Suspended: Dividend and bonus payment is for now suspended to ensure that business continuity. PHOTO BY ERONIE KAMUKAMA. Bank of Uganda has suspended bonus and dividend payments as it seeks to reserve enough capital to support the economy.
In a circular seen by Daily Monitor and signed by Dr Tumubweinee Twinemanzi, the Bank of Uganda (BoU) director supervision, the central bank said it was important that banks and such other firms defer the payment of dividends and bonuses until further notice.
“Capital reservation to support the real economy and absorbed losses should take priority over discretionary distributions like dividend [and] bonus payments. Therefore all payments of discretionary distributions is deferred until further notices or until explicit authorisation is given by Bank of Uganda,” he said in a March 24 circular.
A number of companies, many of which are in the banking sector and listed firms, will be paying dividends to shareholders for the year ended December 31, 2019.
However, it is not yet clear whether the payments will be deferred as instructed by the Central Bank.
Mr Sam Fredrick Mwogeza, the Stanbic chief financial officer, told Daily Monitor that the results they published with dividend proposed were post review by Bou. "Given the new directive issued we will engage with BoU to ensure alignment before any action is taken. We are confident that we are well-capitalized and hold sufficient liquidity buffers that make us well situated to support our customers and shareholders in this difficult time," he said.
Mr George Ochom, the dfcu Bank general manager, told Daily Monitor the board was yet to decide on the dividend payout given that the company’s financial results were yet to be completed by last week.
Bank of Uganda has been working on a number of measures that seek to support the economy that is already under threat due to Covid-19.
Government has already indicated that the economy is likely to slow down to 5.2 per cent from the earlier projected growth of 6 per cent.
At the weekend, Mr Stephen Kaboyo, the Alpha Capital managing partner, told Daily Monitor that as Covid-19 decimates the broader economy, the central bank has been prescribing measures that will ensure that financial institutions remain liquid to support business continuity.
“The new [measure] to defer dividend and bonus payments at this time, in my view is driven by the urgent need to conserve cash amid […]
