The Bank of Uganda has assured the banking and financial industry that it will ensure its stability and the sustainability of the microeconomics of the country amidst the withdrawal of the World Bank from new loan deals with the country.
The decision communicated last week has already caused discomfort in government and civil society, with the former saying it would revise the national budget, while the latter advised frugality and transparency as a means to overcome the expected impact.
Financial experts expressed worry that the move would reverse the gains the economy had made especially in taming inflation and stabilizing the foreign exchange. Dr. Michael Atingi-Ego, the Deputy Governor, says the Bank has proved its ability through its measures that have managed to keep inflation rates at manageable levels and to strengthen the Uganda shilling against the US dollar “save for last week’s events”.
Speaking at the sixth Annual Bankers Conference called by the Uganda Bankers Association, UBA, Sarah Arapta, the Association Chairperson urged for more prudential measures by the banking industry and policymakers amidst the persistent challenges.
She noted with concern the likely impact the latest action by the World Bank could have on an economy still struggling to recover from several shocks including Covid-19, the Russian war on Ukraine, and the recent high global inflation rates.
She said that on their part as bankers, they must be more innovative by taking advantage of the digital revolution currently happening so as to protect the industry against such shocks.
The banks are developing a cyber security control framework that all member institutions of UBA will adopt. This, according to Arapta arose from the multi-sector fraud summit that was held earlier this month.
The theme of the conference this year “Trends and innovations in the fintech space, changing the face of banking & financial services” focused on the financial technology and the challenges the revolution is creating for both the industry and the customers. The challenges include cyber-attacks, data privacy violations as well as disruption of traditional systems like the closure of bank branches.
Deputy Governor Atingi-Ego said overcoming the challenges of a digital or online banking industry will require constant training of staff, constant upgrade of security systems, and strict implementation of the code of conduct for the industry staff. This, according to him, will help preserve the public trust in digital and online banking since it cannot be reversed.
On what the Central Bank is doing in addressing the challenges facing electronic operations, Atingi-Ego said they are already implementing training and capacity-building programs that have started with forex bureaus and cash transfer companies, on top of new regulatory measures instituted.
Shehyrar Ali, Mastercard Country Manager in East Africa pleaded for financing for financial technology companies saying the Ugandan industry was “ripe for innovation acceleration”. Revealing plans by Mastercard to open up an office in Uganda in the next year, Ali said they want to tailor strategies that fit the Ugandan market, adding that people want services delivered fast and conveniently.
Digitisation has pushed the financial industry development faster over the last 10 years than ever before, with about 2.5 million bank accounts opened every year since 2016. Arapta said one of the best developments in the Sector has been online credit products that have seen 13 million people benefit.
The Ministry of ICT and National Guidance has developed a digital enhancement roadmap that it says is a comprehensive approach to support the digital economy. Soon to be launched this week, Rebecca Kiconco, the Vice Chairperson Business Process Outsourcing Council at the ministry said the plan involves enhancing digital literacy, source financing, address fraud among others.
