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 Uganda 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).

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 - 2010[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. The now defunct Global Trust Bank, and United Bank for Africa trace their roots to 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.[3][4]

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 December 2009, total commercial bank assets in Uganda were estimated at US$4.6 billion (UGX 8.73 trillion).[5] (Official Exchange Rate in December 2009 was US$1=UGX:1,897)[6] Rwanda joined the East African Development Bank in July 2008. Burundi is expected to join the bank in the near future.[7] In April 2009, Bank PHB, Nigeria's fifth largest bank, bought 80% ownership of Orient Bank, Uganda's 8th largest commercial bank. This brought the number of Ugandan banks with major investments from Nigeria to three.[8]

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. At that time, 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]

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,[10] 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.[11] (Official Exchange Rate in December 2010 was US$1=UGX:2,300).

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.[12]

After 2010[edit]

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).[13]

During 2012, 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.[14] In November 2012, the total number of commercial bank branches in the country reached 500.[15]

As of June 2012, the Bank of Uganda estimated the total banking assets in the country at Shillings 15.1 trillion (US$6.08 billion).[16] In June 2013, the Central Bank estimated the total of all commercial bank assets in the country at Shs:15.7 trillion (US$6.32 billion).[17] Those assets had increased to Sh18.6 trillion (US$6.695 billion), by 30 June 2014.[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 2014.

It is estimated that asset allocation among the 25 operational Ugandan commercial banks, at that time, broke down as follows:[citation needed] The official exchange rate at 31 December 2014 was USh2,778 = US$1.00.[20]

Assets & Market Share Among Commercial Banks In Uganda
Rank Bank Assets (USD) Millions Market Share Number of Branches
1 Stanbic Bank 1,260 19.0% 91
2 Stanchart Uganda 936 14.0% 12
3 Crane Bank 620 9.3% 45
4 Centenary Bank 587 8.8% 62
5 DFCU Bank 513 7.7% 45
6 Barclays Bank 504 7.5% 43
7 Bank of Baroda 409 6.1% 15
8 Citibank Uganda 300 4.9% 01
9 Diamond Trust Bank 252 3.8% 32
10 Housing Finance Bank 220 3.5% 17
11 Bank of Africa 179 2.7% 37
12 Orient Bank 173 2.6% 20
13 Kenya Commercial Bank 131 2.1% 14
14 Equity Bank 123 2% 39
15 Imperial Bank Uganda 87 1.4% 05
16 Tropical Bank 84 1.4% 11
17 United Bank for Africa 60 1.0% 09
18 Ecobank 60 1.0% 11
19 NC Bank Uganda 56.5 0.8% 01
20 Finance Trust Bank 44 0.7% 33
21 Guaranty Trust Bank 40 0.7% 07
22 Cairo International Bank 30 0.5% 05
23 Bank of India (Uganda) 25 0.5% 01
24 Commercial Bank of Africa 19 0.3% 01
25 ABC Capital Bank 12.5 0.2% 02
Total Twenty Five 6,695 100.0 564[21]
  • 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:[22]

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.[24][25]

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.[27]

Development banks[edit]

Investment Banks & Stock Brokerage Firms[edit]

This is a list of investment banks and stock brokerage firms in Uganda[28] They are regulated by the Capital Markets Authority (CMA) and by the Uganda Securities Exchange.[29]

  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 [30]
  6. Equity Stock Brokers Uganda Limited
  7. UAP Financial Services Limited
  8. Stanbic Financial Services Limited

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) 5 million (approx. US$2,000 in 2014).[31]

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.

Credit bureaux[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 April 2014, interest rates which were in the 20% to 30% range in the past, were down to as low as 10%, for the best customers at some banks.[33]

In 2015, Ugandan regulators licensed a credit bureau, Metropol Credit Reference Bureau Limited, to become the second credit bureau in the country. Based out of Nairobi, Kenya, Metropol has operations in Kenya, Rwanda, Tanzania, and Uganda.[34][35]

See also[edit]


