Will Mutebile get a new mandate at the central bank?

The year 2016 is likely to write new episodes in Uganda’s history, considering that two of the country’s most influential offices will be up for grabs.
Whereas President Museveni will be validating his stay at the ballot, Bank of Uganda might have to do with a new face, given that Emmanuel Tumusiime Mutebile’s term at the Central Bank will expire on January 10, 2016.
At 66 years, Mutebile sits outside the mandatory public service retirement age. However, both Mutebile (as governor) and his deputy are not bound by public service guidelines.

Mutebile, whose role is supervising the country’s banking sector and maintaining a stable monetary policy among others, has been governor for 14 years having replaced Charles N. Kikonyogo (RIP) in 2001.
However, the year 2016 will be a good one for the Central Bank as a new governor – or a renewed contract for Mutebile will not be the only milestone, considering that the bank will be marking 50 years since it was set up in August 1966.

Mutebile will on January 10, 2016 complete his third term as governor, becoming the longest-serving governor in the 49-year history of the Central Bank.
Already, the lobbying is heavy with anxiety and by October 2015; several names will be submitted to the President – from Cabinet – suggesting potential replacement or even reappointment of Mutebile.

Choosing the governor ahead of an election
The Bank of Uganda Act 2000, which Mutebile had a hand in formulating while still secretary to the Treasury, gives the sole responsibility of appointing a governor and deputy governor to the President.
“There shall be a governor who shall be a person of recognised financial or banking experience and shall be appointed by the President on the advice of the Cabinet,” the Act reads in part.
Thus, with the discretion of the President, Museveni could either choose to reappoint Mutebile or appoint a new person.
The Bank of Uganda Act stipulates that apart from the governor and his deputy, all other jobs at the Central Bank have age restrictions with a voluntary cluase that mandates an employee to retire at an earlier age of 55 years.
Uganda’s retirement age and for most civil service jobs is 60 years.

According to the May 2015 report by House Committee on Commissions, Statutory Authorities and State Enterprises, the governor is the highest paid civil servant with a monthly salary of Shs53.3m.
The governor’s job has several perks including first-class travel, housing allowances, daily allowances, fuel, a number of expensive cars and access to interest-free loans, among others.
These trappings could be Mutebile’s yet again in the next five years or for someone else.
Indications show the process of finding the next governor has already started, albeit, behind closed doors.

In September 2010, Cabinet had already approved the renewal of Mutebile’s contract with his name being forwarded to the President for approval.
By the end of November 2010, President Museveni had already given his thumbs up and subsequently by the Parliamentary Appointments Committee gave the man the green light to steer on.
However, the new term presented Mutebile with one of his greatest challenges, considering that it opened, and is closing with a number of economic tests.
In 2011 Uganda’s economy was on the brink after it was hit with new lows that would drive inflation to 30.5 per cent.

The results of inflation where maddening for an economy that was fresh from election spending.
The Central Bank, worried of a bruising economy introduced new measures – inflation-targeting policy as it sought to curb runaway inflation forcing a spike in commercial bank interest rates to a market average of 28 per cent.
Mutebile was also accused of having assisted the ruling NRM with large sums of money from the Treasury to fund the party’s electioneering activities.

This accusation, Mutebile insisted was unfounded, but he later in 2014, admitted during a symposium in Munyonyo, Kampala that he had been misled into “indirectly funding government,” for electioneering purposes.
Thus, how the new governor deals with such trappings (of government interference) will be a defining axis of any man who will take over from Mutebile, considering that the populace is increasing becoming jittery over government’s interference in an institution that is mandated to be free of such trappings.
During an interview with the Guardian newspaper in the United Kingdom, Mutebile revealed he had authorised government to draw more than $2m dollars from the Treasury to buy fighter jets.

The move was highly criticised, considering that by his own admission; Mutebile had put the country’s reserves at the risk of depletion.
However, in recent interactions the Central Bank insists it is an independent institution of government due to the fact that it is well capitalised.
But its independence is questioned at times like these – elections period, given that fingers are already being pointed at the bank for the currency mess in the economy.

