The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | THE INDEPENDENT | The newly elected executive of the Uganda Bankers Association (UBA) will prioritize matters of Environmental, Social, and Governance (ESG) to enhance the sector’s responsibility to society, its customers, and stakeholders.
“We are living in an era where business sustainability is a priority,” said Julius Kakeeto, the newly elected UBA Chairman in an interview. Kakeeto is also the Chief Executive Officer of PostBank Uganda.
Kakeeto was elected to this position on May 17 at the association’s Annual General Meeting (AGM) held in Kampala.
Promoting aspects of the ESG, Kakeeto said would cement the sector’s growth prospects which “I can confidently say is stable and resilient.”
He shared the latest industry numbers. The Supervised Financial Institutions (Tier I, Tier II, and III) have just published their financial performance that reflects the industry’s overall growth.
He said the total assets for the supervised financial institutions (SFI) industry have grown by 7.5% from Shs45.8 trillion in 2022 to Shs49.5 trillion at the end of 2023.
The non-performing loan ratio reduced from 5.3% in 2022 to 4.6% as at the of December 2023.
Aggregate industry profitability also grew from Shs1.2 trillion recorded in 2022 to Shs1.4 trillion in 2023.
Kakeeto said, there is continued investment in information communication technology and delivery channels, especially digital/electronic channels.
The industry nearly doubled spend on ICT at Shs694bn in 2023 compared to Shs392bn in 2022.
“Most of the member banks and financial institutions have met the new capital requirements and are well positioned to continue supporting customers and the economy in general,” Kakeeto said.
Industry opportunities
Kakeeto said there is plenty of opportunity in the market and a lot depends on where a financial institution chooses to mine from.
He said businesses especially in the small and medium (SME) sector have numerous unsatisfied needs in sectors of oil and gas, construction and real estate, agro-processing, and manufacturing for both the domestic and regional markets. The other opportunities are in infrastructure development and the services industry which is growing by leaps and bounds ranging from hospitality to health to education to ICT services.
“There is plenty of micro lending business for all sorts of last mile activities and more and more of these are being reached in collaboration with fintechs,” he said.
Industry challenges
The challenge of growing a large base of good borrowers is something players must continue working on collectively.
Credit expansion thrives in an environment of ability and willingness to pay back what people borrow. The other challenge is e-fraud which manifests from third parties and customers negligently giving access to security credentials of their transactions.
The other challenge is the high operational costs resulting from the overall high cost of doing business linked to delays in settlement of arrears, delays in disposal of litigation cases, poor infrastructure, and more.
Kakeeto said the sector will be at the forefront of supporting several pillars of the economy detailed in the NDP III including trade, manufacturing, exports, infrastructure development, housing and urban development, tourism, ICT, and more.
