Banking in Uganda

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Prior to Uganda’s independence in 1962, government-owned institutions dominated most banking in Uganda. In 1966 the Bank of Uganda, which controlled the issue of currency and managed foreign exchange reserves, became the central bank. Uganda Commercial Bank, which had fifty branches throughout the country, dominated commercial banking and was wholly owned by the government. The Uganda Development Bank was a state-owned development finance institution, which channeled loans from international sources into Ugandan enterprises and administered most of the development loans made to Uganda.

The East African Development Bank, established in 1967 was jointly owned by Uganda, Kenya, and Tanzania. It was also concerned with development finance. It survived the breakup of the East African Community in 1977 and received a new charter in 1980.

In the 1960s, other commercial banks included local operations of Bank of Baroda, Barclays Bank, Bank of India, Grindlays Bank, Standard Chartered Bank and Uganda Cooperative Bank.

During the 1970s and early 1980s, the number of commercial bank branches and services contracted significantly. Whereas Uganda had 290 commercial bank branches in 1970, by 1987 there were only 84, of which 58 branches were operated by government-owned banks. This number began to increase slowly the following year, and in 1989 the gradual increase in banking activity signaled growing confidence in Uganda's economic recovery.[1]

1990s - 2004[edit]

In the late 1990s and early 2000s, the Ugandan banking industry underwent significant restructuring. Several indigenous commercial banks were declared insolvent, taken over by the central bank and eventually sold or liquidated. These included Uganda Cooperative Bank, Greenland Bank, International Credit Bank, Teefe Bank and Gold Trust Bank, which were closed or sold. Uganda Commercial Bank was initially privatized through a sale of its majority shares to a purported company from Malaysia. However it later came to light that the actual buyer was a partnership between Greenland Bank, which was insolvent at the time, and some politically connected individuals. A second privatization sale was conducted, with the Standard Bank of South Africa emerging as the winner.

The privatized Uganda Commercial Bank was merged with the former Grindlays Bank which Standard Bank of South Africa already owned and had renamed Stanbic Bank. The combined new bank is now known as Stanbic Bank (Uganda) Limited. As of 2008, Stanbic Bank (Uganda) Limited was the dominant commercial bank in Uganda, with about 27% of all bank assets and about 20% of all bank branches.[2] Nile Bank Limited, an indigenous institution, was acquired by the British conglomerate, Barclays Plc, in January 2007 and merged with its existing Ugandan operations to form the current Barclays Bank (Uganda).[3]

A moratorium on new commercial bank licences was declared in 2004, with the passage of a new banking bill in Parliament, which established new banking institution classification guidelines. There are four classes of lending financial institutions under the new regulations as outlined below.

Regulatory changes 2007 - 2009[edit]

The moratorium on new banks was lifted in July 2007. During the eighteen months that followed the lifting of the moratorium, eight new commercial banks were licensed. These included Kenya Commercial Bank, Equity Bank and Fina Bank, all from Kenya. Global Trust Bank and United Bank for Africa trace their roots from Nigeria. Ecobank is headquartered in Togo and Housing Finance Bank is an indigenous operation. Three other banks, ABC Bank (Kenya), Access Bank from Nigeria and CRDB Bank from Tanzania, have publicly declared their intention to start banking operations in Uganda.[4][5]

During 2008 and 2009, several of the existing banks went on an accelerated branch expansion either through mergers and acquisitions or through new branch openings. As of October 2010, there were 22 licensed commercial banks in Uganda, with nearly 400 bank branches and a total of almost 600 automated teller machines.[6]

As of December 2009, total commercial bank assets in Uganda were estimated at US$4.6 billion (UGX 8.73 trillion).[7] (Official Exchange Rate in December 2009 was US$1=UGX:1,897)[8] The number of bank accounts in the country was over five million. This represented a 16% penetration, given Uganda's population of 32,000,000, at that time.[9]

By April 2011, the number of commercial banks had increased to 23. The bank branches in the country numbered over 400. The banking sector employed over 8,700 people. Total commercial bank assets in the country were valued at US$4.78 billion (UGX:11 trillion).[10] (Official Exchange Rate in December 2010 was US$1=UGX:2,300).

