I have very fond memories of Jehoash Mayanja Nkangi, who was one of the finest public servants this country has ever had; a man of wisdom, courage, self-sacrifice and humility.
I had the privilege of serving under him when he was, first, the minister of Planning and Economic Development from 1989 to 1992, and then minister of Finance, Planning and Economic Development from 1992 to 1998, and I was the permanent secretary in those ministries.
It was in that period that Uganda’s economic fortunes were turned around. When Nkangi became minister of Planning and Economic Development in 1989, our economy was suffering from triple-digit inflation, acute shortages of foreign exchange and the collapse of production in key sectors of the economy such as the coffee industry and other export industries which had been rendered uncompetitive by a grossly overvalued real exchange rate.
Under his leadership, the ministry spearheaded exchange rate reform, which was, at that time, the single most important reform needed for economic recovery. In 1990, the parallel market for foreign exchange was legalised and the official exchange rate was devalued.
This allowed for the subsequent unification of official and parallel exchange rates at rates which were determined in the market and which, in turn, helped to restore competitiveness to the export sectors.
Alongside the liberalisation of coffee marketing, exchange rate reform led to a strong recovery of exports which boosted the supply of foreign exchange to the economy.
As a result, as foreign exchange became more accessible to those sectors of the economy which needed it most, economic output began to recover; sustainable real growth was restored to the economy.
While Nkangi was minister of Economic Planning and Development, inflation was still rampant. This was mainly because the central bank had to print money to finance large fiscal deficits. The next critical reform now required was to bring inflation under control.
In March 1992, the ministry of Economic Planning and Development and the ministry of Finance were merged, under the political leadership of Nkangi. He understood that however painful and difficult this was, inflation could only be brought under control through fiscal discipline; so that money no longer had to be printed to finance budget deficits.
Nkangi realized that strict control of public expenditure was unavoidable if Uganda was to escape from chronic high inflation. Not surprisingly, control of public expenditure does not endear a finance minister to his colleagues in government, but Nkangi was determined to restore discipline to public finances.
With the support of the president, he led the implementation by the newly-created ministry of Finance, Planning and Economic Development, of cash flow management budgeting, which involved restricting releases of money for spending by ministries and other government agencies to the budgetary resources which could be mobilised from tax revenues and donor aid.
The printing of money to finance budget deficits ceased and, as a consequence, inflation was quickly brought under control and restored to single digits, where it remained throughout the rest of Nkangi’s six-year tenure as minister of finance.
Nkangi was thus instrumental in providing the political leadership for the two most important economic reforms in the history of our country. He restored the economy’s external balance through exchange rate reform and the economy’s internal balance through fiscal reform.
Besides these two critical reforms, several other important ones were implemented under his political leadership. These reforms included the establishment, in 1991, of Uganda Revenue Authority as an autonomous agency for tax administration and the reform of the tax policy, notably through the enactment of modern tax legislation such as the Income Tax Act.
In 1992, Uganda removed export taxes and rationalised the structure of import tariffs, reducing tariffs on most imports to moderate levels while also removing non-tariff barriers. Trade liberalisation proved crucial in supporting the sustainable real growth of output that the Ugandan economy has achieved in the 25 years since these reforms were implemented.
The ministry of finance reformed the planning of the budget with the adoption of the medium-term expenditure framework in the 1990s, to align the budget with the strategic expenditure priorities of the government.
The ministry also prepared the first Poverty Eradication Action Plan in 1997, which provided strategic direction for expenditure priorities and which was vital in enabling Uganda to access comprehensive external debt relief through the Highly Indebted Poor Countries Initiative in the late 1990s.
It is often asked of public figures how they will be judged by history. Of Mayanja Nkangi, I have no doubt that in many decades to come he will be remembered as one of the most consequential political leaders ever to serve our nation.
May his soul rest in peace!
The author is the governor of Bank of Uganda.