Leadership in chaos: Inside Leo Kibirango’s tenure as Uganda’s central bank governor

The book Challenges of a Central Bank Governor” by Leo Kibirango offers an insightful and personal account of the author’s tenure as the governor of the Bank of Uganda from 1981 to 1986, under three different regimes.

This compelling memoir, which could aptly be titled The Trials and Tribulations of Leo Kibirango, captures the essence of his experiences during some of the most tumultuous periods in Uganda’s economic history. Kibirango’s journey begins with his early life in Nkokonjeru, Kyaggwe, where he was raised in a strict Catholic environment.

His upbringing instilled in him a deep love for religion, tradition and family. He narrates his formative years with vivid detail, taking readers from his village schools to Jinja College, and eventually to Namilyango College for his O and A-levels. Despite Namilyango’s tough environment, known for producing leading Ugandan boxers, Kibirango found solace in cricket and church work.

His university years at Makerere University flew by, marked by his effortless grasp of Mathematics and Economics. Kibirango’s leadership qualities were evident early on; he served as the head prefect at Namilyango and later as the minister of Finance for University Hall at Makerere.

In July 1967, just three months after graduation, Kibirango embarked on his career at the Bank of Uganda, starting as a banking officer. Over the next 19 years, he ascended through the ranks, learning the intricacies of banking, from reconciliation and clearance to balancing the day’s work.

By 1973, he was a principal officer and head of the Clearing House section, where he wrote the first Clearing House Operating Manual for the bank.

SUPERVISOR OF BANKS

Kibirango’s dedication to professional development saw him undertake extensive training, including accreditation to the IMF, the Reserve Bank of India and the London Institute of Bankers, where he became a fellow after a rigorous certification process. His promotion to supervisor of banks marked a significant milestone, entrusting him with ensuring financial stability in the banking sector.

The 1970s were a challenging decade, characterized by President Amin’s expulsion of 80,000 Ugandan Asians, which crippled the economy. Kibirango recalls the scarcity of basic necessities like salt, soap and medicine, and the lawlessness that ensued. The demand for foreign exchange soared, leading to intense and often dangerous confrontations with soldiers and other regime elements.

By 1979, Kibirango had become a general manager, and in 1980, he was appointed acting deputy governor. His appointment as governor in 1981 was met with mixed feelings, given the fate of his predecessors. The early 1980s were particularly harrowing, as the country grappled with a decade-long rust in its economy and a severe shortage of professionals.

“On 29th October 1981, I was handed a letter from the new President, Milton Obote, appointing me, Governor. You need to understand my mixed feelings at this appointment. Three out of my five predecessors had left the position in strange circumstances. Governor Joseph Mubiru had lost his life. Another Governor had been imprisoned in 1978, possibly for refusing to give in to demands for foreign currency by regime cronies. Governor Charles Kikonyogo, quite likely due to threats, had hurriedly fled the country. Governor Gideon Nkojo, my immediate predecessor, had departed abruptly in the aftermath of the 1980 disputed General Election!” he writes.

One of Kibirango’s notable achievements was securing debt relief from the Paris Club, which helped increase Uganda’s foreign exchange reserves from a mere $3 million in 1980 to $106 million in 1983. This paved the way for economic growth until the insurgency intensified, forcing the government to prioritize war expenditure over economic stability.

“Almost immediately after the 1980 elections bringing Obote back to power, the International Monetary Fund (IMF) flew in a team to help resuscitate the economy. Once Uganda agreed to manage its finances according to IMF guidelines, it became possible to begin negotiations over Uganda’s debt relief. The Paris Club agreed to write off Uganda’s debt. This gave us great relief. Our foreign exchange reserves rose from a paltry USD3 million in 1980 to USD106 million in 1983. This sparked off the growth seen from 1983 to 1985,” Kibirango writes.

To address the rampant foreign exchange shortages, Kibirango introduced a dual exchange rate system. This innovative approach aimed to curb the black market by creating two separate windows for forex allocation: one for essential goods at a lower rate and another for non-essential goods at a higher, market-equivalent rate.

