Governor who like tea was full value while hot

The Nakaseke South Member of Parliament, Mr Luttamaguzi Semakula, a committee member then, confirmed what had until been the subject of intense rumours – that Mutebile was not in good shape.

“Physically he looks weak but mentally-charged. There is no question we asked that he failed to answer. He wasn’t wheeled, he was walking although being assisted somehow…He looks a bit weak physically, but mentally I can’t deceive you that he’s a weak man,” Mr Luttamaguzi said.

While it was a public secret that Mutebile was unwell, news of his passing still came as a shock yesterday morning.

Standing up to his boss

In a terse statement, Bank of Uganda (BoU) revealed that “Tumusiime-Mutebile passed away at the Nairobi Hospital on Sunday.” It described the economist as a “gallant governor.”

To many others, Tumusiime-Mutebile came across as a brave and confident technocrat who could stand his ground even when he was up against his boss, President Museveni.

In May 2018, Mr Museveni bashed the economist for being “a dogmatic person unwilling to adapt to new technology.” The comments were intended to change Tumusiime-Mutebile’s position on crypto currencies. They did not.

“No crypto currency can match a well-managed or original currency. Crypto currencies do not have the privileges of legal tender and are not backed by the central bank,” Tumusiime-Mutebile said.

Arguably, the fallen economist’s biggest act of bravery came in 2011 when Mr Museveni opted to spend $740m (about Shs2.59 trillion) on the procurement of fighter planes.

In an interview with the Financial Times newspaper UK, Tumusiime-Mutebile described the decision as “erratic policies” and an act of “fiscal indiscipline”.

While many expected such forthrightness to cost the economist his job, it did not. Mutebile’s comments were nonetheless blamed for the rise in inflation to 16.2 percent as they caused outflow. The outflows reached the $30m (about Shs105b) mark by June 15, 2011, forcing BoU to sink in $20m to stabilise the forex market. It was perhaps best that Mr Museveni left him around to fix a mess that he had partially caused.

Mutebile’s record

It is practically impossible to frame the story of Uganda’s economic recovery since 1986 without mentioning Mutebile.

A member of Kampala Club, the economist was until recently known to enjoy his whisky. Regardless, he held several key positions in the Ministry of Finance, Planning and Economic Development. He served as Permanent Secretary/Secretary to the Treasury before taking over at central bank.

He was also instrumental in designing and implementing most of the economic reforms that helped the Ugandan economy recover from the plunge it had taken in the 1970s and early 1980s.

When he first took over at BoU on March 2, 2001, he indicated that he would be a man of action.

“It is said that the perfect bureaucrat is the one who manages to make no decisions but escapes all responsibility. I do not want to see perfect bureaucrats in the bank,” he said.

Mutebile has in close to 21 years at the helm been indeed a man of action. He didn’t run away from taking some tough decisions, including the closure of banks following the sacking of staff at BoU. This led to confrontations with the then ombudsman  Justice Irene Mulyagonja .

BoU has over the years closed and sold Teefe Bank, International Credit Bank Limited, Greenland Bank, the Cooperative Bank, National Bank of Commerce, Global Trust Bank and Crane Bank Limited. Some of them were sold on Mutebile’s watch. For this, BoU was probed by the parliamentary committee on Commissions, Statutory Authorities and State Enterprises (Cosase).

The Cosase probe concluded that officials at the central bank had made many “questionable decisions” and contravened sections of the Financial Institutions Act during the closure and sale of banks such as Crane Bank and the National Bank of Commerce. Some of those actions were deemed to have caused financial loss to the taxpayer.

Mutebile was also accused of having got too reckless. He, for instance reportedly issued six letters of comfort to companies owned by businessman Hassan Basajjabalaba between October 2010 and April 2011.

He is said to have done this on grounds that the government owed them money in compensation for losses incurred following the revocation of contracts that had been signed with Kampala City Council to manage three markets and also develop the Constitutional Square.

Mr Basajjabalaba is said to have used the said letter as guarantees to obtain loans to the tune of $65m (about Shs227b) from four commercial banks. The firms defaulted on the loans and the bank used the letters to recover money from the Consolidated Fund. Efforts to recover that money from the Bank is still the subject of litigation in the Supreme Court.

Mutebile was also one of the 20 people who were dragged to court for violating Article 159 (2) of the Constitution. The constitutional provision bars the government from borrowing or guaranteeing a loan without the authority of Parliament. Legal Brains Trust—which sued them—had sought to have Mutebile and his co-accused repay the money.

Mixed results

Despite the blemishes from the Basajjabalaba and bank closures, Mutebile is credited for having kept the shilling stable and afloat during the global economic meltdown. The recession, which was experienced between 2008 and 2009, plunged many African economies in crisis.

Inflation stood at 1.9 percent when Mutebile tenure at BoU began, and he kept it in single digit figures for most of his time there. Inflation, however, spiked between 2008 and 2012 when it averaged 11.6 percent. That was because under him BoU pursued a monetary policy aimed at achieving low and stable inflation, with a medium term target of five percent of core inflation.

The policy was, however, not devoid of criticism. Dr Fred Muhumuza, a development research economist and a lecturer at Makerere University, has been a consistent critic of the same.

“Inflation targeting is not the right thing to do when inflation is mainly structural,” he says.

Dr Ezra Suruma, who once served as deputy Governor of BoU and later Finance minister, also criticised Tumusiime-Mutebile because of his hand in the passing of the 2010 financial reforms that bar Ugandans from owning more than 30 percent of a microfinance institution. The reforms also saw the minimum capital requirement for setting up a commercial bank raised from Shs4 billion to Shs25 billion.

“This is a stupid law. And we have many stupid laws that must be rejected and amended,” he told students of Makerere University in November 2013.

Dr Suruma said the stringent demands have killed the dreams of indigenous people who wish to start up financial institutions. In other words, BoU under Tumusiime-Mutebile has been driving Ugandans out of the banking sector.

Mutebile was also said to have often come across as insensitive to the plight of the ordinary businessman. In January 2012, when traders attacked him over why commercial banks were maintaining high interest rates even when BoU had lowered the central bank rate, his response was one of a man who had lost a bit of touch with the common man.

“Go to the banks that charge lower rates,” he told them.

The political animal

Despite that disposition, Mutebile was a very politically-sensitive person. He was one of the first people who were brave enough to openly come up to criticise late Idi Amin for his August 1972 decision to expel Asians from Uganda.

The criticism, however, did not go down well with Amin. Mutebile was forced into exile in Tanzania where he and other exiled Ugandan students that had close links to Milton Obote were reportedly helped to go to Europe and complete their studies.

That probably explains why he later held several key jobs during the Obote II regime and was close to Ms Miria Kalule Obote.

“Good governors like good tea, can only be appreciated when they are in hot water,” he said during that maiden speech at BoU in March 2001.

He might not be in hot water now, but we just might as well look at the times when he was to appreciate just how good he was.