Uganda Avoided Financial Crisis, Bank Of Uganda To Reform- Mutebile

COSASE MEETING ON CLOSED BANKS

The Governor Bank of Uganda has appealed to the public to trust in them as they saved Uganda from financial Crisis which would have been bad.

“I would like to thank you for the opportunity  to present our responses   to  the  Auditor   General’s   report  and  for  the cordial interaction  between  the  Bank and  the Committee. On behalf of the Bank, allow me to thank you for your time and your effort”.

I  would  like  to  thank  you  in  particular,  for  your  candid approach  to  tackling  issues  that  you  believe  needed  to have been addressed,  or at least taken into consideration by the staff of the Bank  of Uganda.   I also  would  like to express  my  appreciation  to  the  Auditor  General  for  his report which raised issues that will culminate in an improvement in the operations of Bank of Uganda.

The Bank of Uganda acknowledges  the relevance of this exercise  and we are confident  that  it will  enhance transparency  and accountability,  which are key values that the  Bank  upholds.  This  interaction   has  highlighted  the shortfalls  within  our  processes,   policies  and  practices.  It has been a learning  process  not only for the Management but also for the staff who followed the proceedings  closely, and I am confident that resulting from this process,  we will review  ourselves,  the  Banks  processes   and  policies  in order to strengthen  our capacity to perform the functions of the Central Bank better.

It will be incumbent  upon us to put in place measures  that translate into a stronger institution and visibly boost the confidence  of the public in the central  Bank.   We want to see a stronger financial sector and economy built on the confidence that the public has in us.

Honorable Chair,  allow me mention that the staff  changes, which  were  made   in  February,  2018  were  intended  to address  some  of the  challenges  that  we knew  but which have  now  become  all too  evident  in  the last  few  weeks. The interaction process with COSASE so far, has helped to expose some of the challenges  to the natural medicine  of air and light so that we can address them better.   For that, Mr  Chairman,   we  are  grateful.     Further   changes   and remedial  action  will  be  done  in  due  course  in  order  to restore the Bank’s image.

Honorable  Chair  let  it  also  be  clear,  that  the  Bank  of Uganda   in  every   case   was   right  to   intervene   in  the Financial Institutions.   Delay to act, failure to act, lack of decisiveness in the actions taken could very easily have led to contagion, financial crisis and a real danger to savers, borrowers,  businesses  and  the  economy  at large.    If we had not intervened, this committee  would be carrying out a different kind of probe.

Mr Chairman, in 2008, the lack of decisiveness from the Regulators led to a global financial crisis.   The House of Commons  in the UK and The House of Representatives  in the  US conducted  a  different  kind  of inquiry;  they  asked “What happened  to our economy?”   We take some solace from the fact that we have not had to answer that question. The challenges we have seen relate to post intervention processes.     The   Bank  will  review   these  processes   to ensure  that  future  processes   are  well  documented  and follow the law to the letter.

We  take  note  of  the  committee’s   concern  of  conflict  of interest with respect to service providers and Directors of supervised financial institutions.  As previously mentioned, Bank of Uganda will review its policy on conflict of interest and its implementation.

Honorable  members,  I would  like to reiterate that Bank of Uganda’s interventions in the financial sector are well­ intentioned with a focus on protecting the depositors, increasing confidence in the banking system and fostering financial sector stability.   This has been achieved, by large, in each of the cases we have intervened which is a key milestone on our part.  Overall, the Bank of Uganda has performed  well  towards  achieving  its mission  of fostering price stability and a sound financial system.

As  I  conclude,  it  is  my  appeal  that  the  committee  shall handle  the information  submitted  to you  in the  course  of this interaction within the context of the complexity  in bank resolution.

Hon Chairman, as we conclude and look forward to your Report, our work is clearly cut out for us and is already in progress.

I thank you for listening to me.

E Tumusiime Mutebile (Prof) GOVERNOR
Governor, Bank of Uganda

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