Kampala, Uganda | URN | The Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) has postponed its engagement with Bank of Uganda after the central bank failed to provide satisfactory explanations over a Shs140.487 billion guarantee issued to Habba Group that has remained outstanding since 2017.
The committee on Monday questioned Bank of Uganda officials over the nine-year-old financial exposure highlighted in the Auditor General’s report for the 2024/25 financial year, demanding to know why the money has not been recovered. The amount is recorded under Note 36 of Bank of Uganda’s financial statements and relates to letters of comfort issued to Habba Group to enable it to obtain financing from commercial banks.
Dorothy Masifa Ochola, the Bank of Uganda Head of Legal, told the committee that the guarantee was issued following instructions from the Ministry of Finance. She said the central bank has been engaging the Ministry of Finance and its external lawyers, Max Advocates, on possible ways of resolving the matter, including pursuing court action. However, Ochola admitted that the Bank of Uganda has not directly engaged Habba Group over recovery of the money and that no court case has been filed against the company. “Court resolution is one of the options we have been looking at,” Ochola said.
The admission angered MPs, who questioned why the central bank had spent nearly nine years corresponding with government and consulting lawyers instead of taking concrete steps to recover the outstanding amount. The committee also established that no security had been obtained from Habba Group before the guarantee was issued. Ochola further failed to provide details of the company’s current directors and shareholders, saying she could not confirm the information without conducting a fresh search. She said members of the Basajja Balaba family were associated with the company but could not recall the names of all its directors.
The MPs questioned how Bank of Uganda could fail to establish the ownership and current status of a company linked to a financial exposure of Shs140 billion. COSASE chairperson Muwada Nkunyingi said Bank of Uganda could not continue to rely on the Ministry of Finance when the central bank, as a corporate entity, issued the guarantee and was expected to take appropriate measures to protect public funds.
The committee also questioned what MPs described as conflicting explanations from Bank of Uganda officials over who ultimately benefited from the money. Ochola initially explained that the loan had been advanced to the Government and that the Government was responsible for payment because the guarantee had been issued on its instructions. MPs, however, pointed out that documents before the committee showed that the letters of comfort were issued in relation to Habba Group’s borrowing from commercial banks.
Bank of Uganda Governor Michael Atingi-Ego said he was aware of the Shs140.487 billion matter but asked the committee to allow the institution to provide a detailed written response. He said previous COSASE committees had examined the matter and that Bank of Uganda had continued writing to the Ministry of Finance requesting settlement of the outstanding amount. According to Atingi-Ego, the Ministry of Finance instructed Bank of Uganda to provide letters of comfort to commercial banks to enable them to lend to Habba Group.
The current committee, however, rejected the argument that it should rely on previous parliamentary inquiries, saying the 12th Parliament must establish what has happened to the money and what action has been taken during the current audit period. The MPs also criticised Bank of Uganda for appearing before the committee without the relevant documentation despite having been informed in advance that the financial issues would be scrutinised.
Atingi-Ego asked for additional time to retrieve details from previous reports and engagements before responding fully to the committee’s questions. COSASE consequently postponed the engagement and directed Bank of Uganda to return with comprehensive information on the guarantee. The committee wants the central bank to provide details on the circumstances under which the guarantee was issued, the due diligence conducted before it was approved, any security obtained, recovery efforts undertaken, and correspondence exchanged with the Ministry of Finance.
The committee also resolved to summon representatives of Habba Group, including Basajja Balaba, to explain the company’s position and establish its current ownership and status. COSASE will further examine the respective responsibilities of Bank of Uganda, the Ministry of Finance, Habba Group and the commercial banks involved in the transaction.
The Shs140.487 billion has remained outstanding since 2017, raising questions over the effectiveness of recovery measures and the management of public financial risks arising from government-backed financial guarantees.
