The authorities’ efforts to diversify the economic base and expected gains in productivity should over time help enhance the economy’s resilience to the vicissitudes of primary commodity prices.
It should be noted that the current high level of international reserves would provide an important cushion and would afford the authorities some time to adjust their policies.
If the security situation in neighboring countries deteriorates, it could also adversely affect the Ugandan economy.
In case of Uganda, selected indicators of financial depth such as M2/GDP and private sector credit/GDP are significantly lower than neighboring Kenya, Zambia, and Zimbabwe, while the ratio of currency/M2 is one of the highest in Africa.
Starting in October 2001, the BOU aligned its loan classification criteria to international standards, and issued circulars in April and July 2002, to adequately capture NPLs in the system. It has now been more than 15 months since the loan classification standards were strengthened, providing further comfort with respect to loan quality.
The level of provisions for most banks increased initially due to the more stringent loan classification criteria introduced in 2001, and subsequently declined as a result of some write-offs.
This will involve, in addition to the enactment of the AML and related legislation, the drafting of enabling regulations, the assignment of responsibilities for AML issues to the appropriate organization, and the establishment, as expected, of the Financial Intelligence Authority.
The data exhibited some anomalies, in part as a result of the recent merger of UCBL with Stanbic, and were incomplete, particularly with respect to the off-balance sheet information on banks.
The FSAP did not conduct a formal detailed assessment of Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT) activities in Uganda.
As a member of the ESAAMLG, Uganda agreed in 1999 to adopt and implement the 40 FATF Recommendations, and also implement any other measure contained in multilateral agreements and initiatives for the prevention and control of laundering of the proceeds of all serious crimes. Following this regional commitment, the government issued a Uganda AML policy paper, and the Uganda Anti-Money Laundering Committee (UAMLC) was created in August 2000. The UAMLC is mandated to promote greater cooperation among various agencies, institution building, and awareness raising on the dangers of money laundering.
On this issue, the government stated in the Budget Speech of 2001/02 that no payment of uninsured deposit of closed banks will be made and the latest bank failure has been resolved at no cost to the DPF.
The NSSF is a Provident Fund (Defined Contribution) type scheme, established to cover all employees in the formal sector, except government and other government-related enterprises. Participation in the scheme is mandatory, with contributions of 15 percent (10 percent by the employer and 5 percent by the employee) of total cash compensation.
It is not surprising that NSSF participation is widely viewed as a tax and not a benefit, and under these circumstances enforcing required participation and collecting contributions has been challenging. This is why the NSSF has begun a public relations campaign to improve its image.
A moderately well-run provident fund in a developing country the size of Uganda might expect to incur operating expenses of 1 to 2 percent of contributions and 0.1 percent of assets.
Governance problems and directed credit have led in the past to about 90 percent of UDB’s portfolio to become nonperforming.
The two umbrella organizations are UCA and UCSCA.
The formerly state-owned Uganda Commercial Bank Limited was acquired by the Stanbic group in a privatization arrangement in February 2002 and subsequently merged in September 2002.
Following the recommendations of a full-scale bank inspection, the BOU closed one of the small banks on September 2, 2002 and facilitated its merger with another bank.
It must be emphasized that problems with the timeliness of publications arise more with hard copies of various reports of the central bank and less with the versions of the publications appearing on the website.