“Uganda had seen years of infrastructure breakdown and moral degeneration. It refused to respond to the usual theories governing ‘demand and supply.’ Allocating foreign currency at controlled rates was fast draining the country’s reserves. On the streets, a parallel forex- market was selling the dollar at 30 times the official rate of UGX8.1453. The BOU needed to think outside the box; like the Kibanda or black-market dealers down town,” he writes, adding, “senior government and military officers as well as other leaders demanded foreign currency from BOU — which, sadly, was resold immediately, downtown! The returnees from years of exile also expected to be treated like heroes and facilitated with foreign currency. They, too, would resell it immediately!”

“Under the law, all forex had to be declared and handed over to the bank. However, not many respected this! To curb smuggling at border crossings, body searches were made, and undeclared currency was confiscated. People hid the currency in men’s socks; women’s underwear, and even in soiled baby nappies,” he writes.

Kibirango’s tenure was further complicated by infrastructural deficits, with top hotels and other facilities in dire need of repair. He played a pivotal role in rehabilitating these facilities, often overseeing the repairs himself. The challenges of regime changes also tested his resilience, as he navigated demands from outgoing regimes while trying to appease new ones.

Kibirango also talks about his dramatic ouster from the bank and the difficulty of handling regime change. The Okello generals ousted Obote’s government on July 27, 1985. Six months later, NRM/A guerrillas under Yoweri Museveni out-gunned the Okellos and took power.

Regime changes placed the bank governor in tight situations, he says. The outgoing regime would make demands which, afterwards, the new regime to- tally refused to understand; why he had to bow.

“After a year’s loyal service with the new regime, I entered my office one morning, only to find the Vice President, Dr Samson Kisekka, seated in my chair, showing staff a new Bank Governor replacing me! I stayed calm and took my replacement through the job,” he says.

After his tenure at the Bank of Uganda, Kibirango’s financial assets were severely affected by new currency reforms, forcing him to start afresh. He joined forces with Christopher Columbus Sembuya, channeling his experience into building the Sembule Group’s financial services.

“As I prepared to leave the bank, my savings were depleted by the new currency reforms, which reduced all monetary assets by two zeroes and taxed the balance by 30 per cent! Out of 1,000 shillings one remained with sh 7! I had to start all over again!”

“I joined the magnanimous Christopher Columbus Sembuya. My experience now went into building the Sembule Group’s financial services; the Sembule Investment Bank and the Pan World Insurance Company. Impatient at the snail’s pace of Uganda’s development, Sembule Group stretched into agricultural exports and industrial expansion, running steel rolling, television and bulbs industries, and giving credit lines to local artisans. However, the nation’s systems couldn’t support the pace, and Sembule paid the price. We had to organize the sale off of the undercapitalized Sembule Investment Bank and Pan World Insurance to stronger players. Thank God, these are still active today,” he says.

Kibirango was instrumental in founding several key financial structures in Uganda, including the Kampala Stock Exchange, the Capital Markets Authority, the Institute of Bankers, and the Institute of Corporate Governance. His expertise also contributed to the establishment of the Financial Intelligence Authority, a critical body for financial oversight.

His later years saw him engaging in public and private consultancy work, training in banking supervision and currency management, and participating in regional economic initiatives. Kibirango’s commitment to charity work is evident in his involvement with organisations such as the Daughters of Charity and Radio Maria Uganda, as well as his service as the pioneer minister of Economic Planning and Development in the Buganda government.

RADICAL RETHINK

In the concluding chapters, Kibirango addresses the economic challenges ahead, emphasizing the need for a radical rethink to manage growing consumerism and national debt. He highlights the impact of mobile money on financial inclusion, noting its success in reaching 70% of the informal sector.

Kibirango also stresses the importance of reopening the Cooperative Bank and establishing an Agricultural Development Bank to support specialized funding needs. Kibirango’s reflections underscore the importance of maintaining a balance between technological advancements and human interaction in banking. He predicts that physical banking halls will continue to play a central role in customer service, complemented by digital innovations.

In expressing his gratitude, Kibirango acknowledges his editorial team, including Court of Appeal judge Geoffrey Kiryabwire, the Bank of Uganda, and the Madhvani Group, for their support in publishing the book. He pays special tribute to his book editor, Sam Obbo, whose professional touch greatly enhanced this historic work.

Challenges of a Central Bank Governor by Leo Kibirango is not just a memoir; it is a testament to the resilience, innovation, and dedication required to navigate the complexities of Uganda’s economic landscape. Kibirango’s story is one of perseverance and ingenuity, offering valuable lessons for future generations of economic leaders.