Restructuring at the Bank of Uganda: Only 40% of the employees are productive

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By: Moses Kaketo

In summary
• Is the Deputy Governor fighting alone?
• BoU to request for a supplementary budget
• Critics prepare a dossier, want an NSSF like audit of BoU.

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Prof. Emmanuel Tumusiime Mutebile had laid out a grand plan before his death to transform the Bank of Uganda to reflect current global trends. This is according to one of late’s very close friends at the Uganda shilling headquarters. The Bank of Uganda is responsible for controlling inflation, ensuring the country’s financial sector is sound, and assisting in closing the output gap by pursuing policies that promote economic growth.
At the height of the COVID-19 lockdown, Bank of Uganda (BoU) management discovered, among other things, that some of her employees were no longer required. The late acknowledged that the bank needed to be restructured. Before embarking on the exercise, the Bank of All Banks in Uganda required hard facts.

According to the survey, only 40% of the 979 BOU employees, or 392 people, were productive.
“The rest of the staff, 60% or over 587 people, were, for lack of a better word, idle,” a source at BoU said.
“They come to the office every day to read newspapers, do private work, and eat free lunch,” he adds.
Part of the problem is that the bank employs more people than it requires. More importantly, events have taken over some of the jobs.
While central banks around the world have embraced new trends, the Bank of Uganda remains structured around the traditional group of paper money, clearing houses for cheques, printing and sorting money. However, new trends have rendered these once-valuable jobs obsolete.
The lowest-paid employee earns UGX 5 million, plus a slew of other perks.

According to available information, the lowest-paid staff at BoU earns UGX 5 million, while executive directors and directors earn UGX 20 million and UGX 30 million, respectively.

The fat pay cheque comes with a host of other benefits: free education for children under 18 and free medical care for all family members. Senior managers are entitled to free medical care for the rest of their lives [even if they have left BoU]. Other advantages include loans with the lowest interest rates in town.

The restructuring process
The UGX. 1.2 billion organizational structure review exercise, led by audit firm KPMG, lasted from June 2022 to February 2023, and included, among other things, creating an organogram aligned with the bank’s strategy (2027), rationalizing staffing and costs to increase productivity, and improving operational efficiency. This was a welcome gesture for many, but how it was done was the issue.
The trouble began when the bank’s top management, including the executive directors who make up the executive committee, were barred from participating in the restructuring.
Critics also questioned why the former board approved the process so quickly.
“The new changes were approved by the former board on their last day at work [February 10, 2023],” critics questioned. Couldn’t they wait for the new board?
Furthermore, “even after new changes were approved, the Deputy Governor kept the changes hidden.”
There is a secondary issue of power concentration. In the deputy governor’s hands, which his internal critics accuse him of misusing to purge late Mutebile’s loyalists and build his own power base, according to sources within the bank quoted in the Daily Monitor.

The Deputy Governor is given more supervisory responsibilities in the new structure [the changes take effect on July 1, 2023, at the start of the fiscal year]. Several responsibilities were also transferred from the executive directors to the deputy governor’s office as part of the restructuring. According to critics, the Deputy Governor oversaw the approval of structural and management changes on one side and oversaw their approval by the board, which he chaired.

also read: Is MTN Uganda on the verge of becoming a bank? Are Ugandan banks ready for this monster?

While the intention of restructuring was to consolidate, or reduce staff, they ended up increasing staff and creating more functions; staff increased from 973 to around 1061.
What came up was the issue of BoU being a national institution and that they can’t just fire people like that—this is a national institution, and we have to hire from across all regions.
However, analysts argue that this argument is invalid when the government is losing money.
According to sources, BOU is already in the process of submitting a request for a supplementary budget due to losses. The government revealed in February 2020 that the Bank of Uganda had been losing up to UGX 2 trillion since 2008/2009. Over the years, BoU has suffered losses and has sought recapitalization from Parliament.

Deputy Governor, fighting alone?
While many [outside the BoU] have praised him for his efforts, he is still fighting a solitary battle.
Without a governor, a board [the term of the board expired on February 10, 2023], and some staff against him, it is difficult for him to do his mandated job while also addressing internal critics.

read: Is the Bank of Uganda in a leadership crisis? No: Governor, quorum for the board

The situation appears to be worsening by the day, as evidenced by media leaks of events inside the BOU, which were unheard of at the time. According to sources, there is already a dossier with various accusations. Critics want an NSSF like audit of BoU.

A meeting was called to calm things down. The deputy governor assured staff during a staff meeting late last month [that ended in a shouting match] that everyone would be absorbed into the new structure.

The new structure
The board is the supreme organ in the new approved structure, but the offices of Governor and Deputy Governor are placed on a similar scale. Each person is given a personal assistant.
Along with the Bank Secretary, the director of communications and public relations, the deputy director of board affairs, and the deputy director of corporate affairs and public relations, a new office of executive director for legal services has been established.
Except for the Chief Internal Auditor, there are 15 units in the new structure that report directly to the Deputy Governor (10 directorates and 5 departments).

Directorates and departments affected

The strategy and risk management directorate, led by Ms Joyce Okello, a former personal assistant to the late Mutebile, has been disbanded. Instead, two constituent departments were established: strategy and innovation and risk management and compliance.
The Department of Financial Stability was carved out of the Directorate of Banking Supervision to report directly to the Deputy Governor.

A new department of Legal Affairs has also been created out of the Bank Secretariat. Legal Affairs has been elevated to a directorate with no departments, but with divisions headed by deputy directors.

A Communications Department has been carved to report to the Deputy Governor or Governor, leaving the Bank Secretariat with one Department of Board Affairs, which was downgraded to a division.

The two offices of personal assistants to the Governor and Deputy Governor were reduced to the level of deputy directors.

The Operations Directorate was sub-divided into three directorates. The Currency Department headed by Ms Christine Alupo was elevated to a directorate, Financial Markets department was elevated to a Directorate, and Banking Department was merged with the Payments Systems Department to form the Banking and Payments Systems directorate.

About the author: The writer is a marketing and distribution expert. He sees business in everything. He loves writing business news, reviews, and analyses. Reach him Twitter: @mkaketo LinkedIn: Moses Kaketo

read: Fraud, insider dealing at Uganda Development Bank: 900m disappears just like that; could this be a tip of the iceberg?

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