Banks
There are 23 licensed banks operating in Uganda, holding assets of around US$3.5 billion, of which four are investment banks (2009). Stanbic is the largest, with around 30% of both the total banking sector assets and market share. Many of the country’s banks are foreign-owned, including well-known global names such as Citibank (USA), Barclays (UK) and Standard Chartered (UK). The Association of Microfinance Institutions of Uganda (AMFIU) had a membership of 120 registered institutions in 2012.
Regulation of Financial Services
The Bank of Uganda is responsible for regulating commercial banks, microfinance credit and deposit-taking institutions, foreign exchange bureaus and money remitters operating in the country. The bank regulates in line with the Supervision Acts and Regulations and the Intervention Policy by Government of Uganda 1997. It is not however responsible for regulating other non-bank financial institutions such as insurance companies and brokers, leasing companies or development banks. To guard against instability in the sector, the Financial Institutions Act 2004 outlines mandatory Prompt Corrective Actions which must be taken to strengthen weaknesses in financial institutions before the situation deteriorates. Effective from 2011, Uganda’s Monetary Policy Framework replaced the Reserve Money Programme which had been in place since 1993. This is designed to keep up with new demands in macroeconomic policy brought about by the changes in the economy over the last ten years. The Ugandan banking system is sound, scoring 5.2 out of 7 in relation to the soundness of its banks; the country ranks equally with Italy and comes above the world mean of 5.1 according to the World Economic Forum’s Global Competitiveness Report (2012-2012).
Development of Financial Services
The 2012 Ease of Doing Business Index issued by the World Bank ranks Uganda in a strong 12th position out of 46 sub-Saharan African countries in overall ease of doing business. Uganda is also top-ranking regionally when it comes to getting credit, holding 6th place along with Ghana and Botswana. Its position in the group for protecting investors is also strong; it comes 23rd out of 46. The World Economic Forum’s Global Competitiveness report (2012-2013) shows that Uganda achieves 4.5 out of a possible 7 in availability of financial services, equivalent to the world mean score. The IMF showed that the number of commercial bank branches per 100,000 adults had more than doubled in the time between 2007 and 2010. The number of depositors with local banks has also risen in this period with 20% of adults over the age of 15 holding an account at a formal financial institution in 2011. The WEF’s report shows affordability of financial services in Uganda to be 4.0, scoring the same as neighbor Rwanda and only slightly below the world mean of 4.2. In terms of ease of access to loans, the WEF gives the country a score which is nearly in line with the world mean. In 2012, 9% of adults over the age of 15 had taken out a loan from a financial institution in the past year. Financing through local equity market is strong, equaling the world mean.
