Kampala, Uganda | JULIUS BUSINGE | Commercial banks under their umbrella organization, Uganda Bankers Association (UBA) are demanding reforms from government in key sectors of agriculture, information technology; insurance and debt repayment to enable them thrive in tough economic times.
Patrick Mweheire, the chairperson of UBA and the Chief Executive, Stanbic Bank, said during the 2nd Annual Bankers Conference in Kampala on July 17 that banking sector in Uganda is operating in a challenging environment of high cost to income ratios estimated at 60% as of 2017, low coverage and penetration among the bankable population, increasing regulatory requirements and a population hungry for alternatives.
This situation, he said, has been worsened by several borrowers with significant loan exposure due to delayed or non-payment for their services from government. Currently, NPL stands at 5.8% according to Bank of Uganda.
“NPLs can impact interest rates upwards as pricing for risk,” he said. “This constrains lending appetite and private sector credit which in turn affects trade and economic growth, since government is the largest business driver.”
The other concern is Agricultural Credit Facility (ACF) that banks says are yet to benefit fully from the 50% guarantee to claim recoveries due to new and burdensome approval process for write off claims.
Mweheire said there is need for government to link insurance to agro–finance as well as pass laws related to data privacy and protection to instill customer confidence in the banking industry.
However, the Bank of Uganda Governor, Emmanuel T. Mutebile simply said banks must invest in systems that ensure sound risk management to among other things protect customer deposits.