004 as Amended to “take such necessary actions and measures to ensure that the provisions of the law is implemented in accordance with the intention of the law such as to protect the Ugandan economy from illegal hemorrhages and uncontrolled flows of financial resources and to ensure that financial institutional business in Uganda is operated within the letter of the law to protect the nascent banking business industry in Uganda.”

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