Bank of Uganda Governor, Michael Atingi-Ego during a high level economic growth forum at Kampala Serena hotel last year. PHOTO/MICHAEL KAKUMIRIZI
A robust financial market requires state-of-the-art infrastructure. The Bank of Uganda (BoU) has undertaken several initiatives to modernize and integrate Uganda’s financial systems to become a financial hub in the region.
Governor Bank of Uganda, Dr Michael Atingi-Ego says they are in the final stages of enhancing the Central Securities Depository (CSD), which holds $11.5 billion (Shs45 trillion) in government securities.
“The integration of the Uganda Securities Exchange with the CSD will enable retail investors to trade government securities, expanding market participation,” he says.
Mobile money for government securities
In collaboration with the Finance Ministry, BoU is developing the Okusevinga project, which will allow retail investors to purchase government securities through mobile money. This initiative will reduce the minimum investment threshold from $30 to $3, making government securities accessible to the bottom of the pyramid.
The RTGS system upgrade
Dr Atingi-Ego says they are replacing the current Real-Time Gross Settlement (RTGS) system to align with ISO27000 standards, enhancing performance, security, and financial stability. The new system is expected to go live in June 2025.
Regarding the trading platforms, Dr Aingi-Ego says BoU officials have adopted Refinitiv (formerly Reuters) and ICAP as additional trading platforms for fixed income, complementing Bloomberg E-bond.
Regulatory sandboxes
Dr Atingi-Ego says under the National Payment Systems (NPS) Act 2020, they oversee regulatory sandboxes to evaluate fintech innovations before they are introduced to the market, ensuring operational efficiency and validity.
“Incorporating ESG Principles: A Commitment to Sustainability is no longer optional; it is a necessity. At the BoU, we are embedding ESG principles into the heart of our policies, operations and across the supervised financial institutions.
Strategic plan 2022-2027
BoU’s five-year strategic plan prioritises sustainability, climate change risk management, and cybersecurity.
“We have established a climate change risk management taskforce to address emerging risks,” he says.
In terms of sustainability integration, he said ESG principles will be embedded in the financial system with robust ESG governance, sustainable finance, and reporting frameworks in place.
The BoU is currently working to diversify the financial products in the country, including green bonds, Sukuk bonds, and infrastructure bonds, to appeal to a broader investor base.
Uganda is considered to have the highest tax rate in the region for some financial products. High tax rates, such as the 15 percent dividend tax and withholding tax on government securities, remain a disincentive.
“We trust that the Finance Ministry will address this issue thoughtfully, balancing the costs against the potential benefits,” Dr Atingi-Ego says.
In relation to risk management tools: the BoU have introduced foreign exchange swaps and Tradeclear, an umbrella guarantee facility, to enhance risk management in the interbank market.
Mortgage Refinance Bill
Dr Atingi-Ego said the Draft Mortgage Institutions Refinance (MRI) Bill was approved by Cabinet in November 2024 and is
undergoing final review by the Bank of Uganda in collaboration with the Ministry of Justice and Constitutional Affairs.
He says once published in the Gazette and tabled before Parliament through the Finance Ministry, this Bill will unlock long-term capital and liquidity by enabling the issuance and trading of mortgage-backed securities.
It will also establish a Mortgage Refinance Company, enhancing access to affordable housing finance and deepening the capital markets.
Dr Atingi-Ego says in the next 5-10 years, they envision Uganda as a regional and international financial hub, characterised by: a unified East African financial market.
“We are working with regional Central Banks to fast-track the East African Monetary Union, harmonising financial markets across the region,” Dr Atingi-Ego says.
Concerning a deep and liquid bond market, Dr Atingi-Ego spells out that they aim to develop a diverse range of fixed-income products, including green bonds, Sukuk, and infrastructure bonds, through the Uganda Fixed Income Market Committee.
Having a broadened investor base in place; Dr Ating-Ego says initiatives like Okusevinga will increase retail investor participation, which currently stands at 5.3 percent of outstanding stock, up from 4.4 percent in 2023.
Clean netting jurisdiction
“The Uganda Netting Bill, currently in development, will affirm Uganda as a clean netting jurisdiction, enhancing investor confidence,” Dr Atingi-Ego says.
Pension reforms
BoU is engaging with the Uganda Retirement Benefits Regulatory Authority (URBRA) and the Finance Ministry to unlock the pension sector’s potential, securing the future of our citizens,” he says.
Dr Atingi-Ego points out that while the regulators have made significant strides, challenges remain in attracting international investors.
Diversify financial products
The Bank of Uganda is currently working to diversify the country's financial products, including green bonds, Sukuk bonds, and infrastructure bonds, to appeal to a broader investor base.
Uganda will soon issue Sukuk bonds, alongside the country's launch of green and infrastructure bonds.
