Mr Jachan Omach, the board chairman of Pride Bank (right), receives the certificate of registration from Mr Mackay Aomu, the director of Non-Banking Financial Institutions at the Bank of Uganda, yesterday. PHOTO/STEPHEN OTAGE
Pride Microfinance has transitioned to tier two, classified as a credit institution with an equity capital base of Shs174 billion. This amount exceeds the required capital for institutions in this class, as well as the capital requirements for tier institutions (commercial banks). The capital requirement for tier one, which is a commercial bank, is Shs150 billion, and the capital requirement for tier two (credit institutions) to be net commercial banks is Shs25 billion.
A financial institution with a higher capital base means more equity, is more resilient and stable, and better able to absorb losses. In November 2022, the Bank of Uganda (BoU) announced a six-fold increase in the minimum absolute paid-up capital requirement for Tier 1 credit institution licences Shs150 billion by end-1H24.
This was to enhance financial sector stability and provide greater room for loan growth. In an interview with Daily Monitor yesterday at Kampala Serena Hotel, the executive director of Pride Microfinance, which has now transitioned to credit institution and Rebranded as Pride Bank Limited, Mr Edward Nkangi said the bank is well capitalised to become a fully commercial bank if it wants to.
Mr Nkangi said Pride Microfinance has been growing organically since 1995, when it started in Mbarara with the name Pride Africa. It became a microfinance deposit-taking institution (MDI) in 2005, and it has been organically and stably growing. “We now have 47 branches and our loan book as of December 31, 2024, was Shs258 billion because we were focusing on the smaller amount of loans, but now that we have transitioned to tier, we shall be giving bigger loans and more products,” he said.
Earlier in the meeting, Mr Nkangi disclosed that the transition follows the granting of Credit Institution Licences (Class 5) by the Bank of Uganda on November 26, 2024, marking a milestone in the institution’s journey of providing inclusive financial solutions to Ugandans. Explaining the significance of becoming a credit institution, Mr Nkangi said: “Having achieved a tier 2 banking licence, we now stand ready to offer expanded financial solutions, including competitive savings products, enhanced credit facilities, and seamless digital banking.” “We shall continue to push for financial inclusion because this is a very important aspect of who we are as Pride, and therefore, we intend to reach more customers with banking solutions that positively impact their lives,” he added.
The growing number of credit institutions is vital for a country’s economic growth and stability because they facilitate access to finance, stimulate economic activity, and promote financial inclusion. This expansion allows businesses to invest, create jobs, and diversify, while also empowering individuals to manage their finances, invest in their future, and build/grow their assets.
The director of non-bank financial institutions, Bank of Uganda, Mr Mackay Aomu, told Daily Monitor in an interview that Uganda's financial institutions are growing and they remain stable. “Currently, there are seven credit institutions, and they are well capitalised, with some of them having high capital bases like the tier one financial institutions,” he said.
Much as they have a high capital base, Mr Aomu advised that the credit institutions must ensure that they have a sound risk management system in place, good corporate governance, and a higher level of liquidity management. “Pride Bank Limited, being a government-owned institution it is going to play a big role in enabling the government programme of the Parish Development Model of reaching the people in the rural areas,” Mr Aomu said.
The board chair of Pride Bank Limited, Mr Fred Jachan Omach, said Pride Bank Limited is 100 percent owned by the government (the Ministry of Finance, Planning and Economic Development and the Accountant General. “Over the years, Pride has experienced dynamic growth, offering more comprehensive products. President Museveni has often talked to us about innovation.
We will continue to innovate and provide a broader range of financial facilities to drive economic development and improve the lives of Ugandans,” he said. Mr Omach said Pride Bank Limited is now in a better position to reach out to more people with an increased number of products.
The executive director of Uganda Bankers’ Association, Mr Wilbrod Humphreys Owor, said the Bank of Uganda raised the capital requirements for the supervised financial institutions significantly, and for Pride to transition to tier two institutions is very remarkable. It conveys a great deal of meaning and indicates that you are prepared for the journey. It reflects stability, resilience, and presence. The majority of business leaders borrow between Shs50 million and Shs200 million,” he said.
Mr Owor said the normal businesses that drive the economy fall within this bracket, and they need regular financial resources to finance their enterprises. However, Mr Owor cautioned Pride Bank management that the financial sector is the most targeted institution by the fraudsters. “We seal security and trust. We should be focused and make sure people’s savings are safe so that they can grow,” he said.
Background
Established in 1995 as Pride Africa, the institution was initially a donor-supported initiative aimed at providing financial services to low-income individuals, particularly those in agriculture. Over the years, it evolved into Pride Microfinance Limited in 2003, with the Ugandan government acquiring full ownership. In December 2024, the Bank of Uganda approved the rebranding to Pride Bank following the granting of a credit institution licence.
