Bank of Uganda headquarters in Kampala, Uganda. PHOTO/FILE
The absence of a substantive Central Bank governor – a key figure in managing the economy – robs the country of much-needed expertise, experts have said.
The position has remained vacant for 969 days and counting following the death of Emmanuel Tumusiime-Mutebile in a Nairobi hospital on January 23, 2022. Mutebile had run the bank since 2001.
Deputy Governor Micheal Ating-Ego, who was appointed to the position in March 2020, has been running the bank in an acting capacity since Mutebile’s death.
Despite concerns about the President’s failure to fill such a critical position or confirm Mr Ating-Ego to the job, State House says there is no cause for concern. Mr Sandor Walusimbi, the Presidential Press Secretary, said President Museveni would make the appointment at an “appropriate time”.
“The President will let the country know when he chooses one,” he said.
The Bank Uganda Act establishes the office of the Governor, who must be of recognised financial or banking experience. However, the law does not provide timelines within which the position must be filled, and State House insists the absence of a substantive governor bears no consequence.
“Are all the functions of the Bank working?” Mr Walusimbi asked when contacted for comment. “We have a deputy governor who is acting, so there may not necessarily be a figurehead right now, but the concern would have been if Bank of Uganda is struggling to do their job on account of the fact that they don’t have an appointed head yet.”
The Central Bank under the leadership of the governor is responsible for, among others, maintaining economic stability, managing inflation, supervising the banking sector, and acting as the financial adviser and banker to the government.
Sources at the Central Bank who spoke to this publication say there is no sign of an imminent appointment. “We do not have any update; as the Bank we do not have any information yet,” a senior official said. They asked not to be named. “It is the President who appoints the governor, and he is the only one who can answer that question of who is in line for the job.”
The Minister for Finance, Planning and Economic Development, Mr Matia Kasaija, and his junior in charge of General Duties, Mr Henry Musasizi, weren’t available to comment on whether names had been forwarded to the President for consideration or offer an update on the matter.
Waiting game
The delay in appointing a Central Bank governor has raised eyebrows and drawn parallels to other public appointments that were delayed or left hanging. Dr Louis Kasekende, the former deputy governor at Bank of Uganda, waited to hear if his contract would be renewed when it lapsed in January 2020. State House remained silent, however, leaving the official to walk away unceremoniously.
Similarly, the Justice Ministry remained without a substantive minister for about a year while President Museveni negotiated with Mr Norbert Mao, the leader of the opposition Democratic Party, to join his government.
Nevertheless, the delay in filling the top job at the Central Bank is unprecedented. In October 2022, the Daily Monitor reported the names of 10 high-ranking economists that had been forwarded to the President after being vetted by security agencies.
The matter has since gone silent, with one of the top economists on the list yesterday saying, “I really don’t know why he has not appointed one yet. I don’t know.” Others on the list, when contacted, declined to comment.
Dr Fred Muhumuza, an economist, said on Monday that a substantive governor would bolster the decisions of the team at Bank of Uganda with experience and influence.
“The Central Bank is supposed to be run by a monetary policy committee, and a board which is a strategic high-level body, while the committee is technical. As long as those two organs exist then the functions of the Central Bank will be done,” he said.
“The shortfall of the Governor would mean the two bodies have one person less, so the two organs are certainly missing out on the input of that extra high-level person. In voting, they would carry the same powers but before you vote you have dialogue and discuss issues so one of the brains that would be feeding the discussion is not there because that person would be with a lot of training and exposure or even influence.” Another senior economist, who asked not to be named in order not to jeopardise personal and professional relationships, said: “To fill that position is a political decision.”
According to a paper titled, 'How Do Central Bank Governors Matter? Regulation and the Financial Sector' published in the Journal of Money, Credit and Banking, a governor should be a person of influence. “Central Bank Governors (presidents or chairmen) play a pivotal role in decisions about economic policy, even when they are part of a board or committee, and even when central banks are not fully independent,” the paper states.
Mutebile, who was the Treasury Mandarin at the Finance Ministry before crossing over to Bank of Uganda (BoU), is widely believed to have succeeded in taming inflation using a combination of technocratic competence and political nous. He is credited with having highlighted the risk of inflation and given relatively free rein, helped to bring it down from over 200 percent to single digits. He was also a major advocate of free market reforms, including liberalisation of the economy and the privatisation of state-owned enterprises.
Yet even his high profile did not always give him the last word. The Central Bank was left holding the can after businessman Hassan Basajjabalaba cashed in multi-billion guarantees from commercial banks which had been offered on the back of letters of comfort from BoU.
Then in June 2011, Mutebile used an interview with the Financial Times newspaper to reveal that he had been strong-armed by the presidency into spending about $750 million of the country’s reserves to buy fighter jets.
Experts interviewed by this newspaper cited these and other examples of Executive overreach into the financial sector as evidence of the need for a substantive Central Bank governor able to hold their ground. “You definitely need a strong governor who is able to say no to the political class,” a senior official said, asking to remain anonymous. “Having an acting governor or no substantive governor is not ideal, really.”
Legal questions
The extended acting period by Deputy Governor Ating-Ego has raised some concerns about possible legal challenges against some of the decisions made at the bank.
Ms Laura Martha Tumwesigye, an employment and labour lawyer, cited Public Service Standing Orders, which state that a public servant cannot hold a position in an acting capacity for more than 12 months. According to the orders, any power exercised after the statutory period is null and void.
"However, there are public policy considerations,” she added. “The position of Governor of the Central Bank is a sensitive one. And it is very difficult to obtain expertise to fill it. So, there is a need to strike a balance. On one side is the need to act legally and fill the vacancy substantively in a year. On the other hand, there is the need to get a competent citizen to fill the post.”
Attorney General Kiryowa Kiwanuka, however, said the standing orders do not apply to Bank of Uganda staff. “They have their own manual. He is not appointed by Public Service, not everyone who works in the public service is governed by the public service standing orders,” he said.
Mr Kenneth Situma, a lawyer, also offered reassurances about the legality of ongoing actions by the deputy governor. “The law does not indicate any fatal consequences because it sufficiently and specifically designates the deputy governor to take on the mantle and even when both are absent there's still more designation as to who can handle their duties and how they are selected,” he said.
Dr Ating-Ego in July 2022 launched the Central Bank’s five-year strategic plan that focuses on strengthening its ability to maintain stability of the economy and a sound financial system to support investments in the country.
Some of the sticking issues revolved around appointments and movement of staff in the institution, but the Bank officials said these were all done in line with the entity’s guidelines and are unlikely to be rolled back by a new governor.
“Every organisation has minor changes from time to time. It is very normal and to say a new governor may or may not reverse these changes would be to speculate,” an official at the bank said. They asked not to be named. “I don’t know who the new governor will be and what changes they would want to effect but the changes done, like moving personnel from one department to another were done to effectively move forward, and given our strategic plan, the changes had to be done.”
Apart from bringing inflation down to below the target of five percent, Dr Ating-Ego also oversaw the economic stimulus package rolled out in response to the coronavirus pandemic.
