‘Post Bank cannot handle poverty funds’

from New Vision

Post Bank cannot handle poverty funds’
By Madinah Tebajjukira

POST Bank lacks the capacity to handle the Bonna Bagaggawale (Prosperity-For-All) funds. A Parliamentary report said the bank only had branches in 17 out of the 80 districts countrywide. The Government had earlier proposed to channel the funds through the bank.

The review discovered that the bank also had a low capital of sh3.4b, far below the industry average of sh15b.

“The bank’s capital structure is not adequate to enable it take a key role in the implementation of the Government’s rural financial services strategy. Although, the Cabinet had earmarked an additional sh6.5b as a capitalisation grant, the financial demands of the bank seem enormous for efficiency and effectiveness to be realised,” said the report.

The sh500m that was sent to Masindi district in May through the bank had not reached the branch. According to the report, the money was supposed to be lent to various saving and credit cooperative organisations (SACCOs). The committee, chaired by John Odit (UPC) further revealed that the bank lacked enough staff to implement the Bonna Bagaggawale programme.

On average, the report said, the bank had seven staff to handle banking, credit, linkage banking and customer service operations. It added that most of the staff had degrees but lacked experience in the banking sector.

“On average, the seven members of staff per branch cannot cover all the districts under a branch catchment area. The Arua branch covers the districts of Arua, Nebbi, Ajumani, Moyo, Koboko, Yumbe and Nyadri.

“This branch has a linkage banking officer supposed to mobilise the SACCOs in the area,” said the report.
During the August review, the MPs noted that some bank staff did not have a clear understanding of the Prosperity-for-All project.

“The linkage banking staff at the Jinja branch could not explain the programme.” MPs also discovered that some branches were sharing offices with Posta Uganda. This contradicts the image and brand of the bank.

The report also noted that the rent allowances for the bank’s acting managing director of sh400,000 per month were being paid by the bank, yet he lives in the former Uganda Posts and Telecommunications Corporation staff quarters.

“An estimate of sh6m was made in 1998 on accounts but no bills were received, meaning there was double payment for the same item, which amounts to fraud,” the report stated.

The MPs recommended that the bank should recover the money. According to the report, the bank lacked accountability of payment of casual workers, fuel, excessive allowances in addition to misallocation of funds.

The legislators recommended that the Government put in place a legal and regulatory framework for the institutions before rolling out the funds. They advised that the law should ensure that the operations of SACCOs remain.