Mbatau Wa Ngai
10 October 2008
opinion
Kampala — The recent announcement that the East African Development Bank (EADB) has made a massive anticipated loss of $8.9 million was inexplicable coming, as it did, after a sustained upward trend in profitability in the past three years and despite the bank having posted an operating income of $19.3 million last year.
The hope is that cool heads will prevail at the EADB's board of directors level so that it does not indiscriminately fire the top management members, some of whom may not have been involved in the dishing out of the political loans that have led to the massive losses.
Instead, the board should borrow a leaf from Kenya's KCB Bank Group which faced similar problems a few years ago but crafted a solution that saw it emerge as one of the top financial institutions, not only locally, but is also positioning itself to be a regional banking powerhouse.
It could be in the EADB's favour that many of the serial loan defaulters from Kenya and Tanzania are unlikely to find political support at home were the bank to aggressively go after their assets in a bid to recover its loans because they have fallen out with their godfathers.
Even in Uganda, Parliament's newly-found assertiveness vis-a- vis the executive could deny the political defaulters support at State House. But, perhaps, even more important, the board should take this opportunity to chart-out a more ambitious future for the region's foremost development financial institution.
The decision on whether to retain the current bank's top management or let its members graciously leave after the expiry of their respective contracts would then depend more on whether it can help in the formulation and implementation of this new vision rather than on its inability to deal with the political loan portfolio which it may, very well, have inherited from its predecessors.
The bank's new vision should include its role in promoting private-public partnerships (PPPs) across the region now that the respective government's have agreed that the PPPs offer the best route to developing various infrastructural projects that would, in turn spur economic development.
Their should be no reason why the regional bank should not play its rightful role in leading a consortium of other regional and international financial institutions to raise funds for long-term investments in infrastructure projects and for industry and agriculture.
Of course, EADB would have to work closely with the major private sector players including regional investment banks and stock exchanges. But this is a challenge that can be easily met by fresh regional and, where necessary, international recruitment of staff and outside consultants.
That way, the regional development financial institution could emerge from the current crisis stronger and better-suited to meet the expectations and needs of its shareholders and clients.
Since this calls for a visionary leadership both at the bank's board of directors and top management levels, the hope is that all those involved will rise to the occasion and look beyond the current crisis to chart a way into a brave new future for all stakeholders.
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