KAMPALA – A Member of Parliament is currently drafting a Bill that proposes to amend the Bank of Uganda (BoU) Act so that the board of directors is separated from the central bank management.
Under the current Bank of Uganda Act, the Central Bank Governor is the chairman board of directors and is deputized by the Deputy Governor. The other Board members are directors from different departments of the bank plus the Secretary to the Treasury.
According to Igara East MP Michael Mawanda, this arrangement creates a scenario of conflict of interest and abuse of powers since the Governor, who is also the Board Chairman, reports to him.
“We hope it can solve all these impasses that have been happening in the bank from the sale of the defunct private banks, infighting among others. For now the board of Governors is reliant on each other and this brings out issues of accountability,” he said.
Mr Mawanda says his draft Bill is ready and he is only waiting for the Speaker’s green light to table it before parliament.
“He (deputy speaker) asked me to submit it so that he can have a look at the draft. But I expect to get feedback within this week,” the MP said.
The proposed amendments come in the wake of scandals that rocked the central bank recently leading to a probe by the Committee on Commissions, Statutory Authorities and State Enterprise (COSASE) in the sale of several commercial banks.
In his report, the former COSASE Chairperson, Abdul Katuntu recommended a complete overhaul of the bank and separation between the bank management and board.
“In terms of the functions of the Board, the committee observed that the board didn’t adequately supervise management in the process of liquidating the financial institutions,” read the committee findings.
Another committee set up by President Museveni to investigate the recruitment process at the Bank of Uganda has also 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that some of the laws which the Governor based on to make the sweeping staff changes must be amended as they are outdated and inconsistent with the Constitution.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.