Remarks by Michael Atingi-Ego, Deputy Governor of the Bank of Uganda, at a town hall meeting for the Lango subregion in Lira town on 20 October 2023
Good morning to you all, and thank you – the leaders and people of Lira and the great Lango sub-region – for being here today. We are grateful to everyone who joined and engaged with us yesterday as we explained the Bank of Uganda’s (BoU) role and how we carry out our mandate.
We rely on these town hall meetings to inform you, our stakeholders, about our work and its impact, answer your questions about the BoU, and listen to your feedback. Your questions, comments, and opinions are essential in improving our performance, which ultimately serves the interests of all Ugandans.
James Quinn Wilson, an American public administration authority, once said, “Agencies differ in two main respects: Can the activities of their operators be observed? Can the results of those activities be observed?”
At the BoU, we approach these questions with transparency and accountability as we carry out our mandate. Being transparent and accountable about the central bank’s governance, policies, outcomes, and official relations through effective communication with our stakeholders reduces uncertainty and contributes to better policy outcomes. In this way, we aim to maintain public support, safeguard operational independence, and enhance policy effectiveness.
We understand that central bank independence requires transparency. More importantly, it requires that people can comprehend what we are doing. We are happy to report that the BoU is one of the few central banks that have had their transparency practices reviewed through the new voluntary Central Bank Transparency Code by the International Monetary Fund.
Briefly, let me provide an overview of the BoU’s work to set the stage for the open discussion ahead. Our mission focuses on promoting price stability and a sound financial system supporting Uganda’s socioeconomic transformation in line with the national Vision 2040, i.e., “A Transformed Ugandan Society from a Peasant to a Modern and Prosperous Country.”
Essentially, our mission is like a three-legged stool, resting on three key pillars: ensuring price stability, overseeing the safety and soundness of financial institutions, and managing the payment system.
One of our primary roles is to promote and maintain the stability of the value of the Uganda shilling. We aim to safeguard the purchasing power of money, ensuring that the prices of essential goods and services, like maize flour or school fees, remain steady.
Price stability is essential as it allows people to plan and maintain their standard of living. When prices rise too rapidly due to increased demand for goods or services, we step in to manage the flow of money and the cost of borrowing, which helps align prices with available goods and services.
We are also responsible for licensing, regulating, and supervising financial institutions such as commercial banks, credit institutions, and micro deposit taking institutions. Our role is to ensure that these institutions operate safely, maintain the trust of their customers, and adhere to ethical business practices. We work to reduce financial crimes, enforce consumer protection, and ensure fair treatment of customers by these institutions.
The BoU oversees the banking sector to ensure that only well-capitalized and professionally managed banks receive and maintain operating licences. In cases of failure, we take steps to ensure that the depositors’ funds and the health of other financial institutions are protected. The central bank is committed to improving the handling of failed financial institutions to ensure accountability and safeguard the interests of all stakeholders.
The BoU is now also tasked with ensuring the safety and soundness of the country’s payment systems, which facilitate transactions such as mobile money. The growth of mobile money transactions accelerated during the Covid-19 pandemic and continues to increase in volume and value. This has made financial services more accessible to a wider population. However, we urge caution and emphasize the need for users to be aware of the risks associated with electronic financial services, such as fraud and hacking. We are actively working to promote digital financial literacy and protect users from IT and cybersecurity threats.
We encourage all stakeholders to collaborate in minimizing IT threats and cybersecurity risks to ensure the robustness and efficiency of electronic financial services.
With secure and efficient electronic financial services, Uganda can reduce its reliance on physical currency notes and coins, which can be costly to produce, transport, and secure.
The BoU has the exclusive authority to issue the national currency. While we maintain a clean note policy and ensure that money is widely available, hard cash production is expensive and consumes valuable resources. We encourage using mobile money and discourage “cashing out” of the system to reduce these costs. This approach benefits the environment and promotes the growth and maturity of the digital financial services industry, which, in turn, fosters financial inclusion with increased participation of the population in the money economy.
In response to the evolving operating environment, our mission now extends beyond macroeconomic stability to prioritize the impact of our work and work methods on the lives and livelihoods of our people. We aim to enhance price stability, strengthen the financial system, promote financial market development, and integrate environmental, social, and governance (ESG) sustainability in the financial sector.
We believe that achieving socioeconomic transformation requires the collective efforts of all stakeholders to innovate and create new approaches for uplifting the underprivileged, boosting industry, and developing policies for mission driven co-creation of value, especially for those at the bottom of the economic pyramid.
The BoU is committed to helping reduce risks associated with development financing, promoting environmental sustainability, and fostering inclusive growth. We help advance this agenda by administering the Agricultural Credit Facility (ACF) and the Small Business Recovery Fund (SBRF) to support agricultural value addition and small businesses hurt by the pandemic.
As you know, climate change – changes in rainfall patterns, drought, flooding, and increased temperatures – is a pressing issue affecting Uganda’s agriculture, water resources, and public health.
The Lango subregion is highly vulnerable to the impacts of climate change, given that the main economic activity here is agriculture. Climate change poses a significant threat to food security and prices.
We urge everyone to take action to mitigate and adapt to the impacts of climate change by supporting initiatives like reforestation, developing drought-resistant crops, and improving water management practices.
We also pursue our ESG agenda through Corporate Social Responsibility (CSR) activities to provide affordable and quality healthcare to mothers and newborns, not least because health services are one of the pillars of national socioeconomic transformation.
We are pleased to announce that the BoU will partner with authorities in Lira City to renovate Ayago Health Centre, improving service delivery to the growing population, especially antenatal services, by constructing an outpatient department building, providing medical equipment and supplies, and planting trees.
We look forward to working with the leaders and people of Lira to improve maternal and child healthcare through this project.
Now, let us move on to the question-and-answer session.
Thank you for your attention.
God bless!
