Speaker, Rebecca Kadaga asks Finance Minister to explain why it is taking long to appoint Kasekende’s replacement at BoU Pressure mounts on government from MPs, World Bank and IMF to implement governance reforms at the Central Bank so as to avoid a repeat of the several mistakes at BoU as identified in the parliamentary probe of Bank of Uganda. Meanwhile the fate remains unknown, one month after he left the central Bank’s second highest office.

CEO ReporterFebruary 13, 2020February 14, 2020 0

Bank of Uganda faces scrutiny after cancelling the National Payments Switch tender, raising concerns over transparency, influence peddling, and procurement integrity. Allegations of favoritism and government interference spark debate on fair competition and financial sector governance in Uganda.

The Speaker of Parliament Rt. Hon Rebecca Kadaga has summoned the minister of Finance Matia Kasaijja to appear before Parliament, next week on Thursday to update parliament on when a new Deputy Governor, Bank of Uganda will be appointed.

Speaking in today’s plenary seating Kadaga reportedly was concerned that since the Deputy Governor’s contract expired on January 14th 2020, there has been no replacement leaving only the Governor, Prof Emmanuel Tumusiime Mutebile to take on all the responsibilities of the governor.

“I am concerned about this crisis, therefore I hereby order the Minister of Finance Matia Kasaija to appear before Parliament to tell us when the deputy governor is going to be appointed,”Kadaga reportedly said.

Kadaga’s comments came after, the Igara County East Member of Parliament, Hon. Michael Maranga Mawanda raised an issue of national importance in Parliament tasking Government to appoint a deputy governor for the central bank.

The tough talking Kadaga has been instrumental right from reigning down on Kasekende who tried to oppose the probe to putting pressure on government to act on the recommendations of the probe

“Madam Speaker, I am here to raise on an issue of National importance. I am currently working on the Bank of Uganda Amendment Bill 2019. But madam speaker as I speak now, we don’t have a governor for the Bank of Uganda; the position is vacant. Can government explain to me why they are not appointing a new person?”Mawanda said.

The term of the former Bank of Uganda deputy governor, Dr. Louis Kasekende expired without a renewal nor a substantive one being appointed by the president.

According to a source familiar with appointments of the governor and deputy governor, 6 months before the expiry of the terms of all the officers mentioned in Article 161 of the Constitution (Governor, Deputy Governor and board members), the Central Bank notifies the Ministry of Finance in writing, which also in turn informs the president in advance.

Mr Don Wanyama, the Senior Press Secretary to H.E. President Museveni, had in an earlier media interview said that the “president will respond at his own time.”

Executive, MPs and IMF want controls tightened at BoU

Hon Mawanda and Paul Mwiru (MP, Jinja Municipality East) are working on a private member’s bill seeking to amend the Bank of Uganda Act so as to streamline governance at the central Bank. This follows the failure by government to act on the report of the Public Accounts Committee on Commissions, State Authorities and State Enterprises (PAC – COSASE) on seven defunct commercial banks which accused several bank officials, including Dr. Kasekende of abetting several illegalities.

Following the damning PAC-COSASE report that was tabled before parliament and adopted, Dr. Ruhakana Rugunda, the Prime Minister and leader of government business in the House, said Government would respond in 3 months, but has up to today not taken any action on the recommendations of the MPs.

The Bank of Uganda Amendment Bill, seeks to among others amend the constitution and the Financial Institutions Act (2004) to among others, separate the office of Governor and his Deputy from that of the chairperson and vice chairperson of the BoU board respectively.

This was one of the major recommendations by MPs on the PAC-COSASE probe, saying that this would bring about the objectivity of the Board and strengthen its independence from management. The bill also seeks to empower parliament to carry out an appropriation and oversight role on BoU as it does with other government institutions.

Daily Monitor, a local daily on February 7th 2020 also reported that there were moves between Ministry of Finance and Bank of Uganda to separate the bank resolution function from the central bank.

Quoting a Treasury Memorandum to Parliament from the finance ministry, Daily Monitor reported that there was a process to establish a Bank Resolution Unit/department that shall be responsible for the implementation of the resolution framework.

Daily Monitor also reported that government had also constituted a special committee composed of all regulatory agencies (such as BoU, Uganda Retirement Benefits Regulatory Authority, and Insurance Regulatory Authority) within the Financial Sector to draft a comprehensive Financial Sector Crisis Management Plan, which plan would form “the basis for the amendment of Financial Institutions Act, 2004 and regulations which relate to procedures and guidelines for resolutions of Financial Institutions in distress.”

The International Monetary Fund (IMF) in their May 2019, Country Report No. 19/125 also observed that following the parliamentary probe that identified many weaknesses at the Central Bank, “Bank of Uganda should step up the enforcement of the findings of weaknesses in the banks’ internal audit, controls and compliance.”