The World Bank has withdrawn from new loan agreements with Uganda, but the Bank of Uganda has promised the Banking and Financial sector that it will continue to support the country’s microeconomics and stability.
The decision announced last week has already caused unease in the government and civil society.
The former has announced that it will amend the national budget, while the latter has suggested thrift and openness as a way to mitigate the effects.
Financial analysts voiced concern that the decision might undo the economic progress that had been made, particularly in containing inflation and stabilizing foreign exchange.
The Deputy Governor, Dr. Michael Atingi-Ego, claims that the Bank has proven its mettle by taking actions that have helped to strengthen the Uganda shilling relative to the US dollar “save for last week’s events” and keep inflation rates at acceptable levels.
Speaking at the sixth Annual Bankers Conference organized by the Uganda Bankers Association, UBA, Sarah Arapta, the Association Chairperson, called on the banking sector and policymakers to take additional precautionary measures in light of the ongoing difficulties.
She expressed worry about the potential effects of the World Bank’s most recent decision on an economy that is still attempting to recover from many shocks, including COVID-19, the Russian invasion of Ukraine, and the most recent spike in global inflation rates.
She asserted that in order to safeguard the sector against such shocks, bankers must act more creatively by utilizing the present digital revolution.
All UBA member institutions will adopt the cyber security control framework that the banks are currently building. Arapta claims that this resulted from the multi-sector meeting against fraud that was conducted earlier this month.
This year’s conference, which had the subtitle “Trends and innovations in the fintech space, changing the face of banking and financial services,” was centred on financial technology and the difficulties that the transformation is posing for both the market and the public. Cyberattacks, data privacy violations, and disruption of established systems, such as the closing of bank branches, are some of the difficulties.
According to Deputy Governor Atingi-Ego, addressing the difficulties faced by the digital or online banking sector will necessitate ongoing staff training, regular security system upgrades, and rigorous adherence to the industry staff code of conduct. He claims that because it cannot be undone, this will help maintain the public’s confidence in digital and Internet banking.
Atingi-Ego stated that in addition to the new regulatory measures put in place, the Central Bank is already implementing training and capacity-building initiatives that have started with FX bureaus and cash transfer businesses to address the issues facing electronic operations.
The financial technology sector in Uganda is “ripe for innovation acceleration,” according to Shehyrar Ali, Country Manager for Mastercard in East Africa.
Ali revealed that Mastercard would be opening an office in Uganda within the coming year. He added that they wanted to customize their strategies for the Ugandan market because customers there wanted services supplied quickly and conveniently.
Since 2016, over 2.5 million new bank accounts have been established annually, thanks to digitization, which has accelerated the financial industry’s development more quickly than ever before.
Online credit products, from which 13 million individuals have benefited, according to Arapta, have been one of the best developments in the sector.
A comprehensive strategy to assist the digital economy, according to the Ministry of ICT and National Guidance, has been prepared in the form of a plan for digital advancement.
The proposal, according to Rebecca Kiconco, vice chairperson of the ministry’s business process outsourcing council, will be unveiled this week and include, among other things, improving digital literacy and addressing fraud.