Ugandans are worried of the current economic fundamentals that continue to show signs of volatility.
For the first time since 2011 interest rates have been rising, worsened by rising inflation and a continuously weakening shilling.
Rising inflationary pressures have forced the Central Bank to increase its key lending rate from 13 per cent to 14.5 per cent, kick-starting a spike in commercial bank lending rates to a market average of about 24 per cent.

Such weak fundamentals, key among them stabilising the Shilling are likely to weigh heavily on the next governor and will be a defining moment.
However, it will be a difficult feat, considering that a cocktail of factors, including reducing export returns, cutback in remittances, strong dollar and low tourism receipts are beyond the Central Bank’s reach.
Beyond the current troubles, Ugandans will want a person who will restore the country’s economic confidence, albeit lifting the Shilling a key fundamental that has fed into other sectors of the economy, including fuel and real-estate among others.

Museveni appointments
For one to be governor, the qualifications are simple, at least according to the Bank of Uganda Act.
“…the person shall have recognised financial or banking experience” and will be “appointed on conditions specified in their letters of appointment,” part of the Act reads.

The above clause of the Act definitely presents President Museveni with a host of names that might be within and without the Central Bank.
Already lobbyists are throwing around names and notable among them is Dr Louis Kasekende, who is the current deputy governor. His contract expired at the start of 2015 after serving a five-year term as deputy governor. He would be up for the appointment in 2016.

Within the bank another name has been thrown in the mix not forgetting that the Central Bank has about eight directors with potential to steer the governorship.
Among the eight directors, Dr Adam Mugume, who heads the bank’s research activities has come up more often with suggestions he could fit well in Mutebile’s shoes.
However, beyond the Central Bank other names have been thrown around including that of Keith Muhakanizi, the current permanent secretary at the ministry of Finance and secretary to the Treasury.

Waswa Balunywa, the Makerere University Business School principle is another of those names that have come up not forgetting Dr Ezra Suruma, a seasoned economist and former minister of finance.
However, President Museveni might also do it the Uhuru Kenyatta way, looking outside to tap one of Kenya’s fine brains from the International Monetary Fund.
President Uhuru recently appointed Patrick Njoroge who had been an advisor at the IMF.

The process:
Through the ministry of Finance names, which are discussed by Cabinet are proposed. After the discussion Cabinet zeros in on particular individuals who are then forwarded to the President for approval.
From the President the proposed name is sent to Parliament for the final approval.

Profile
Emmanuel Tumusiime Mutebile
Age. 66
Background and Education. Mutebile was born in Kabale District in a peasant family of nine children. He attended Kigezi College Butobere for his O-Level studies, before moving to Makerere College School for his A-Level studies. In 1970, he entered Makerere University, where he was elected president of the university students’ guild, with the intention of studying economics and politics. In 1972 Mutebile flee Uganda after he gave a speech publicly criticising the expulsion of Asians from the country by Idi Amin.
Work. He was first appointed as the Central Bank governor on January 1, 2001 but was re-appointed for a second five-year term on January 1, 2006. In November 2010, he was re-appointed for a third five-year term, running up to January 10, 2016.

Some of the names that have been suggested as likely replacements for Mr Mutebile

Dr Louis A. Kasekende
He is the current deputy governor Bank of Uganda. He was appointed on January 18, 2010, before that he had served in the same position from 1999 until 2002. He holds a PhD in Economics from the University of Manchester, UK.

Dr Adam Mugume
He is the current director of research at Bank of Uganda. He is a seasoned economist holding a PhD in economics from Oxford University. He has done consulting work for the World Bank and African Economic Research Consortium.

Keith Muhakanizi
He is the current permanent secretary at the ministry of Finance and the secretary to Treasury. He has wide experience having worked in the ministry of Finance for over 10 years. He is the chairman of Housing Finance Bank and is a director in EADB.

Prof Balunywa
He is the principle of Makerere University Business School. He holds a PhD form University of Starling, an MBA from the University of Delhi, and Bachelor of Commerce from the University of Delhi. He has before served as a member on the BoU board.