In June 2023, Uganda’s Supreme Court issued a groundbreaking ruling in the case involving Ham Enterprises and Diamond Trust Bank, affirming that foreign lenders do not need a Bank of Uganda license to extend loans to Ugandan borrowers, as long as they are not accepting deposits from the public.
This decision overturned a 2020 High Court ruling that had threatened the validity of cross-border loans, restoring confidence in Uganda’s financial sector and directly supporting high-profile transactions like Sudhir Ruparelia’s acquisition of Simbamanyo House, now Gender and Labour House.
The ruling’s economic significance is immense. The earlier High Court decision had put over 5.7 trillion Ugandan shillings in syndicated loans at risk, creating uncertainty for sectors like infrastructure, real estate, and energy. These loans, often involving foreign banks to share risk and meet local lending limits, are vital for Uganda’s development. For example, projects like the Standard Gauge Railway depend on such financing, as local banks, like Stanbic with its 60 million US dollar single-borrower cap, cannot meet large-scale credit demands alone.
By clarifying that foreign lenders like DTB Kenya can operate without a local license, the Supreme Court ensured Uganda remains attractive to international investors, safeguarding billions in external debt financing.
Critics, however, raise valid concerns. Some argue the ruling opens the door to unregulated “shadow banking,” potentially increasing risks like money laundering, especially as Uganda works to exit the Financial Action Task Force grey list. Others see it as bypassing parliamentary authority, weakening the Bank of Uganda’s regulatory oversight. While these risks deserve consideration, the ruling’s benefits—stability, investment, and enforceable contracts—far outweigh speculative drawbacks, particularly with proper anti-money laundering safeguards in place.
The Simbamanyo Estates case vividly demonstrates the ruling’s impact. In July 2025, the High Court dismissed Simbamanyo Estates’ challenge to a 10 million US dollar syndicated loan from Equity Bank Uganda, Equity Bank Kenya, and Bank One Mauritius. The court upheld the 2020 auction of Simbamanyo House to Sudhir Ruparelia’s Meera Investments for 18.5 billion Ugandan shillings and Afrique Suites to Luwaluwa Investments, citing the Supreme Court’s precedent. The judge ruled the loan was a “permissible commercial necessity,” rejecting claims of fraud or illegality. This decision cemented Ruparelia’s acquisition, showing how the ruling protects legitimate financial transactions.
The Supreme Court’s decision strongly supports Ruparelia’s buyout of Simbamanyo House. It reinforces the principle that borrowers must repay loans, even under void agreements, to prevent unjust enrichment, as stipulated in Uganda’s Contracts Act 2010.
Ruparelia’s purchase through a transparent auction transformed a distressed asset into a productive one, now housing the Ministry of Labour, Gender, and Social Development as Gender and Labour House. Critics of the buyout often ignore Simbamanyo’s prolonged default, which justified the sale. Ruparelia’s investment not only aligns with the ruling’s emphasis on contract enforceability but also contributes to Uganda’s economic vitality by repurposing prime real estate.
In conclusion, the Supreme Court’s ruling is a decisive win for Uganda’s economy and Sudhir Ruparelia’s acquisition. It secures foreign investment, enables cross-border lending, and upholds lawful transactions like the Simbamanyo buyout. By ensuring borrower accountability and financial stability, it fosters growth while protecting investors like Ruparelia, whose vision has revitalized a key asset. To maintain this progress, Parliament should introduce clear guidelines to balance openness with oversight, ensuring Uganda’s financial ecosystem thrives for all stakeholders.
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