Rwanda joined the East African Development Bank in July 2008. Burundi is expected to join the bank in the near future.[11]In April 2009, Bank PHB, Nigeria's fifth largest bank, bought 80% ownership of Orient Bank, Uganda's 8th largest commercial bank. This brings the current number of Ugandan banks with major investments from Nigeria to three (3).[12]

In November 2010, Bank of Uganda, the national banking regulator, directed that all commercial banks in Uganda, must raise their minimum capital to Ugx:10 billion (approximately US$4.34 million) by March 2011[13] and to Ugx:25 billion ( approximately US$11 million) by March 2013. Any new commercial bank entering the Ugandan market effective November 2010, has to have a minimum capitalization of Ugx:25 billion.[14] However most of the banking activity is concentrated around Kampala, the country's capital and other large towns, leaving 42% of Ugandans at the mercy of the informal financial sector, and another 30%, totally excluded from the financial services sector, according to a study in 2010.[15]

During 2013, Bank of Uganda, closed down National Bank of Commerce (Uganda) (NBCU), a small indigenous operation with wealthy investors, some of whom held high-ranking government positions. The deposits of the liquidated (NBCU), were sold to Crane Bank, the fastest growing commercial bank in the country at that time.[16] In November 2012, the total number of commercial bank branches in the country reached 500.[17] As of December 2012, the Bank of Uganda estimated the total banking assets in the country at Shillings 15.5 trillion (US$6.09 billion).[18]

Classification of financial institutions[edit]

Tier I Financial Institutions[edit]

This class includes commercial banks which are authorized to hold checking, savings and time deposit accounts for individuals and institutions in local as well as International currencies. Commercial banks are also authorized to buy and sell foreign exchange, issue letters of credit and make loans to depositors and non-depositors.[19]

Asset Allocation Among Commercial Banks As of December 2012

It is estimated that asset allocation among the 24 operational Ugandan commercial banks, at that time, broke down as follows:

Assets & Market Share Among Commercial Banks In Uganda
Rank Bank Assets (USD) Millions Market Share Number of Branches
1 Stanbic Bank
19.9% 91
2 Standard Chartered Bank
15.8% 12
3 Barclays Bank
8.2% 46
4 Crane Bank
7.7% 28
5 Centenary Bank
7.3% 62
6 DFCU Bank
6.5% 30
7 Citibank Uganda
4.9% 01
8 Bank of Baroda
4.6% 14
9 Housing Finance Bank
3.4% 16
10 Bank of Africa
2.9% 33
11 Orient Bank
2.9% 16
12 Equity Bank
2.2% 44
13 Diamond Trust Bank
2.2% 20
14 Kenya Commercial Bank
2.1% 14
15 Tropical Bank
1.4% 11
16 United Bank for Africa
1.0% 09
17 Ecobank
1.0% 11
18 Imperial Bank Uganda
1.0% 03
19 Global Trust Bank
0.7% 15
20 Guaranty Trust Bank
0.7% 07
21 Cairo International Bank
0.5% 04
22 NC Bank Uganda
0.5% 01
23 Bank of India (Uganda)
0.5% 01
24 ABC Capital Bank
0.2% 02
Total Twenty Four
100.0 496
  • The totals are slightly off due to rounding

Tier II Financial Institutions[edit]

This class includes Credit and Finance companies. They are not authorized to establish checking accounts or trade in foreign currency. They are authorized to take in customer deposits and to establish savings accounts. They are also authorized to make collateralized and non-collateralized loans to savings and non-savings customers:[20]

Tier III Financial Institutions[edit]

This class includes microfinance institutions which are allowed to take in deposits from customers in the form of savings accounts. Members of this class of institutions are also known as Microfinance Deposit-taking Institutions or MDIs. MDIs are not authorized to offer checking accounts or to trade in foreign currency.[22]

Tier IV Institutions[edit]

These institutions are not regulated by the Bank of Uganda. They are not authorized to take in deposits from the public. However, they may offer collateralized or non-collateralized loans to the public. In 2008, it is estimated that there are over 1,000 such institutions in the country.[24]

Development banks[edit]

Investment Banks & Stock Brokerage Firms[edit]

This is a list of investment banks and stock brokerage firms in Uganda[25] They are regulated by the Capital Markets Authority (CMA) and by the Uganda Securities Exchange.

