Bank of Uganda (BoU) building in Kampala.
Dr Louis Kasekende
Many of you
are asking why the Bank of Uganda is seeking to engage the public more.
Our agenda is three-fold. First is to establish and strengthen
communication channels to enable fast resolution of any challenges that
each of us may be having in executing our respective mandates.
Second
and related to the first, is that those communication avenues should
also enable quick feedback from the population and area leadership. The
third objective is to allow BoU to directly explain its mandate and
account to the public for its policies. We believe this should help
moderate the misrepresentation of BoU, which often may be a result of
lack of information. Therefore, I will respond to some of the most
frequent issues or questions that the population and area leadership
have raised.
First, I wish to update you on the
operationalisation of the Islamic banking model that was permitted by
the enactment of the Financial Institutions (Amendment) Act, 2016. BoU
is currently processing three applications that it has so far received
from entities seeking to offer Islamic banking services. One of these
applicants that currently offers traditional banking services in Uganda,
seeks to open up an Islamic finance window; while the other two
applicants that are entities outside Uganda, are interested in acquiring
Islamic banking licenses.
BoU is also finalising
consultations with the various stakeholders to establish the necessary
Shariáh Advisory Council that shall oversee regulation and supervision
of the Islamic takeholdersbanking segment of our financial sector. As
part of BoU’s effort to increase public awareness of the Islamic banking
model, I have asked one of my staff to prepare a presentation for you
that details the key features of the Islamic banking model, which
business activities are permissible or not under Islamic banking, and
what will be required of you as customers, the financial institutions
that seek to offer this service, and the BoU as a regulator.
The
second inquiry relates to the Gross Domestic Product (GDP) growth
figures and what some of you have called “the disconnect of the rosy
picture painted by these figures from the common man’s reality”. Let me
state from the onset that the compilation and publication of official
national statistics like GDP is the core responsibility of Uganda Bureau
of Statistics (Ubos). Therefore, the figures often cited by the BoU in
its reports or press statements are sourced or based on statistics from
Ubos. Why should you care about the GDP figures?
These
GDP figures to an extent reveal the economic activities that are
fastest growing or generating income and where you should look to
participate and take advantage of the opportunities therein to earn a
decent living. GDP information also reveals why some sections of the
population might not be experiencing higher incomes relative to others.
Such information can be deduced from sectoral breakdown of the GDP and
other critical statistics like population growth rates and the
employment patterns.
For instance, while the economy as a whole has registered an
average of 5.2 per cent growth per annum over the last five financial
years (FY 2014/15 to FY 2018/19), this growth has not been uniform
across sectors. Services sector that includes trade, education,
recreation, banking and telecommunications, and accounts for about half
of our country’s GDP, is growing at an annual average of 6.3 per cent
over the past five financial years. Industry is a close second with an
average growth rate of 5.5 per cent while agriculture that employs the
vast majority of Ugandans, is only growing at an average of about 2.9
per cent per annum over the same period. It means that the people
working in the services sector shall take most of the increase in the
country’s income and those in subsistence agriculture shall lag behind.
This
is why we must all heed the President’s call to support all our
countrymen and women to transit to commercial agriculture and also
industrialise. As BoU, we remain steadfast in ensuring an enabling
environment for you to plan, save and invest in commercial enterprises.
This is through preserving the purchasing power of the Uganda Shilling
by controlling inflation and ensuring gradual moderate changes in the
exchange rate. In addition, we are undertaking financial literacy and
also administering the Agricultural Credit Facility (ACF), a government
facility that you can utilise to commercialise agriculture and engage in
value addition processes that yield higher incomes.
Third,
is the issue of supervision of financial institutions and the
management of complaints by the customers of these supervised
institutions. Let me clarify that BoU does not regulate or supervise all
financial institutions. At the moment, BoU supervises commercial banks,
credit institutions and the micro-deposit taking institutions. In
addition, we regulate the foreign exchange bureaus, money remittance
services and consider an application by a commercial bank that seeks to
partner with a telecommunications entity to provide mobile money
services.
Let me also state clearly that the online
cryptocurrency businesses are not regulated at the moment and,
therefore, carry significant risk of loss of savings, with no recourse
to protection or insurance by government, like is the case with
regulated financial institutions such as commercial banks. With respect
to where and how you may have your complaint regarding your dealings
with supervised financial institutions handled, we have set up a
dedicated office within BoU to receive, follow up with respective
offices within and outside of BoU, and coordinate the resolution of
these complaints within set timelines.
Finally, many
of you have asked for clarification from the BoU on the ongoing
investigations by the police and sister investigative agencies regarding
the recent shipment of Uganda currency consignment. Unfortunately, the
matter has progressed to court and any detailed discussion on the
specific merits of the issue might be construed to be contempt of court
processes.
However, currency printing like many of the
work processes in BoU, is subject to very rigorous processes with
inbuilt controls for checks and balances. Those deliberate checks at
various levels, including the Currency Policy Committee headed by the
Governor himself, coupled with a strong and independent audit function,
have overtime been robust enough to maintain the integrity of our
currency operations.
This is an abridged version of remarks made by
Dr Kasekende, Deputy Governor, Bank of Uganda, at the Bank of Uganda Townhall Meeting in Masaka, yesterday.
Dr Kasekende, Deputy Governor, Bank of Uganda, at the Bank of Uganda Townhall Meeting in Masaka, yesterday.
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