1. THE EFFECTS OF CENTRAL BANK INDEPENDENCE ON THE TREND OF INFLATION AND ITS IMPLICATIONS ON WOMEN IN UGANDA IAFFE 18 th Annual Conference on “Engendering Economic Policy”, June 26-28, 2009,Simmons College, Boston E. K. Bwanga & C. Kabonesa Makerere University.

2. OUTLINE OF THE PAPER Definition of concepts Background to the study Statement of the problem Scope of the study Hypothesis

3. OUTLINE OF THE PAPER… Theoretical perspectives Methodology Results Discussion of results Conclusion Recommendations Thank you.

4. DEFINITION OF CENTRAL BANK INDEPENDENCE Central bank independence is the autonomy given to the central bank through a charter which spells out a strong commitment to price stability and freedom to pursue it. It involves government setting the goals that the central bank is expected to pursue and achieve. The central bank is not expected to set its own goals to pursue, but is given adequate scope to pursue the goals that are set (Fraser, 1994)

5. WHERE CBI EMANATE FROM In Uganda, this autonomy emanated from The Constitution of Uganda, 1995 and the Bank of Uganda Statute, 1993. The Constitution of the Republic of Uganda (1995) Article 162 Section (1) and (2) specifies the role of Bank of Uganda with a focus on ensuring economic stability as the primary goal - promote and maintain the stability of the value of currency and that in performing its functions, the Bank of Uganda shall conform to this constitution but, shall not be subject to the direction or control of any person or authority.

6. ECONOMY IN THE 1960’s Vibrant – Real GDP growth rate = 4.8 percent – GDP per capita growth = 3 percent per annum – National savings rate = 13.4 percent per annum.

7. ECONOMY IN THE 1970’S Economic shocks both internal and external. – DGP declined = 3.8 percent between 1973-1979 – Official prices controls – Inflation sky rocketed to 40 percent per annum compared to 8.2 percent per annum between 1967 and 1970 – Gross domestic investment decline from 12.7 percent per annum of GDP to 8.6 percent between 1963 -70

8. ECONOMY IN THE 1970’S….. Recurrent government expenditure declined from 14.6 percent of GDP in the 1960’s to 9.9 percent in 1978. Total government spending declined marginally 17.5 of GDP to 15.5 (Uganda, 1998)

9. AGRICULTURE IN DEVELOPMENT Dominant sector It contribution to GDP has been declining, 67% in 1990 to 42.4 in 1997 and currently it is about 21 % of GDP. Most women are employed there

10. WOMEN IN DEVELOPMENT 80 percent of women work in agriculture. Form a greater population (sex ratio is currently 94.5 for men. Female enrolment is currently 44.0 percent of population What do these figures indicate?... Justifies the study!

11. POVERTY IN UGANDA It is acute in women specially so for those leaving in rural areas. 41.1 percent of Ugandan’s are relatively poor. 8.3 percent very poor and below poverty line and of these the majority are women. There are a host of other statistics to justify the story of poverty among women esp. in access to water health, markets information, land etc.

12. FINANCIAL SECTOR IN UGANDA It is thin, shallow in depth and breadth. Mostly constituted of formal banking sector and of late the micro finance institutions are coming up. It is quickly picking up and becoming organized. Interest rates are high with minimal lending to the subsistence agriculture.

13. STATEMENT OF THE PROBLEM Economic distortions including high inflation, mass poverty, balance of payment deficit, weak financial sector and deficit budget financing Developed countries’ emphasis on central bank independence as a measure to control inflation 1993 Uganda government granted independence central bank. This study aimed at assessing whether central bank independence curbed inflation during the period 1993 and 20007

14. SCOPE OF THE RESEARCH Examined whether inflation reduced after central bank independence, and The implication of the tend of inflation on the welfare of women The study covered the period from from 1980 to 2007.

15. HYPOTHESES OF THE STUDY Inflation would be low and stable after central bank independence Low and stable inflation would translate into better economic welfare for women.

16. THEORETICAL PERSPECTIVE According to available evidence, a fall in inflation leads to an increase in real incomes Translates into an increase in consumption and improved welfare.

17. METHODOLOGY Review of documents and secondary data from government documents in the Ministry of finance, Planning and Economic Development, Uganda Bureau of Statistics to mention but a few. Annual time series data on consumer price index was used to plot the line graph to compare the trend. Data from 1980 - 2007

18. THE TREND OF INFLATION OVER THE PERIOD 1980 – 2007.

19. INTERPRETATION OF RESULTS Inflation reduced right after CBI There were a host of other programmes that were meant to increase productivity, streamline the functioning of the financial sector, improve infrastructure The programmes could have contributed to the fall in inflation.

20. DISCUSSION OF RESULTS Reduction in inflation could be interpreted as an indictor of improvement of economic welfare according theoretical perspective. However, this did not improve the welfare of Uganda’s women Because it did not take long for inflation to start rising due to the seasonality of agricultural production However, inflation is more predictable now than before

21. FAILURE TO CHANGE WOMEN’S STATUS There are many other constraints women face such as illiteracy, lack of access to market information, lack of storage facilities and poor infrastructure.

22. DISCUSSION ……… The marketing chain structure is dominated by middlemen. Lack of storage facilities by women to take advantage of slack periods when prices are high. The immobile nature of women that restricts them to market access

23. DISCUSSION………. Subsistence nature of output that does not encourage mass marketing. The output is too little to warrant market search and better opportunities. Lack of bargaining power of women in the market due to the low level of education. This causes imbalances that favour men when bargaining for a fair price. Lack of access to market information.

24. CONCLUSION CBI improved the trend of inflation but the welfare of women still remains an outstanding issue.

25. RECOMMENDATIONS Government should lay emphasis on the education of women Increase access to free and reliable market information especially on prices Improve of the marketing strategy by providing access to storage facilities in rural areas. Improve on the rural infrastructure ie roads Support rain fed agriculture by promoting irrigation agriculture.

26. RECOMMENDATIONS On the rising inflation after central bank independence, government should avoid budget deficit financing, and donor support to finance the budget. Implement the debt strategy that has been agreed upon ie limit government borrowing that has been the main cause of inflation.

27. THANK YOU FOR LISTENING