The Shs140.487 billion financial exposure involving Habba Group has remained unresolved for nearly nine years, with Parliament now demanding answers from the Bank of Uganda on why the money has not been recovered.
The matter dates back to 2017, when the Bank of Uganda issued letters of comfort to commercial banks to enable them to lend money to Habba Group. The letters were issued following instructions from the Ministry of Finance.
A letter of comfort is a form of assurance issued to a lender, indicating that another party will support or honour an obligation if necessary. In this case, the arrangement exposed the Bank of Uganda to Shs140.487 billion.
The outstanding amount was again raised in the Auditor General’s report for the 2024/25 financial year and is recorded under Note 36 of the Bank of Uganda’s financial statements.
The Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) on Monday questioned Bank of Uganda officials over why the matter has remained unresolved since 2017.
Dorothy Masifa Ochola, the Bank of Uganda Head of Legal, told MPs that the central bank has been engaging the Ministry of Finance and its external lawyers, Max Advocates, over possible ways of resolving the matter.
She said one of the options being considered is taking legal action. However, Ochola admitted that Bank of Uganda has not directly engaged Habba Group over the 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 response raised concern among MPs, who questioned why the central bank had spent almost nine years corresponding with the Ministry of Finance and consulting lawyers without taking concrete steps to recover the outstanding amount.
The committee also found that no security had been obtained from Habba Group before the guarantee was issued. MPs further questioned why Bank of Uganda could not provide basic information about the company, including its current directors and shareholders.
Ochola said she would need to conduct a fresh search to confirm the company’s current ownership details. She only told the committee that members of the Basajja Balaba family were associated with Habba Group but could not recall the names of all its directors.
COSASE chairperson Muwada Nkunyingi questioned how the central bank could lack up-to-date information about a company connected to a financial exposure of more than Shs140 billion.
The committee also raised questions over who was ultimately responsible for the money. Ochola initially told MPs that the loan had been advanced to the Government and that the Government was responsible for repayment because the guarantee had been issued on its instructions.
However, MPs pointed to documents before the committee showing that the letters of comfort were issued in connection with Habba Group’s borrowing from commercial banks.
Bank of Uganda Governor Michael Atingi-Ego said he was aware of the matter but asked the committee for more time to prepare a detailed response. He said previous COSASE committees had also examined the issue and that Bank of Uganda had continued writing to the Ministry of Finance seeking settlement of the outstanding amount.
According to Atingi-Ego, the Ministry of Finance instructed Bank of Uganda to issue letters of comfort to commercial banks to enable them to lend to Habba Group.
The current COSASE committee, however, said the 12th Parliament must establish what has happened to the money and what action has been taken, rather than relying on previous parliamentary inquiries.
The MPs also criticised Bank of Uganda for appearing before the committee without all the relevant documents, despite being informed in advance about the issues that would be examined.
COSASE has now postponed the engagement and ordered Bank of Uganda to return with comprehensive information on the Shs140.487 billion exposure.
The committee wants the central bank to explain how the guarantee was issued, what due diligence was carried out before it was approved, whether any security was obtained, what recovery efforts have been made and what communication took place between Bank of Uganda and the Ministry of Finance.
COSASE will also summon representatives of Habba Group, including Basajja Balaba, to explain the company’s position and provide information about its current ownership and status.
