The Sector has experienced tighter BOU supervision, more stringent requirements and higher capital requirements with the passing of the Financial Institutions Act in 2004 and the Financial Institutions Regulations in 2005. This has facilitated a quick recovery of the sector following the closing of several domestic banks in 1998 and 1999.
Most banks in the country are foreign owned, including major international institutions such as Stanbic, Citibank, Barclays, and Standard Chartered. However, a number of locally owned banks have been established including DFCU Bank, Crane Bank and Cerudeb.
Sector earnings have risen due to increased lending to the public. These have been largely financed by a growing deposit base. The aggressive drive to increase customer deposits was caused by the Bank of Uganda decision to withdraw all government project funds from commercial banks in 2005. The Banking sector also continues to experience a wide disparity between the lending and deposit rates, which have been caused by the inefficiencies with in the sector.
The insurance sector remains a small part of the financial services system and in 2005, it was comprised of twenty licensed insurance companies, under the supervision of the Uganda Insurance Commission. The sector has experienced the successful privatization of the National Insurance Company, which was previously one of the largest insurance companies in terms of underwriting. The sector awaits the formalisation of the of a reinsurance company, Uganda-Re by the Uganda Insurers' Association.
The Industry has also experienced the listing of several companies, including DFCU Bank in 2004, and the cross listing of Jubilee Insurance Company on the USE and the NSE. In 2004, the Bank of Uganda successfully issued 2-, 3-, 5-, and 10-year government bonds with hope to encourage private companies to access the debt markets. The industry has experienced the issuance of bonds by Standard Chartered Bank and awaits DFCU Limited and Nile Bank Bonds. The East African Development Bank has also been able to trade bonds on the exchange.
In 2003, the Government of Uganda enacted a collective investment law which allows investors to pool funds to be invested on the USE and in government T-bills. In 2004, CMA licensed African Alliance Uganda to operate the first Ugandan collective investment scheme. The Microfinance institutions have also evolved in the past years from donor funded non governmental organizations to financial institutions funded by members. The sector currently consists of over 1,000 microfinance institutions.
In total, there are twenty three registered banks and twenty three insurance companies in the country
PwC is the market leader in the provision of professional financial services and has a team of dedicated experts to service all its clients. Our clients, predominantly subsidiaries of international/global companies, include several of the top tier registered banks, non-banking financial institutions, as well as the larger insurance companies. Whatever your financial services needs, PwC Uganda can help.
Country Senior Partner, PwC Uganda
Tel: +256 (0) 312 354 400