  1. ^ "Library of Congress Country Studies: Uganda Banking". Library of Congress Online Catalog. Retrieved 20 April 2014. 
  2. ^ "About Stanbic Bank Uganda Limited". Stanbic Bank (Uganda) Limited. Retrieved 20 April 2014. 
  3. ^ "Kenyan Banks Assert Presence in Uganda". African Executive. Retrieved 20 April 2014. 
  4. ^ "Continent of Dreams: Across Africa, Banks Are Expanding". The Economist. 2 March 2013. Retrieved 20 April 2014. 
  5. ^ Juuko, Sylvia (7 July 2010). "Banking Sector Gains Resilience". New Vision via Retrieved 20 April 2014. 
  6. ^ "Historical Official Monthly Exchange Rate Averages". Bank of Uganda. Retrieved 20 April 2014. 
  7. ^ Ownership of EADB[circular reference]
  8. ^ "Nigeria's Bank BHP acquires controlling stake in Orient Bank". TradeInvestAfrica. 12 May 2009. Retrieved 20 May 2014. 
  9. ^ Pascaline, Dupas; et al. (2010–2013). "Expanding Access to Formal Savings Accounts in Chile, Malawi, the Philippines, and Uganda". Poverty Action Lab. Retrieved 20 April 2014. 
  10. ^ Wafula, Walter (3 June 2011). "Banks Raise Minimum Capital To Shs10 Billion". Daily Monitor. Retrieved 20 April 2014. 
  11. ^ Juuko, Sylvia (14 November 2010). "Banks To Fork Out ShS25 Billions By 2013". New Vision. Retrieved 20 April 2010. 
  12. ^ Were, Nathan (14 June 2011). "Uganda: Banks Should Rethink Expansion Strategies". Daily Monitor. Retrieved 20 April 2014 – via 
  13. ^ Nannozi, Tereza (7 April 2011). "Banks Rolling In Profits". The Independent (Uganda). Retrieved 20 April 2014. 
  14. ^ Rupiny, David (28 September 2012). "Bank of Uganda: National Bank of Commerce Was In Financial Mess". Uganda Radio Network Online. Retrieved 20 April 2014. 
  15. ^ Sanya, Wilfred (1 November 2012). "Uganda: Bank of Baroda Goes to Industrial Area". New Vision via Retrieved 20 April 2014. 
  16. ^ "Uganda Financial Stability Report June 2012". Bank of Uganda. Retrieved 20 April 2014. 
  17. ^ "Uganda Financial Stability Report June 2013". Bank of Uganda. Retrieved 20 April 2014. 
  18. ^ BOU, . (30 June 2014). "Bank of Uganda Financial Stability Report, June 2014: Issue Number 6" (PDF). Bank of Uganda (BOU). Retrieved 17 March 2015. 
  19. ^ BOU (June 2015). "List of Licensed Commercial Banks As At June 2015" (PDF). Kampala: Bank of Uganda (BOU). Retrieved 18 December 2015. 
  20. ^ Umeme, . (26 March 2015). "Umeme 31 December 2014 Annual Report And Financial Statements" (PDF). Umeme Limited (Umeme). Retrieved 23 April 2015. 
  21. ^ Oketch, Martin Luther (23 April 2015). "Banking Sector Records Improved Performance". Daily Monitor (Kampala). Retrieved 23 April 2015. 
  22. ^ "List of Licensed Credit Institutions". Bank of Uganda. Retrieved 20 April 2014. 
  23. ^ Kalungi, Nicholas (24 November 2011). "Opportunity Uganda Takes On New Name". Daily Monitor. Retrieved 20 April 2014. 
  24. ^ "List of Deposit-Taking Microfinance Institutions". Bank of Uganda. Retrieved 20 April 2014. 
  25. ^ Oketch, Martin Luther (4 February 2015). "Deposit Taking Companies Serving Fewer People, Says BoU Governor". Daily Monitor (Kampala). Retrieved 4 February 2015. 
  26. ^ "Profile of UGAFODE At". Triodos Bank. Retrieved 21 April 2014. 
  27. ^ Non Deposit-Taking Microfinance Institutions
  28. ^ "List of Licensed Investment Banks & Stock Brokerage Firms in Uganda". Uganda Securities Exchange. Retrieved 21 April 2014. 
  29. ^ Mugwe, David (10 November 2011). "Ugandan Stockbroker Transfers Kenyans' Share Accounts". Business Daily Africa (Nairobi). 
  30. ^ "Partial Listing of Stock Brokerage Firms In Uganda". New Vision Group. Retrieved 21 April 2014. 
  31. ^ Musa Ladu, Ismail (19 August 2014). "Why Your Bank Could Be Closed By The Regulator". Daily Monitor (Kampala). Retrieved 19 August 2014. 
  32. ^ Odyek, John (19 December 2013). "Compuscan Improves Uganda’s Loan System". New Vision. Retrieved 21 April 2014. 
  33. ^ Lyatuu, Justus (1 February 2010). "Post Bank Unveils New Agricultural Loans Project". Daily Monitor. Retrieved 21 April 2014. 
  34. ^ Ngigi, George (16 March 2015). "Kenya’s Metropol Gets Uganda Credit Referencing Licence". Business Daily Africa. Nairobi. Retrieved 17 March 2015. 
  35. ^ Herblin, David (27 November 2015). "Kenyan credit bureau Metropol gets licence to start Uganda operations". The EastAfrican. Nairobi. Retrieved 27 November 2015. 

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