Uganda’s financial sector is facing challenges due to the low capacity of local investors, with pension assets per capita estimated at only about $125 (Shs482,735). In response, the Bank of Uganda has initiated efforts to address these issues through legislative reforms and strategic measures.
At the forefront of these initiatives is the Uganda Financial Agreements Bill, which aims to reduce settlement risk and credit risk in the financial markets. Dr. Michael Atingi-Ego, the Deputy Governor of the Bank of Uganda, highlighted the importance of this bill during his keynote address at the Absa Africa Financial Markets Index event held at the Sheraton Kampala Hotel.
Dr. Atingi-Ego emphasized that adopting clean netting categorization in markets has led to increased investor participation and enhanced access to capital in other countries. He also mentioned Uganda’s efforts to gain global visibility for its government securities by listing them on international indices such as the FTSE Frontier Emerging Market Index.
In addition to seeking international recognition, Uganda is also taking steps to enhance ethical trading practices through the adoption of the FX Global code of conduct. The Bank of Uganda has launched Repo guidelines to facilitate transparent trading, further demonstrating its commitment to ethical standards in the financial markets.
Despite these advancements, Dr. Atingi-Ego acknowledged the persistent challenges faced by Uganda’s financial sector, particularly the low capacity of local investors. He emphasized the need for further pension sector reforms to ensure that pension assets are effectively invested in the real sector to stimulate domestic economic growth.
The Bank of Uganda remains committed to developing the domestic financial markets by creating a conducive environment to attract capital and foster economic growth. Dr. Atingi-Ego highlighted the importance of addressing legal and infrastructure challenges while also promoting innovative products such as ESG products and sukuk bonds.
Moreover, Uganda aspires to establish itself as a leading financial center in the region. The Ministry of Finance, Planning, and Economic Development has appointed the Bank of Uganda to chair the Uganda Fixed Income Market Steering Committee, signaling a concerted effort to strengthen the country’s position in the financial landscape.
