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Uganda maintains 10th spot in ABSA’s Africa Financial Markets Index

Mumba Kalifungwa,MD of Absa Bank Uganda and BoU Deputy Governor, Michael Atingi-Ego

In relation to improvement in promoting investment in government securities to the public, both locally and in the diaspora, Atingi said they have a lot to learn from the majority of Uganda’s peer countries, especially Namibia and Botswana given their high concentration of domestic assets from pension funds.

“I must stress that the liberalisation of the pension sector in Uganda while preserving national interests and securing public confidence in the private institutional players, would significantly expand and deepen the non-bank financial sector,” he said.

But he said, the country needs a richer debate and a coming together of minds to harvest the potential of a liberalised pension sector.

Regarding the improvement of national performance on the pillar of enhancing legality and enforceability of standard financial market master agreements, the central bank together with partners has undertaken several measures including promotion of the adoption of the Global Master Repurchase Agreement and promotion of the Financial Markets Association (ACI) dealing in certification to ensure conformity with a market code of conduct by dealers in the money, forex and debt markets.

The others are; enhancing efficiency and boost policy transmission and development of the implementing regulations for the National Payments Systems Act, 2020.

“We are optimistic that the successful implementation of the reforms that are underway will elevate Uganda’s performance in the AFMI going forward,” Atingi said.

Central Bank warns

However, Atingi said much as Uganda’s financial sector has been resilient through the pandemic partly through accelerated digitalisation and the containment of near term risks to financial stability aided by decisive policy measures by the BoU, the financial sector is ‘not out of the woods yet.’

He said the slow economic recovery poses vulnerabilities to financial stability, including through the impact on earnings of households and businesses as well as the banking sector asset quality.

The good news, however, is that whereas credit extension remains subdued, on aggregate, banking institutions have strong liquidity and capital buffers to absorb emerging shocks.

He said the BoU’s Monetary Policy Statement of December 2020, showed that recovery was gradually gaining traction towards the projection of economic growth above 3% in 2020/21.

This was contrary to earlier projections that had showed that the economy would grow at 6.2% in FY2020/2021 and 6.4% in the medium term (3-5 years’ time), according to the Ministry of Finance national budget documents.

The discovery and global distribution of multiple vaccines together with better treatments of COVID-19, will help to contain the negative impact of social distancing on economic activity and so is performance of financial markets, Atingi added.


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