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IMF Intervention: Unprepared for Internet Boom, BoU Counts Cost of Bad Publicity

The International Monetary Fund (IMF) is assisting Bank of Uganda (BoU) salvage its reputation damaged by what officials described as “negative reporting” on its operations and management since the takeover of Crane Bank in 2016.

“The Bank’s Communications Strategy for the period ended FY2013/14 – FY2017/18 is under review with support from the International Monetary Fund (IMF),” BoU said in its annual report released this past week.

“The periodic review is intended to strengthen areas such as Financial Stability Communication, Crisis Communication, and Digital Communication inclusive of social media in the forthcoming strategy for the FY 2018/19 – FY 2022/23,” the report emphasised.

Over the years, the Bank says it has achieved its core mandate of price stability by maintaining annual core inflation around the medium target of 5 percent.

In addition, the banking system has generally been well capitalized.

However, BoU observed: “Despite the successful implementation of its mission, the Bank has been the focus of criticism from the public, as well as the subject of deliberate and malicious smear campaigns, which have resulted in the Bank’s credibility and integrity being brought into question.”

“The current scrutiny and misinformation about the Bank started following the takeover of a Domestic Systemically Important Bank (DSIB) in October 2016 (Crane Bank).”

The central bank said the cumulative nature of reputation means that the negative perceptions that the institution has had to deal with “have drawn down on its brand equity and could mask the accomplishments in its mandate.”

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An analysis of the coverage of Bank of Uganda showed that each month, but especially during times of crisis, negative conversations in the mainstream media were amplified online through social media.

The largest share of negative stories was related to alleged unethical behavior in the conduct of the central Bank’s mandate in resolving defunct financial institutions and the mess in transporting printed currency notes.

“This line of misreporting was perpetuated in the coverage of the COSASE probe and the printed matter inquiry,” reads BoU’s annual report.

“The public and media sentiments expressed during FY2018/19 suggest that the Bank needs to strengthen its corporate image,” said BoU, adding, “There is a concerted effort to strategically tackle this misinformation and negative publicity.”

Public relations pundits say Bank of Uganda needs to roll up its sleeves in facilitating timely communication especially in responding to online media content.

Statistics

BoU would need to appreciate the growing role of internet in shaping public sentiments and opinions, voting patterns, consumer habits and the general lifestyle of almost half of the Uganda’s population.

Uganda Communications Commission (UCC) says in its sector report for the year 2018/2019 that “the mobile internet subscription now stands at 14,360,847 (Q4 2018) up from 13,569,354 (Q3 2018), reflecting a growth of 5.8%.”

The total market (this includes both OTT and web access) internet penetration now stands at 37% – which BoU is yet to exploit as shown in its annual report.

Traditional means

During the Financial Year 2018/19, the Bank said it continued to utilize “various channels” to engage external stakeholders on topical issues related to Monetary Policy, Balance of Payment position and the financial sector covering areas of consumer protection, and the Agricultural Credit Facility (ACF).

“Since radio is the most efficient way of sending out information to a large audience in Uganda, the Bank prioritized the channel. Consequently, there was a wider reach of BOU’s messages in the local languages. In addition, the quality and quantity of information about the Bank on radio stations upcountry was improved,” the BoU report reads in part.

“Other channels of communication included television talk shows, town hall meetings, and interviews with international media houses like Financial Times, Reuters and The Economist. The Bank also held press conferences on Monetary Policy Committee (MPC) decisions.”

Internet boom

Yet, in a space of one year, mobile internet subscriptions grew from 10 million in the first quarter of 2018 to 14 million in the last quarter of the year.

Research shows Ugandans use internet for reading news, watching videos on YouTube, researching, social media engagement, buying goods, paying taxes, betting and listening to music.

The growth in internet subscriptions can also be traced to the increased import of smartphones in Uganda.

According to UCC’s report, the total number of smart phones in the market grew by 14% in the period Q1 to Q4 of 2018.

“The number of smart phones in the market was 5,219,729 by end Q4,” the report reads in part.

Richard Mwiine, a public relations practitioner says it is not too late for BoU to cope up.

“BoU was clearly unprepared for the rapid growth and impact of digital media in Uganda,” said Mwiine, adding, “They didn’t have a plan on dealing with negative stories shared on WhatsApp groups and other social media platforms. But reading from their annual report, they appear to have woken up to these serious challenges.”

What happened?

Following the Bank’s commemoration of its 50th Anniversary in FY2016/17, BoU says there was a deliberate tactical approach to condense its stakeholder engagements into fewer activities.

“The reduced stakeholder engagements in FY2017/18 inadvertently created a vacuum at a time when the Bank was resolving a DSIB (Crane Bank) and appearing before the Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (COSASE),” the annual report reads in part.

As a result, the Financial Year 2018/19 “started off with an accumulation of negative public sentiment about the BoU brand.”

Overall, negative tonality in media reports about the Bank throughout FY2018/19 averaged 9 percent in traditional media, and 17 percent in online media, both being significantly above the performance measure target of below 5 percent negative coverage set in the Bank’s Strategic Plan FY2017/18 – FY2021/22.

For traditional media, this was a marked increase from 4.9 percent recorded during FY 2017/18.

Negative reporting spiked in October 2018.

The rise in negative reporting was partly on account of stories related to the Auditor General’s (AG) special audit report on closed banks, and a subsequent probe by the Parliamentary Committee on Statutory Authorities and State Enterprises (COSASE), wherein the overarching narrative was that the Bank could have done more to strengthen the execution of its supervisory and regulatory role.

BoU said a positive reputation and good corporate image would enhance the Bank’s credibility which is “crucial for successful formulation and implementation of price and financial stability policies.”

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