BoU Board Wants Law Amended

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The
Board of Directors of Bank of Uganda (BoU) has blamed the difficulties faced by
the Central Bank on gaps in the Constitution. 

Article
161 (2) of the Constitution vests the authority of the Central Bank on the
Board. According to the law, the Chairperson of the Board is the Governor while
the Vice Chairperson is the Deputy Governor. 

The
directors of the Central Bank however, said that there is need to separate the
role of the board Chairperson from that of management. 

The
proposal was made while the Board together with the Minister of Finance,
Planning and Economic Development, Hon Matia Kasaija, the Governor BoU and
other officials appeared before the Committee on Commissions, Statutory Authorities
and State Enterprises (COSASE) on Friday, 08 January 2019. 

One
of the Board members, Polycarp Kahooza warned that unless the roles are
separated, BoU will continue having difficulties.

“Once
you have a Chairman of the Board who is also the Executive Director,
administration can be difficult. Right now, there are very many difficulties in
BoU which stem from such gaps, “ Kahooza said.

He
recommended that government borrows a leaf from the Central Bank of Kenya.

“In
Kenya, the Governor deals purely with technical matters like management of
monetary policy, but general administration is done by the chairman of the
board who is not the head of the institution,” said Kahooza.

When
asked by the MPs if the Board was aware of the process of closing banks,
Kahooza confirmed that  the Board was
aware. He however, said that the board delegated the role of taking over of the
banks to management.

“The
board cannot have a meeting to discuss how to take over a bank. These are
dangerous businesses that is why the board has to delegate taking over of
banks,” said Kahooza.

Board
member, Josephine Ossiya advised that whilst consideration is made to amend the
Constitution to separate the role of the Governor from board chairperson, an
immediate intervention should be made. 

She
suggested that guidelines should be made which clearly state the decisions that
the Governor can make as Chief Executive Officer and those that he can take as
chairman of the board.

“Now
that we have gone through this process, maybe it is time to rethink and improve
the operations and governance of the Central Bank. Indeed, we have seen the
gaps and we need to address them,” said Ossiya.

MPs
however, blamed the board for failing to perform and instead delegated its
duties to the Governor.

Committee
Chairperson, Hon Abdul Katuntu  suggested
that the power of the Board should be given to the Governor.

“Now
that you said that is not possible for the board to do some functions and
delegated to the Governor, can we take it away and give to the Governor such
that you wash yourselves off this that you cannot do,” said Katuntu.

He
also wondered if the Board was bothered by the fact that banks were closed and
yet they (board members) did not have final reports. 

“Does
it bother you that you have not demanded for a single final report of closed
banks and it takes Parliament 20 years later?” said Katuntu.

Hon.
Michael Tusiime (NRM, Mbarara Municipality) said that the manner in which the
board operated during the closure of the banks is questionable.

“If
I was to appraise you, which parameters of performance would I hinge on. That
you are comfortably seated on the board and there is an unresolved matter for
the last 20 years,” wondered Tusiime.

 Matia Kasaija said that it was unfortunate
that BoU does not have final reports of all the closed banks. He said that it
is a shortfall that must be addressed.

“There
is a huge weakness and we shall demand officially in writing for these reports
from BoU,” said Kasaija.

COSASE has been investigating the Auditor General’s report on the closure of seven commercial banks by Bank of Uganda.

Parliamentary News



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