KAMPALA – The Committee set up by President Museveni to investigate the recruitment process at the Bank of Uganda has recommended a raft of changes, including “an urgent and comprehensive review” of the laws governing the Central Bank as well as trimming the Governor’s powers.
The committee, which was set up by the President after Mr Emmanuel Tumusiime Mutebile’s February controversial staff appointments, indicates that some of the laws which the Governor based on to make the sweeping staff changes must be amended as they are outdated and inconsistent with the Constitution.
“The Bank of Uganda Act Cap 51 was last amended in 1993, two years before the promulgation of the 1995 Constitution of Uganda. In the case of the Bank of Uganda Byelaws established under Statutory Instrument 51-1, the situation is even worse as they were passed in 1968 and continue to be applied despite being inconsistent with the Constitution in some important respects such as the authority of the Governor versus the authority of the Board,” the report reads in part.
“A review, therefore, needs to be urgently undertaken and the Bank of Uganda laws brought into harmony with the Constitution along with any other matters necessary for the stability and smooth functioning of the central bank,” the report adds.
The report also recommends the separation of position of Governor from that of Chairperson of Board, noting that when Mr Mutebile made the February 7 staff changes, he based himself on the fact that he is the governor and at the same time the board chairman.
“The Committee recommends the possible splitting or separation of the functions of the Governor and the Chairperson of the Board especially with regard to administrative matters. Corporate Governance best practice normally requires that the two positions are separate as the Chief Executive Officer is normally supervised by and is therefore answerable to the Board. In the instant case most of the problems caused as a result of the Governor’s decision could have been avoided if the two roles were separate with no opportunity for the Governor to function as both Board and Chief Executive Officer,” the report adds.
The Committee alludes to the case of Kenya Central Bank whereby the Governor remains the functional head of a Monetary Policy Committee to avoid hampering the decision-making process in terms of monetary policy and currency. The idea is to ensure that the Governor does not get into a situation where he makes administrative decisions over which there is no effective oversight in terms of checks and balances, the report adds.
The Committee recommends that creation of at least one additional position of Deputy Governor. It adds that In light of the institutional problems resulting from and also preceding the decision of the Governor, the position of the Governor is too overloaded in terms of responsibilities and that some of the responsibilities risk exposing the position of Governor to unnecessary controversies.
“It may, therefore, be prudent to consider the creation of an additional post of Deputy Governor, which Deputy shall largely be responsible for the general administration of the Bank while the Governor and the other Deputy are free to concentrate on the core functions of the Bank as stipulated in the Constitution,” the report adds.
The Committee also recommends that in the immediate short term, all decisions involving human resource matters be subjected to the approved processes and coordinated through the Administration Directorate hierarchy in accordance with the Administration Manual to avoid propagating the impression to staff that parallel processes exist in terms of advancing human resource related interests.
The Committee recommends that there should be periodic individual-focused appraisals of the performance of all the Board members including the Governor. In this same regard, the committee says, any review of the law establishing Bank of Uganda must take into consideration the need for distinct and specific functions or terms of reference to be spelt out for the positions of Governor and Deputy Governor(s). This is consistent with the practice in all the central banks that the Committee was able to benchmark against.
The Committee also recommends that the Bank of Uganda Act be amended to operationalize Article 161(5) of the Constitution wherein it is provided that,
“The Governor, Deputy Governor or any other member of the board may be removed from office by the President only for – (a) inability to perform the functions of his or her office arising from infirmity of body or mind; (b) misbehaviour or misconduct; or (c) incompetence.”
During the course of deliberations on how to ensure that the leadership at the Bank is accountable the Committee noted that as much as grounds for removal of the individual Board members existed in the Constitution, there were no legal provisions which a President may rely upon to set in motion
the process of removal of any of the Board members including the Governor and Deputy Governor. Such legal provisions exist for other constitutional offices such as judges, heads of commissions and the Inspector General of Government and usually involve the setting up of a legally recognized tribunal.
Some of the committee members who appended their signatures to the report are Abdu Katuntu (MP), Justice Irene Mulyagonja Kakooza, Elijah Okupa (MP), Michael Tusiime (MP), David Makumbi (IG Staff), Justus Kareebi (IG Staff) and Sarah Birungi (IG Staff).