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BOU speaks out on Kasekende-Kisamba Mugerwa row over economic growth

National Planning Authority chairman Kisamba Mugerwa

The management of Bank of Uganda (BoU) has downplayed the disagreement between Deputy Governor, Dr Louis Kasekende, and the chairman of the National Planning Authority, Dr Wilbeforce Kisamba Mugerwa, over quoting different Gross Domestic Product (GDP) growth rates, saying they were taken out of context.

Last Friday, Dr Kasekende put Uganda’s GDP growth in the last six months of 2017 at 6.9 per cent while Dr Mugerwa, in a March 27 letter to Finance Minister Matia Kasaija and other government officials, put it at 5.5 per cent and said the country is unlikely to attain middle income status by 2020 because of low economic growth.

But in a sharply worded statement on Thursday, the BoU Director for Communications, Ms Charity Mugumya, said the different GDP figures “are easy to explain, because they pertain to different time periods.”

BoU deputy governor Louis Kasekende

“The Governor, in his Monetary Policy Statement of April 2018, referred to a growth rate of 6.3 percent in the calendar year 2017. The Chairman of the NPA referred to a projected GDP growth rate of 5.5 percent for the 2017/18 fiscal year, which has not yet ended. As such, there is nothing inconsistent in the different GDP figures given by these three gentlemen and certainly nothing that warrants the allegation that they are lying,” Ms Mugumya said.

A monetary policy statement for April 2018 BoU Governor Emmanuel Tumusiime-Mutebile, gave a different GDP growth rate, putting the economic growth at 6.3 per cent in 2017 compared to 3 per cent in 2016.

However, the BoU Communications director said BoU was quoting GDP figures published by the Uganda Bureau of Statistics (UBOS) and said the Central Bank cannot be held responsible since it does not publish GDP estimates.

“Both of these figures are taken directly from the quarterly GDP data published by the Uganda Bureau of Statistics (UBOS) which are available on its website. Please note that the Bank of Uganda does not publish its own GDP estimates, it uses UBOS data,” she explained.

Speaking at a dinner organised by Uganda Securities Exchange (USE) to mark 20 years in the Ugandan market, on Friday, Dr Kasekende said that the core capital adequacy ratio for the banking system rose from 17.3% in 2016 to 20% last year, an indication that people feel it is now safe to bank their money.

He said the ratio of non-performing loans fell to 5.6% from 10.5% in 2016, which he said is an indication that many firms and people have gradually cleared their debts due to an improved economy.

“In the last six months of 2017, real GDP grew by 6.9 percent, compared to the same period in 2016. Furthermore, growth was widespread across the economy, with agriculture, industry and services all recording buoyant growth in the second half of 2017. The economy undoubtedly suffered a downturn in 2016, recording only sluggish growth, but those problems are clearly now behind us,” he said.

But Dr Mugerwa said the country is unlikely to attain middle income status by 2020 because of low economic growth.

He said for the country to attain the status Uganda’s economy needs to grow by 15 per annum not the current 5%.’ and indicated the country had missed many targets under the National Development Plan II.

“The low economic growth performance for the last three years of NDP II implementation implies that the country may not be able to achieve the lower middle income status by 2020,” Mugerwa wrote.

 

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