Why Bank of Uganda must be audited

Under Section 14 of Bank of Uganda Act, financial redemption (or bail-out in this case) from the Government’s fiscal side or national budget, is provided for.

Does this explain why BOU has overtly or covertly been consistent in making losses without fail in its capital resources over the years?

This characteristic behaviour appears to have expanded the Bank's operating deficit, by Shs 116 billion by end of fiscal period/ FY 2010/11, Shs 226 billion by end of FY 2011/12 and today, Shs504 billion and perhaps more before end of this FY 201/18.

It is thus in the interest of BOU to be audited or even investigated, in order to check whether it can still deliver on its constitutional mandate or roles and responsibilities under the Bank of Uganda Act.

Structural, managerial and accountability investigations are inevitable for BOU to come out clean and recast itself to its core business.

 Let this include checking on the level of transparency in the administration of respective monetary policy instruments and transactions over the last five years.

Being a bank for the government, say, under Section 33 of the Bank of Uganda Act, the extent of prudent, accountable and transparent operations on behalf of citizens of Uganda is a must achieve.

The bank cannot be a cash cow for some individuals but rather all Ugandans who are already grappling with potentially unsustainable debt again as was in 1990s and 2000s. BOU management of advances to government plus the full refund with interest thereof especially in cases of overdraw, since all these are public debts, need to ascertained.

 This also includes checking on the criterion around BOU guarantees to private sector companies, coupled with who has paid back in designated time.

 Moreover, all Ugandans deserve to know more about how and who exactly benefits from these financing modalities, to accord everyone access to the transparent criterion in officially seeking financial support through BOU.

As pivotal, the BOU that appears to be increasing facing erosion of her functional credibility and public image deficit will stifle the move by Africans, towards effective economic blocks and mechanisms such as those prescribed under the East African monetary convergence criteria and East African Monetary Institute (EAMI).

 Yet these areas are fundamental steps to East African Monetary Union (EAMU) and economic liberation of the African people.

To address some of the policy and structural gaps in prudent financial public finance management, after several CSOs, IMF and World Bank calls in 2013, Government of Uganda forcefully introduced the Treasury Single Account (TSA), inter alia, to reduce the run-away corruption across government ministries, departments, agencies and local governments (MDALGs).

Out of over 881 MDALGs, BOU appears to have still undermined this reform. This was to the extent that it continued to superintend to over 179 Government institutions (over 20%) transacting billions of public funds outside the TSA modality.

This was so even about three years after 2012, all through 2016 (and perhaps still counting even when another FY 2018/19 is at hand come July 2018), excuses notwithstanding.

Such issues point to a cocktail of fundamental functional accountability deficits at BOU. Does this point to taking Ugandans and the development partners for granted?

 How about allegations of unauthorized withdrawals from the Petroleum Fund and others at the Bank? These areas must be addressed and/ or crosschecked expeditiously to keep policy, programming and development coherence.

Otherwise, Ugandans may find it somewhat difficult to trust or not ask about the safety and broader custody of the increasing volume of oil proceeds.

So, how do we step up the level of prudent management, accountability and transparency of the various Operational Holding Accounts of the MDAs or even transactions specifically at the Revenue Accounts and Expenditure Accounts at BOU?

The trending levels of stealing of public resources amidst mixed impression amongst citizens about the public service delivery outcomes will remain recurrent concerns at the doorstep of BOU.

BOU under the Bank of Uganda Act and attendant policy regimes is allowed to transact business including off-shore investments and others.

The returns thereof are ideally what enables the bank to meet financial obligations in course of administering her monetary policy including debt instruments herein, financial markets, supervision for a prudent financial sector, banking, clearing services and others.

 So, before BOU can cry the alleged foul to the fiscal side or national budget in order to plug her capital deficit over Shs504 billion; but how much has been generated from her investments, say over the last four  years upon which to justify the said bail-out?

Who profits from the off-shore and other investments by the Bank? How will the Bank keep its independence if it is going to consistently run to the fiscal side or even Cabinet and Parliament for rescue?

 Is the creeping behaviour of Bank of Uganda of what appears to border on accountability and transparency issues in the management of her financial portfolio?

Does this not generally undermine the Bank’s independence as envisioned under Uganda's 1995 Constitution of Uganda and the Bank of Uganda Act?

At what point can Africans entertain no excuses, as to consistently and prudently run critical economic modalities and institutions such as the BOU, EAMI or EAMU?

We must redeem and uphold BOU, for economic liberation of the Ugandan economy and the African people.

The contribution of BOU in the macro-fiscal policy (broadly including the fiscal policy, public debt, inflation management, accurate and astute statistical data is critical.

This is the fiscal deficit in horizon of overall government recurrent and development expenditure and others.

 BOU efforts this far is highly regarded by Uganda Debt Network and other actors, especially under the largely cash-based economy of Uganda.

Yes, the importance of BOU in moderating this equation but to the level of eight regional currency centres, simply makes them too many for Ugandan tax payers.

The said tax payers have shouldered domestic revenues and handed over to government the tune of Shs7.2 billion in FY 1986/87, nearly Shs 4 trillion in FY 2009/10, a target of over Shs15 trillion in FY 2017/18 and still counting over the medium.

On top of that, there are money demands and competing priorities for the NRM Manifesto, National Development Plan, debt servicing, and regional peace initiatives.

These include UPDF logistical demands in Somalia since 2007 and trainings abroad, replacement and upgrading of equipment.

There are more service delivery expectations from a numerically growing population, EAC and African Union joint economic projects, for shared economic and political destiny of the African people.

Uganda’s national budget is constrained with a catalogue of demands, that BOU may not sustain the 8 branches for a Ugandan economy with a GDP $26 billion in 2017. This is against a sample of Kenya's $72 billion (with 6 central bank branches) and Tanzania $50 billion (with 7 central bank branches) in the same period.

Its Ugandan tax payers who shoulder all this laden, it is our duty to demand a scale-down of BOU branches with commensurate reduction in operational costs.

This can be achieved through tapping into technological opportunities and platforms like agency banking, mobile money and others.

This scale-down can then cascade across other government MDALGs. Otherwise, the taxation trajectory in Uganda will actually undermine its very tenets, private sector growth, risk perpetuation of income inequality, against desired economic development and well-being of Africans.

As Ugandan tax payers we can only stand with Parliament, Inspectorate of Government, BOU management and other institutions to expeditiously redeem the capital base, image and credibility of the bank.

This will, albeit, require establishing the state of affairs and financial accountability at the bank, through an independent audit and/ or investigations.

BOU will emerge as a reputable institution to invigorate her autonomous existence and functions as envisaged under the Bank of Uganda Act, Public Finance Management Act (2015) and the 1995 Constitution of Uganda (as emended), EAMI and EAMU.

The author is the Director of Programmes at Uganda Debt Network

jkapwepwe@udn.or.ug