Is it time for strategic change at BOU?

What you need to know:

Who will President Museveni pick to step into the shoes of former Governor of Bank of Uganda, Prof Emmanuel Tumusiime-Mutebile?

At the burial of the late Governor, a local government official from Kabale, Mutebile’s home district, suggested that someone from that area should be named as his successor. I agree, not for tribal feeling but for the change of direction BoU needs.

I recommend Ezra Suruma, a son of the soil. He is a former Finance Minister, a former Deputy Governor of BoU, and a former MD of Uganda Commercial Bank. Can he bring a strategic change of direction to BoU operations? Yes.

Let me explain. Mutebile was a key disciple of the Washington Consensus, a set of 10 economic policy descriptions forced on poor countries by the World Bank and IMF. On the contrary, Suruma was opposed to the enthusiastic acceptance of these “stabilisation, liberalisation and privatisation” policies deceptively wrapped as “a reform package.” He saw privatisation especially for what it truly was – an instrument for neocolonial economic control of the periphery (developing countries) by the centre (developed world).

Many Ugandans may not even know that the Washington Consensus was not the brainchild of the World Bank and IMF. It was the work of a British economist known as John Williamson (he died last year aged 83), who was working for the Peterson Institute for International Economics in Washington, DC. In 1989, Williamson wrote a paper on how highly indebted Latin American countries could deal with their debt crises.

He offered 10 proposals: Maintaining fiscal discipline; reforming tax policy; allowing market-determined interest rates; maintaining competitive exchange rates; permitting inward foreign investment; privatising state enterprises; abolishing regulations that restrict competition; liberalising trade; reordering public spending priorities; and securing property rights.

Williamson intended these proposals to be used as a tool for a levelheaded reform agenda allowing affected Latin American countries to individually deal with specific problems. Importantly, he advised these countries to do the reforms “of their own volition rather than because someone from Washington tried to tell them they needed to be done.”

Now, get this. The World Bank and IMF quickly partnered with the US Treasury Department and rushed to implement the proposals, causing swift economic changes – some of them painful because of associated conditions – in poor countries such as Uganda.

I arrived in Washington on a six-month journalism fellowship in 1990, the year the three entities decided to implement Williamson’s 10 policy prescriptions. However, they did so on the basis of a one-size-fits-all solution to the various economic problems facing poor countries.

I heard dissenting opinions from Americans themselves. Some were saying their government had no business imposing tough economic conditions on “banana republics.” The dissenters were ignored.

So, here we are now living with the lasting consequences of embracing the Washington Consensus policies in the early 1990s. Here we are with an excessively higher import bill than export receipts. Revenue per capita is still woefully low. Moreover, in fiscal year 2022/23 we have a national budget of some Shs43 trillion, yet revenue can cover just about half of that, heightening borrowing.

Here we are with BoU as the titular supervisor of a financial sector controlled by foreign capitalist interests. No wonder, as I lamented in this paper recently, the economy has little or no long-term finance to underwrite key economic growth areas such as agriculture, industry and technology.

What’s more, Covid has revealed the gaps in our education system, which is barely linked to modern agriculture, the mechanical arts, industrialisation, innovative technology, advances in healthcare delivery services, etc.

Clearly, we must review our policy regime. We need a central bank Governor who can listen more to what Ugandans are saying than what the World Bank and IMF think is good for us. In my view, Ezra Suruma is the person who can cause the much needed strategic change at BoU.

Dr Okodan Akwap Associate consultant, journalism and communications management, Uganda Management Institute.