Uganda’s central bank governor nominated for a fifth term

President Yoweri Museveni has nominated Emmanuel Mutebile as Bank of Uganda (BOU) governor for a fifth term. Mutebile has been governor for 20 years and he will be in office till 2026 if parliament confirms his appointment.

Significance - Executive authority

Mutebile’s just-concluded term was a period of relative price stability. Inflation averaged 4.4% in the five years before COVID-19, compared to 4.6% in neighbouring Tanzania and 6.2% in Kenya. Core inflation, BOU’s preferred yardstick, has also been below its 5% target since 2017.

However, BOU’s takeover of three banks between 2012 and 2016 typifies gaps in governance on Mutebile’s watch. Parliament began probing the takeovers in 2018 and found that BOU did not independently value the assets and liabilities of the distressed banks. The central bank also could not ascertain the terms on which the same were transferred to new owners. One Global Trust Bank was closed and sold the same day without compliance with the law, and BOU seemed to pick DFCU as its preferred buyer in the resolution of Crane Bank.

New legislation has been proposed since the probe. Proposals include amending the constitution and the Bank of Uganda Act to make the management accountable to the board by separating the leadership of both arms. Currently, the governor and deputy governor are also the board chairperson and deputy chairperson respectively.

Mutebile has survived a number of these probes owing to his relationship with Museveni. For example, six cabinet ministers resigned in 2012 over a USD62 million deal between BOU and Museveni associate Hassan Basajjabalaba. The auditor-general declared the deal illegal and parliament found Mutebile to be complicit, but Mutebile remained in office. Two years before, Mutebile had approved the government’s request to the central bank to fund a supplementary budget just before general elections. Mutebile later admitted the money might have been used for electioneering.

Conclusion - Independence at bay

BOU will remain susceptible to political interference even if proposed legislation is enacted. The president’s arbitrary powers to appoint and remove its board members will continue to undermine operational independence. Without effective checks (e.g. by parliament) and now probably serving his final term, Mutebile will have little incentive to organise internal reform at the bank or withstand political pressure.

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Image credit: commons wikimedia

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