IMF adviser should avoid pressuring BoU Governor

When I read in the Daily Monitor of September 6 that the International Monetary Fund (IMF) had assigned a resident bank superviser to assist Bank of Uganda (BoU) Governor to supervise the banking sector, I was alarmed.
BoU Governor Emmanuel Tumusiime- Mutebile was quoted as saying: “IMF sent us a resident bank supervision adviser to help strengthen supervision so that we get strong financial performance going forward.”

Adviser! Have we forgotten the policy advice from the World Bank and IMF in the 1980s? That was the decade of Structural Adjustment Programmes (SAPs), which were based on wrong assumptions about poor countries such as Uganda. Such assumptions directly led to widespread retrenchment of workers across Africa. And SAPs did nothing to change the status of Uganda as a primary commodity producer. Have we also forgotten the deceptive 1990s neo-liberal “Washington Consensus” policies the World Bank and IMF fronted, promoting “stabilisation, liberalisation and privatisation?”

Yet, according to Prof Joseph Stiglitz, a former World Bank chief economist, these policies were based on “a rejection of the State’s activist role.”
That is how well-connected Ugandans made fortunes by brokering the cheap sale of national assets to “foreign investors.”

Lately, IMF is preaching to us the importance of strengthening public institutions. BoU ranks high as one of the most critical public institutions in Uganda. It is mandated to issue legal tender, regulate money supply, be a banker to government, be a banker to commercial banks, regulate financial institutions, manage our foreign reserves, manage our external debt, and advise government on financial and economic issues. Crucially, BoU is responsible to us all.

We should be cautious not to allow any IMF adviser to influence everyday decision-making at BoU. Especially at a time when BoU is yet to shake off all the dirt that came out when Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) shone a torch on its decision to questionably close a number of banks.

One thing that sprung up after we saw BoU’s dirty linen being washed and hanged out to dry in the open is trust. If some of us still have a problem trusting BoU to deliver on its mandate, it may be because of the way the Central Bank sold banks the same way sweets are sold to schoolchildren – casually - without an iota of concern for what the heck the public thought.

To restore public trust in its operations, BoU must raise the bar on transparency and accountability to the public. Whatever BoU does now must be watched closely. The bank needs to be watched because it seems to be loaded with way too much independence.

But Mutebile cannot even pretend to be one of the gods of our ancestors. He is an appointed mortal man, entrusted with the mighty job of fostering a sound monetary policy for this country. As such, he could have an Achilles’ heel that the IMF adviser may exploit to pressure him into pursuing, or considering, flawed monetary policies.

We should be talking about building domestic capacity to free us from the overbearing sermons of international financial institutions. Remember, the biggest stakeholders in BoU are Ugandans. That is why the IMF adviser must resist the temptation to exert pressure on Governor Mutebile.

BoU is at a point when it sorely needs to restore public trust in its operations. The people working at BoU should not be seen as a bunch of knick-knacks. They are qualified experts who understand monetary policy.

Dr Akwap is a senior lecturer at Kumi University.

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