By Louis Kasekende
“Role of BoU. Let me clarify that BoU does not regulate or supervise all financial institutions. At the moment, BoU supervises commercial banks, credit institutions and the micro-deposit taking institutions. In addition, we regulate the foreign exchange bureaus, money remittance services and consider an application by a commercial bank that seeks”
Many of you are asking why the Bank of Uganda is seeking to engage the public more. Our agenda is three-fold. First is to establish and strengthen communication channels to enable fast resolution of any challenges that each of us may be having in executing our respective mandates.
Second and related to the first, is that those communication avenues should also enable quick feedback from the population and area leadership. The third objective is to allow BoU to directly explain its mandate and account to the public for its policies.
We believe this should help moderate the misrepresentation of BoU, which often may be a result of lack of information. Therefore, I will respond to some of the most frequent issues or questions that the population and area leadership have raised.
First, I wish to update you on the operationalisation of the Islamic banking model that was permitted by the enactment of the Financial Institutions (Amendment) Act, 2016. BoU is currently processing three applications that it has so far received from entities seeking to offer Islamic banking services. One of these applicants that currently offers traditional banking services in Uganda, seeks to open up an Islamic finance window; while the other two applicants that are entities outside Uganda, are interested in acquiring Islamic banking licenses.
BoU is also finalising consultations with the various stakeholders to establish the necessary Shariáh Advisory Council that shall oversee regulation and supervision of the Islamic takeholdersbanking segment of our financial sector.
As part of BoU’s effort to increase public awareness of the Islamic banking model, I have asked one of my staff to prepare a presentation for you that details the key features of the Islamic banking model, which business activities are permissible or not under Islamic banking, and what will be required of you as customers, the financial institutions that seek to offer this service, and the BoU as a regulator.
The second inquiry relates to the Gross Domestic Product (GDP) growth figures and what some of you have called “the disconnect of the rosy picture painted by these figures from the common man’s reality”. Let me state from the onset that the compilation and publication of official national statistics like GDP is the core responsibility of Uganda Bureau of Statistics (Ubos).
Therefore, the figures often cited by the BoU in its reports or press statements are sourced or based on statistics from Ubos. Why should you care about the GDP figures?
These GDP figures to an extent reveal the economic activities that are fastest growing or generating income and where you should look to participate and take advantage of the opportunities therein to earn a decent living. GDP information also reveals why some sections of the population might not be experiencing higher incomes relative to others.
Such information can be deduced from sectoral breakdown of the GDP and other critical statistics like population growth rates and the employment patterns.