By Patrick Kagenda
Traders say Finance ministry should not stick to blue skies strategies in the global financial storm
On February 16, the Ministry of Finance had five ministers: top minister Ezra Suruma and his four ministers of state: Salim saleh (micro- finance); Semakula Kiwanuka (Investment); Kagimu Kiwanuka (Economic Monitoring), Fred Omach (General Duties).
Next day, February 17, of the five only Mr Omach still had a job. The rest had either been fired or posted to other portfolios in a cabinet reshuffle by President Yoweri Museveni.
Since then, finance sector watchers have been trying to decipher the message in the massive shake-up. Why was Mr Museveni unhappy with his team at Finance house?
Prof. Waswa Balunywa of the Makerere University Business School, member of the Central Bank and one of the top finance brains in Uganda told The Independent in an interview that the incoming Finance Minister, Ms Syda Bbumba is difficult to pin down. He says Ms Bbumba is a very good business woman but economic issues are run on ideology and the ideology of the appointing authority is capitalist and support for private ownership and Ms Bbumba has to follow that.
The other new appointees in the ministry of Finance; Aston Kajara (Investment), Ruth Nankabirwa (Micro-Finance), Kisira Mbeiza (economic Monitoring) are equally unknown quantities in economic/finance management circles.
Mr Issa Sekitto, chairman of the Kampala City Traders Association (KACITA) says: “Syda BBumba has no history of being critical on financial matters and she is not aggressive even when matters are getting worse therefore she is not the best choice for minister of Finance.”
The day after her appointment, Ms Bbumba told reporters that d the global financial crisis will be her biggest challenge. But despite further prodding, she provided no plan on how to deal with it.
However, Uganda Securities Exchange boss, Simon Rutega remains positive.
“I hope she will deliver because she is practical,” he said.
Other commentators say that Rutega and others pinning their hopes on Bbumba is ignoring her history. They say she made no impact in past portfolios as minister of energy and later gender.
But Prof. Balunywa advises against reading too much in the changes because the institutions at Finance have technocrats that ensure continuity as the political head are shunted aside.
Central Bank Governor Emmanuel Mutebile, Ministry of Finance Permanent Secretary Chris Kassami, and the deputy secretary to the Treasury, Keith Muhakanizi are the real movers at Finance House.
Prof. Balunywa also rejects claims that the shake-up signaled the presidentâ€™s displeasure over the handling of the trickle down effects of the current global financial crisis into Uganda.
“The crisis caught prices and inflation on an upward spiral because of escalating food and oil prices,”he said, ‘Oil prices may have gone down internationally but they need time to adjust locally.’
According to him, the ministry of Finance has reacted to the crisis correctly using political, fiscal, and monetary policy to reign in control of money supply, inflation, and interest rates.
But he warns: ‘The challenge now is to loosen up a little to spur economic activity without allowing inflation to build.’
Just days before he was removed from office, Suruma had expressed a similar comfort.
He said the policies that the ministry of Finance had produced stellar economic growth in the past and there was no point in changing them.
But businessmen and managers of corporations, especially in the private sector, are demanding policy changes.
Governor Mutebile told a just concluded CEO`s summit that the government was responding to the demands of the hard economic times. He said government’s policy on public expenditure, liquidity management and foreign exchange reserves has been revised to take account of the lower capital inflows this year.
‘Bank of Uganda will maintain prudent and sensible macro economic management consistent with economic fundamentals. There will be pro-active management in response to the current economic crisis by addressing the structural constraint to growth in the economy,’ he said.
But, as one of the CEO Summit facilitators Peter Kimbowa of the Institute of financial empowerment (IFE) said, for some people, the new financial challenges present new opportunities.
Hopefully, the new finance ministers know that pursuing opportunities without addressing the real and immediate danger is a recipe for financial disaster.