Government has moved fast to amend the Bank of Uganda Act, 2000, a move officials say is intended to strengthen the Central Bank’s operations in the evolving financial market environment.
Information Minister Frank Tumwebaze told press in Kampala on Tuesday that Cabinet had “approved the Principles to amend the Bank of Uganda Act, 2000 and authorised the Minister of Finance to issue drafting instructions to the First parliamentary counsel to have the amendment Bill drafted and then tabled to Cabinet for discussion.”
He said this is intended to “update the objectives and functions” of BoU to “reflect changing mandate and roles” of the Central Bank.
ChimpReports has separately learnt that government wants to grant BoU explicit legal power to oversee the payments system spectrum (such as Mobile money).
Government also intends to align capitalization of the Bank to its dynamic liabilities so as to enable it effectively manage liquidity and deliver on its inflation mandate.
“This is to strengthen the operational independence of the central bank,” said an official who preferred anonymity so as to speak freely.
This news site is equally informed government intends to have two Deputy Governors at Bank of Uganda.
While the rest of EAC Central Banks have these two Deputies, BoU has only one – Louis Kasekende. However, these central banks don’t have the level of Executive Directors that BoU has.
Those opposed to the idea say BoU has an executive Director for Administration, wondering what additional value a Deputy Governor in charge of administration would bring on the table.
“You have an Executive Director in charge of Supervision and Research and they report directly to Governor; is there merit in expending public resources on an additional Deputy Governor for policy?” wondered an official.
The development also comes at a time the Central Bank is being criticized for poor supervision of commercial banks especially during the reign of Justine Bagyenda.
ChimpReports understands the proposal for a second Deputy Governor started way back in 2009 by Patrick Byabakama Kaberenge who had acted as Deputy Governor and was not confirmed.
He wanted a position created to retain his privilege as Deputy Governor not as an Executive Director that he was reverting to.
Kaberenge now serves as Board chairman, National Social Security Fund (NSSF).
The Central Bank recently effected staff appointments and transfers at various levels of management in order to “enhance operational efficiency and effectiveness” of the institution.
Officials say in the wake of the collapse of several financial institutions including the third largest bank – Crane Bank, Cabinet also is determined to address weaknesses in the establishment mandated to foster price stability and a sound financial system
Tumwebaze today said the proposed amendment is aimed at “outlining the monetary policy operations” of the Central Bank and ensuring “effective implementation of the requirements of the new national legislation and regional (EAC) commitments.”
The Monetary Union, which is the third pillar in the EAC Integration process, is expected to be in place by 2024 with the introduction of a common currency and the establishment of a regional Central Bank.
In 2017, EAC Secretariat worked with Partner States and other stakeholders in laying the foundation for the Monetary Union.
Bills for the establishment of the EAC Monetary Institute and EAC Bureau of Statistics were cleared by the EAC Council of Ministers and forwarded to EALA for enactment.
ChimpReports understands the progress made so far indicates that the 2024 timeline for the establishment of the Monetary Union is achievable.