Two members of Parliament are in the process of drafting a private member’s bill seeking to amend the Bank of Uganda Act so as to streamline governance at the central Bank.
Michael Mawanda (MP, Igara East) and Paul Mwiru (MP, Jinja Municipality East) say 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 prompted their move.
Following the damning PAC-COSASE report, Dr. Ruhakana Rugunda, the Prime Minister and leader of government business in the House, said Government would respond in 3 months.
“Giving us three months would really be good time to do a thorough job” Rugunda said at the time.
Hon. Mawanda, at the time said, “If in 90 days they (the executive) don’t bring the amendments, you will allow me to seek leave of parliament to table my private members bill in respect to amendments to BoU Act.”
Nearly four months have since passed without any action from government, prompting Hon. Mawanda to make good on his threat.
According to a report by NTV, Uganda’s leading television station, the private members bill, to be known as Bank of Uganda Amendment Bill, seeks to 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.
MPs on the PAC-COSASE probe, recommended amendment of Article 161 (4) of the Constitution that provides that the Governor and deputy Governor shall be Chairperson and Vice Chairperson of the Board respectively, arguing that the “objectivity of the Board and its independence from management may be strengthened by the separation of the role of the Chief Executive and Chair.”
COSASE also recommended that all the implicated officials in the now infamous bank closures be held liable and punished accordingly.
“The executive implements what the board tells it. If you are the chief executive (Governor), you cannot again be the chairman of the board to implement what you have already decided on in the board. We would like to see the board of the bank independent and management independent,” said Mawanda in an interview with NTV.
Hon Mwiru added that the central bank had abused its constitutional independence as shown by the PAC-COSASE probe, and therefore the said bill would seek to trip the central bank’s independence.
“We had thought that by giving autonomy to the bank (BoU), we would achieve some degree of independence of the bank, but we have also not achieved that,” he said, adding that the planned bill, “also seeks to empower parliament to carry out an appropriation and oversight role on BoU as it is with other government institutions.”
“We have not been appropriating money to them (BoU) – they have been presenting their money to the board and as a result they would spend and consume their own reports,” Mwiru said, adding that this is the reason that BoU has previously snubbed Parliament attempts to hold them to account.
“It is through the power of the purse that you can force someone to account or improve on certain other issues,” Mwiru said.
Several experts and economists, have also previously called for sweeping reforms both in the governance and the mandate of the Central Bank.
The experts who include: Mr. Onegi Obel, an economist and capital markets expert, as well as economists and researchers Dr Fred Muhumuza and Dr Patrick Wakida, have called for a review of BoU’s independence, but also called for BoU mandate to be expanded from just monetary policy management to include jobs growth.
In an interview with NTV, acting Information minister, Dr. Chris Baryomunsi said that cabinet has considered the PAC-COSASE report and will be able to give a report on the progress so far in addressing the COSASE recommendations in the coming weeks. The calls to reform BoU come at a time when the Central Bank is embroiled in a currency transportation scandal, where some illegitimate cargo belonging to private business people found its way on a top-security cargo flight carrying currency notes.