In 1966, what’s known as Bank of Uganda commenced operations. At its helm was Joseph Mubiru, who laid a firm foundation for a robust Central Bank operation. One of his children is an ADB Country Representative in Dar es Salaam, Tanzania.
The Central Bank has many functions, but the most important ones are monetary policy and bank supervision. Bank supervision until recently covered deposit fund protection but that function is now hived off. The Central Bank is responsible for the health of the economy and conducts banking functions on behalf of government, including acquisition and disposal of currency.
The recent events implicating Bank of Uganda’s staff in alleged transport of unauthorised cargo on a chartered flight are a cause of concern. First was a clear violation of procedure carrying classified material in a casual manner. Second was the failure of the Bank to decisively handle the matter internally without causing alarm in the public. A run on the shilling can have destabilising effect on the economy especially in the run up to the 2021 elections.
After 20 years of stability, continuity and good stewardship, the Central Bank is struggling bumbling from one crisis to another. BoU is also mired in a succession struggle. Both the Governor and his Deputy first appointed in 2001 and 1998 respectively are approaching the end of their five-year mandated terms.
The history of the job of Governor isn’t very clear on pedigree. First the job requires significant managerial capabilities. The two most recent Governors, Charles N Kikonyogo and Tumusiime Mutebile fit that bill. Second it requires an excellent command of monetary policy, a profile that has been favoured in both Kenya and Tanzania, which have former Economics professors as former Governors.
The answer lies in between and by failing to get ahead of any transition, government is making a mistake of major magnitude. First it has been relying on a discretionary use of Executive power to reappoint the Governor in the last month of their legal tenure during election time limiting any scrutiny of the appointment and proper vetting.
Early in their term, MPs bruised from elections do not even have the capacity to ask the right questions. In 2016, for example, more than 300 MPs did not make it back to Parliament, including key MPs like former Leader of the Opposition in Parliament.
Second, it is not understood that the Deputy Governor is in charge of BoU operations. He is plant and equipment. He is an executive member of the board of the Bank in charge of all operational issues. He is a sitting landlord of sorts. But the current Deputy Governor is also racing against precedent, no deputy has acceded to the position of Governor as yet since 1966. Dr Suruma and many others left the Bank without this prize. But there seems no way out.
BoU headcount is more than 2000, quite a number if you compare that many agencies rarely number more than 200-300 and these are large agencies. BoU’s hiring mantra in its early days was focused on merit.
Makerere Medical School used the same system yet strictly speaking, the best brains do not make the best doctors in practice.
But merit resolved many problems, it attracted people of integrity whose lifetime dream was to work in the Central Bank. There was a story of a young man who dropped out of St Mary’s College Kisubi because his family could not afford school fees. He descended into the second world of part-time school attendance, but eventually his genius landed him first at Makerere where he graduated with top honors and then at the Central Bank.
It was an embarrassment that the Christian Brothers had missed on his great promise. Central Bankers are very proud people. BoU is faltering because this pride is being hurt by an HR crisis at the top.
Mr Ssemogerere is an Attorney-at-Law and
an Advocate. email@example.com