President Yoweri Museveni has failed to name a new central bank governor almost nice months after the death of the long-serving incumbent.
The prolonged delay may reflect the nature of Uganda’s government, where technocratic concerns must compete with demands of loyalty to the president.
The Bank of Uganda has been without a permanent governor since January, when Emmanuel Tumusiime-Mutebile died in a Nairobi hospital.
Museveni had first appointed Tumusiime-Mutebile in 2001 and reappointed him four times.
Michael Atingi-Ego, the Bank of Uganda’s deputy governor since 2020, has led the central bank since Tumusiime-Mutebile’s death but commentators say that the President’s failure to appoint a new Governor for the Bank of Uganda has left the institution exposed.
They say, Deputy Governor Atingi-Ego has failed to stamp his authority on the institution which has been running under the leadership of the late Prof. Emmanuel Tumusiime Mutebile, an economist with a no-holds-barred approach to handling the task and administrative functions of the Central Bank.
Industry sources have told this website that the acting Governor, Dr. Atingi-Ego lacks crowning abilities including personal courage and leadership skills to head the country’s economic revival from a thread of economic downturns including the Covid-19 tragedy and the recent economic fallout sparked by the Russian war in Ukraine.
BoU has since increased the Central Bank Rate (CBR) by another percentage point to 8.5 percent and has since
encouraged commercial banks to raise interest rates for borrowers, a development that has since puzzled financial experts.
Dr. Atingi-Ego has defended his measures saying the increase was necessary to stabilise inflation but industry experts and borrowers have since hit back the Central Bank—describing BoU inflation containment measures as jeopardizing the already disastrous environment especially for small businesses.
“Remember that when local businesses fear to borrow from banks because of the rise in interest rates, production will be low, which means the Uganda Revenue Authority (URA) will collect less tax revenue at the end of the day. And some banks are losing business as well, in the name of following BoU’s claim of taming inflation,” a top economist said, adding:
“We also know BoU is also behind the idea that the government should not subsidize commodities such as fuel, arguing that it is not sustainable in the long-run. At least Atingi has made this view known in the recent fora that he has participated in. Question for Atingi is, “Who should save Ugandan citizens from the high prices of fuel and other essential commodities? We know that other governments in the EAC where Ugandans belong have subsidized fuel, knowing that it plays an important part in the economy.”
“Does Atingi and others who anti-subsidization know that some people have parked their vehicles at home because they cannot afford fuel, for example?”
Other economists have also called out the acting governor, reminding him that Finance Ministry had already sent lesser monies to government ministries, departments and agencies for the first quarter of Financial Year 2022/23 and that his containment measures including raising CBR were “absolutely unnecessary”.
The Daily Monitor, said in an April 19 article that the appointment of a substantive governor was “long overdue”.
The president of Uganda appoints both the governor and deputy governor to renewable five-year terms, with the consent of the Parliament.
Museveni has been president of Uganda since 1986, when he led the National Resistance Movement (NRM) to power.
He obtained another term in 2021 in an election which saw police harass the opposition candidate and his rallies.
Michael Mutyaba, who researches Ugandan politics at the School of Oriental and African Studies in London said that Museveni was struggling to find a candidate who was both politically loyal and capable of managing fragile economic policy.
Gerald Bareebe, a Ugandan journalist and assistant professor of politics at York University in Toronto, agreed that the president wants “someone who is blindly loyal, but also competent”.
Mutyaba also speculated that the vacancy was useful as a political tool.
The president could try to reinforce loyalty among members of the ruling party by holding out the possibility of leading the central bank, he said.
Museveni could also appoint an opposition figure to the governorship, thus co-opting them. That possibility “sows suspicion in opposition ranks about who might next cross to the ruling NRM”, Mutyaba said.
Museveni has “a habit of leaving government institutions without the head for a long time before appointing substantive official office holders”, Bareebe said.
The president once failed to name a permanent inspector general of government for five years, he added.
Mutyaba stressed that in Museveni’s Uganda, “most power lies in the presidency”. Thus, “filling the position is not a top priority”. Ugandan journalist Emmanuel Mutaizibwa described the late governor as a “a major cog of the NRM regime and the anchor of its economy”.
He credited Tumusiime-Mutebile for successful “neoliberal reforms” adopted in the 1980s.
Tumusiime-Mutebile would sometimes dispute the president’s demands, Mutaizibwa said.
However, he suggested the central bank had become accustomed to working around his absences because Tumusiime-Mutebile had been ill for about five years before he died.
The late governor had put in place “a competent workforce that continues to diligently perform its duties”, Mutaizibwa said.
Mutaizibwa said he believed that the president would choose a “substantive” figure as governor but would also seek “a cadre who can be relied upon by the executive”.
The Daily Monitor recently identified several possible candidates for the governorship.
They include the deputy governor, a former International Monetary Fund official, his predecessor Louis Kasakende, and Ezra Suruma, deputy governor in the early 1990s.
The Covid-19 pandemic delivered a significant blow to the Ugandan economy.
The country’s authorities told the IMF in March that “growth remains significantly below pre-pandemic levels of over 6%.”
The IMF report said officials described themselves as struggling to raise inflation to target levels.
“Despite cuts, interest rates were above the neutral rate and unable to achieve a de facto accommodative stance,” the report said. Acting governor Atingi-Ego has not overseen any major changes in monetary policy. At its April 12 policy meeting, the central bank left the benchmark interest rate at 6.5%, where it has been since last June.
The Bank of Uganda targets 5% core inflation. According to the central bank’s statistics, core inflation was 4.32% in April 2022, and headline inflation was 4.87%.
