How Mutebile managed politics, economics

The Governor Bank of Uganda Emmanuel Tumusiime-Mutebile, 72, died on Sunday in Nairobi, Kenya, after a long illness. Mr Mutebile, an acolyte of Makerere student politics, was the first appointee to head both the Treasury and the Central Bank. Mr Mutebile first appointed in 2001 served for 21 years.

In 2011, a drafting mistake that mentioned reappointment of the Governor was used to mean reappointments and the ship began sailing effortlessly into reappointment ad infinitum.

Mr Mutebile was as outspoken as he was softspoken. At the Treasury (1992-2001), he presided over a limitless adoption of Bretton Woods reforms of the public sector. First was the mass-scale restructuring of the public service that actually shrunk the civil service and retrenched one third of the ministers.

This was quickly followed by privatisation and divestiture reform that put hundreds of government enterprises on the auction block (liquidation), partial divestiture or restructuring within government where government retained majority shareholding.  The first 10 years of the new shilling (1987-1997) were also marked by a massive devaluation eliminating currency controls first through the introduction of open forex trading and removal of limits on the capital account.

When he arrived at BoU he was still quite young, just 51. He had the ability to telex his former bosses (Gerald Sendaula) was Minister and his successor Chris Kassami to stay on a unified message about the economy. Truth be told, Uganda’s public finances were a near mess. The economy drained of stable coffee prices was dependent on foreign aid. Uganda became a project country and the architectural frames of the post-colonial state, free tertiary education, rural agricultural extension service, government stock farms were all in collapse.

The new shilling first pegged at Shs60 to the dollar in 1987 climbed to Shs2,000 to the dollar a decade later requiring frequent budget support from the IMF. This situation was only partly arrested by debt relief by the Paris Club later on that averted Uganda and many other countries from catastrophic debt default.

In 2006, the President began reappointing Mr Mutebile to a succession of five terms as governor. The 2006 election hotly contested under the multi-party dispensation was also the first after term limits had been removed. In all these years, Mr Mutebile up to his death commented only on the economy, never on the politics.

In 2011, he responded to an inquiry by the Financial Times that the $740 million purchase of jets by government was a financial drain. The Development Finance group inside the Bank was tasked with approving a number of tasks in financial wizardry including compensating Hassan Bassajjabalaba for use of City Square, the City abattoirs etc.

In the China decade, immediately after the Paris Club wrote off tons of debt to the World’s poorest countries, the Central Bank governor had little input in what has become the eye-sore of the 2020s, a mounting debt burden. By some counts 34 percent of the resource envelope is going to debt service.

The China decade in many countries has erected a centrifugal post through which massive escrows are managed and newer debts attracted all sorts of payment securities. Some have attracted universal outcry like the recently scrapped OTP levy which drove internet users underground. Others like reintroduction of road tolls are yet to be felt in full effect.

At a certain point, China simply stopped issuing new debts stalling infrastructure projects worried about the political and economic sustainability of these debts and sovereign defaults started first in Zimbabwe then Zambia.

Mutebile was successful in shrugging off currency manipulators. Many got their hands burned when BoU repeatedly intervened on both the demand and supply side. At his death, the shilling is stronger (partly due to less imports and partly due to higher coffee receipts) even where the dollar has gained on neighbouring currencies.   Lastly on the policy, the contours of the Ugandan economy remain as fragile as ever.

Part of the after-taste of all these reforms has been the opposite of indigenization of the economy. In the financial sector, with the exception of Post Bank all banks are majorly foreign owned. Where domestic players like Sembule once existed, foreign players like Roofings exist. Unfortunately the tax base focused more on the Musokes’ rather than the foreign players exacerbating capital diminution, unemployment and retrenchment from the countryside. Uganda’s economic picture is stable but is lagging. 

Inside the Central Bank, he was seen as a decisive figure but the administrative details of Mr Mutebile’s tenure are best saved for another day.  

Mr Ssemogerere is an Attorney-At-Law and an Advocate. [email protected]