  1. African Alliance Investment Bank
  2. Baroda Capital Markets Uganda Limited
  3. Crane Financial Services Uganda Limited
  4. Crested Stocks and Securities Limited
  5. Dyer & Blair Investment Bank [26]
  6. Equity Stock Brokers Uganda Limited
  7. First Renaissance Securities Limited[27][28]
  8. UAP Financial Services Limited
  9. Stanbic Financial Services Limited[29]

Insurance companies[edit]

There are 25 insurance companies in Uganda, as of March 2010.

Foreign exchange bureaus[edit]

Other regulated financial institutions include 123 licensed foreign exchange bureaus, of which 92% are located in Kampala, the capital city and only 8% are located outside of Kampala.

Deposit insurance[edit]

The Deposit Insurance Scheme was established in 1994 and became operational in 1997. It is funded by premiums charged to every licensed deposit-taking financial institution in the country. Each account is protected to the tune of Uganda Shillings (UGX) 3 million (approx. US$1,800).[30]

The Depositor Insurance Law was enacted by Parliament and states that all depositors must be paid within 90 days of a bank failure and the failing institution must be sold by the auctioning of its assets within six months of its seizure by the central bank. If the central bank determines that the failed institution will fetch a better economic return, if sold as a whole, then it will re-open under new ownership and management, provided the new owners and managers meet the approval of the Bank of Uganda.[31]

Credit bureau[edit]

In 2008, a credit reference bureau was established for the first time in Uganda. The bureau, Compuscan, based in South Africa, has subsidiaries in Botswana, Namibia, Rwanda and Uganda, with new ones planned in Kenya and Zambia.[32]

With improved credit risk assessment afforded by the credit bureau, new products including medium and long-term financing like car loans and mortgages have been introduced by most Ugandan commercial banks. As of February 2010, interest rates which were in the 20% to 30% range before 2008, were down to as low as 10%, for the best customers at some banks.[33]

See also[edit]


  1. ^ Library of Congress Online Catalog: Country Studies - Uganda
  2. ^ Stanbic Bank Uganda
  3. ^ Nile Bank Limited
  4. ^ Kenyan Banks Make Aggressive Entry Moves
  5. ^ Access Bank Expands into East Africa
  6. ^ In October 2010, Uganda Had About 400 Bank Branches and Nearly 600 ATMs
  7. ^ Banking Sector Gains Resilience
  8. ^ Official Monthly Exchange Rate Averages From July 1990 to Present
  9. ^ 16% of Ugandans Have Bank Accounts
  10. ^ Ugandan Banks Rolling In Profits
  11. ^ Ownership of EADB
  12. ^ Bank PHB Buys 80% of Orient Bank
  13. ^ All 23 Commercial Banks Meet 31 March UGX10 Billion Capital Deadline
  14. ^ Bank of Uganda Raises Minimum Capital Requirements For Banks
  15. ^ Uganda's Formal Banking Institutions Serve Only 28% of Ugandans
  16. ^ Bank of Uganda Closes Down National Bank of Commerce
  17. ^ Uganda Had 500 Commercial Bank Branches In November 2012
  18. ^ Bank of Uganda 2012 Annual Supervision Report
  19. ^ List of Licensed Commercial Banks
  20. ^ List of Licensed Credit Institutions
  21. ^ Opportunity Uganda Rebrands To Opportunity Bank
  22. ^ List of Deposit-Taking Microfinance Institutions
  23. ^ UGAFODE Applies For Banking License
  24. ^ Non Deposit-Taking Microfinance Institutions
  25. ^ List of Licensed Investment Banks & Stock Brokerage Firms in Uganda
  26. ^ Profile of Dyer & Blair Uganda At
  27. ^ Renaissance Rebrands And Abandons Stock Brokerage
  28. ^ First Renaissance Abandons Stock Brokerage
  29. ^ Stanbic Financial Services Is A licensed Ugandan Financcial Advisor & Stock Broker
  30. ^ Review of Uganda's Banking Sector 2009
  31. ^ Intervention Policies of Bank of Uganda
  32. ^ Compuscan Uganda
  33. ^ PostBank Uganda Offers 10% Interest on Agricultural Loans

External links[edit]