Bank of Uganda (BoU) has disagreed with the proposed amendments to
Article 161 of the Constitution regarding the composition of the Central Bank's
Board of Directors.
The Deputy Governor Bank of Uganda Michael Atingi-Ego accompanied by other
Central Bank officials on Wednesday presented their position to the Legal and
Parliamentary Affairs Committee.
This is in response to the proposed Constitutional Amendment Bill, 2020 tabled
by Igara East MP, Michael Mawanda.
The controversial clause in the Bill is the proposal seeking to separate the
fusion between the BoU management from the Board of Directors by removing the
Governor and the Deputy Governor from being Chairperson and Deputy Chairperson
respectively of the board of directors of the Central Bank.
Mawanda argues that the Central Bank Board needs to be independent of the
management so that it can carry out supervision without interference and
conflict of interest.
However, Atingi-Ego recommends that in line with international best practice,
the status quo should be maintained given that the current BoU board plays a
dual role in public policy formulation and oversight.
In the East African Community (EAC), the only country using the proposed
amendment is Kenya, but the Deputy Governor says that this has not been tested
long enough to provide a reliable benchmark to justify a departure from the
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He adds that the Governor has key targets to achieve especially concerning
monetary policy, price stability and financial system stability and that such
targets will be very difficult to achieve if there is a conflict between the
Governor and the Chair of the Board.
“The risk of conflict, especially for a board with public policy formulation
roles, is minimized by fusing the chairmanship of the board with the
Governorship of the Central bank. Indeed, majority of Central Bank boards (over
86%) have the Governor and Chairmanship of the board held by the same person,”
He further explains that countries such as Ghana which have attempted to
separate the Governorship from the board chair roles have reverted to fusion
for such reasons.
The proposal in Mawanda’s Bill follows a 2019 report by the
Committee on Commissions, Statutory Authorities and State Enterprises (COSASE)
on the closure of seven commercial banks.
The report adopted by Parliament recommended that the Bank of
Uganda (BoU) Governor Emmanuel Tumusiime-Mutebile and his then-deputy Dr Louis
Kasekende be sacked from the Central Bank’s Board of Directors if the
institution is to run its operations efficiently in the future.
The committee then chaired by Bugweri County MP Abdu Katuntu argued that much
as Article 161 (4) provides that the Governor and Deputy Governor shall be
Chairperson and Vice-Chairperson respectively, good governance principles would
require that the position of the Chairperson and Vice-Chairperson of the board
is separated from the position of the governor and his deputy.
In response to Atingi-Ego’s submission, Katuntu maintained his earlier position
saying that the Central Bank needs a board that is supervisory, oversight and
not fused with the leadership of the Bank. He disagreed with the opinion of the
Deputy Governor that Kenya’s practice cannot be relied upon for benchmark.
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He adds that the country cannot afford to have a Governor and Deputy Governor who
is not supervised.
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Katuntu was supported by Mwenge County MP Aston Kajara saying that the issue of
conflict of interest in the way the board and management of the Central Bank
are structured needed to be changed immediately.
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But Bugiri Municipality MP Asuman Basalirwa agreed with the position of the
Deputy Governor regarding maintaining the status quo saying that the idea of
separating their roles will be problematic.
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Kaberamaido County MP Veronica Elagu Bikyetero did not have a position saying
that they need to find a neutral ground but certainly improving the status quo.
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Regarding the proposed amendment to provide for the functions of the Governor,
BoU recommends that the functions should be better detailed in the Bank of
Uganda Act with a comprehensive list of all the roles to be executed by that
Atingi-Ego also notes that the practice across a majority of Central Banks is
that the Governor and Deputy Governor have the same tenure.
The Bill sought to limit the term of the Deputy Governor and the board members
to only ten years. Currently, the Governor, his Deputy, and the board
members hold office for a term of five years but are eligible for
“We seek guidance on the rationale for the proposed differences on
reappointments for the Deputy Governor via-a-vis that of the Governor and other
board members. We would then be in a better position to comment,” says