Banking in Uganda

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 the Uganda Cooperative Bank, Greenland Bank, the International Credit Bank, Teefe Bank, and Gold Trust Bank. The Uganda Commercial Bank (UCB) was initially privatized through a sale of its majority shares to a purported company from Malaysia. It later became public, however, that the actual buyer was a partnership between Greenland Bank, which was insolvent at the time, and politically connected individuals. A second privatization sale was conducted, with the Standard Bank of South Africa emerging as the winner.[2][3][4]

The privatized UCB was merged with the former Grindlays Bank Uganda that the Standard Bank of South Africa already owned and had renamed Stanbic Bank (Uganda). The combined bank is now known as Stanbic Bank Uganda Limited.[5] As of 2008, Stanbic Uganda was the dominant commercial bank in Uganda, with about 27 percent of all bank assets and about 20 percent of all bank branches.[6]

Nile Bank Limited, an indigenous institution, was acquired by the British conglomerate Barclays in January 2007 and merged with its existing Ugandan operations to form the Barclays Bank of Uganda.[7][8]

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.[9]

During the 18 months following the July 2007 lifting of the new banks moratorium, several commercial banks were newly licensed.[10] These included KCB Bank Uganda Limited, Equity Bank Uganda Limited, GT Bank Uganda, Global Trust Bank, United Bank for Africa, Ecobank, and Housing Finance Bank. Three other banks, ABC Bank (Kenya), Access Bank from Nigeria, and CRDB Bank from Tanzania, publicly declared their intention to start banking operations in Uganda.[11]

During 2008 and 2009, several of the existing banks went on an accelerated branch expansion through mergers and acquisitions or new branch openings. As of December 2009, total commercial bank assets in Uganda were estimated at USh 8.73 trillion.[10] In April 2009, Bank PHB, Nigeria's fifth largest bank at the time, bought 80 percent ownership of Orient Bank, Uganda's eighth largest commercial bank. This brought the number of Ugandan banks with major investments from Nigeria to three.[12]

In October 2010, there were 22 licensed commercial banks in Uganda, with nearly 400 bank branches and almost 600 automated teller machines.[10] At that time, the bank accounts in the country numbered over 5 million.[10] This represented a 16 percent penetration, given Uganda's population of about 32 million at that time.[10]

In November 2010, the BoU directed that all commercial banks in Uganda must raise their minimum capital to USh 10 billion by March 2011[13] and to USh 25 billion by March 2013.[14]

According to a study published in 2010, most of the banking activity was concentrated around Kampala, the country's capital, and other large towns, leaving 42 percent of Ugandans dependent on the informal financial sector and another 30 percent totally excluded from the financial services sector.[15]

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 more than USh 11 trillion.[16]

During 2012, the BoU closed the National Bank of Commerce (Uganda) (NBCU), a small indigenous operation with wealthy investors, some of whom held high-ranking government positions. NBCU's deposits were transferred to Crane Bank.[17] In November 2012, the total number of commercial bank branches in the country reached 500.[18]

In June 2012, the BoU estimated the total banking assets in the country at USh 14.4 trillion.[19] In June 2013, the BoU estimated the total of all commercial bank assets in the country at USh 15.7 trillion.[20] Those assets had increased to USh 18.6 trillion by 30 June 2014.[21] As of 31 December 2015, total banking assets in the country were USh 21.7 trillion.[22]

The Bank of Uganda reported total banking assets at USh 24.9 trillion, as at 30 June 2017,[23] with 7.4 million commercial bank accounts in the country.[24] At that time, there were 546 bank branches and 818 ATMs in Uganda.[23]

As of June 2019, according to the Uganda Deposit Protection Fund, total banking assets in the country were USh 30.3 trillion (US$8.34 billion), with total customer deposits of USh 22 trillion (US$6.05 billion), held in approximately 14 million deposit accounts. The total banking sector loan portfolio had a 3.48 percent non-performing loan ratio. At that time, the Deposit Protection Fund had assets valued at USh 689 billion (US$190 million).[25]

As of January 2020, according to Uganda Bankers Association, there were 13 million bank accounts in Uganda and 11,000 banking agents countrywide.[26]

As of December 2022, total assets in Uganda's banking institutions were valued at USh45.44 trillion (approx. US$12.3 billion). At that time the 10 largest commercial banks accounted for 82.18 percent of total banking assets, while the remaining 15 commercial banks held 17.82 percent. The top five banks held a combined market share of 57.54 percent of total national banking assets.[27]

The Uganda Deposit Protection Fund became operational in 1997. It is funded by premiums charged to every licensed deposit-taking financial institution in the country. Each account is protected up to USh 10 million.[43] The Depositor Insurance Law was enacted by Parliament and states that all depositors must be paid within 90 days of a bank failure and that 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 BoU.[43]

In 2008, the Bank of Uganda registered Compuscan CRB Ltd, a subsidiary of Compuscan, as the first credit reference bureau in the county.[44] In addition to its traditional credit bureau services, Compuscan CRB introduced and maintained the biometric identity smart card system used in the Ugandan financial industry.[45]

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 that were formerly in the 20 to 30 percent range had dropped to as low as 10 percent for the best customers at some banks.[46]

In 2015, Ugandan regulators licensed an additional credit bureau, Metropol Credit Reference Bureau Limited. Based out of Nairobi, Kenya, Metropol has operations in Kenya, Rwanda, Tanzania, and Uganda.[47][48]

• Asset allocation among commercial banks in Uganda
• List of banks in Africa (Uganda)

• The First Bank In Uganda
• Uganda: Commercial Banks Reeling
• Mixed Bag of Banking Stars:January 2014
• Overview of Uganda's Banking Sector In September 2013
• Ugandan Banks Swimming In Profits In 2011
• Most Ugandan Banks Had A Profitable 2010
• Overview of Uganda Banking Sector April 2010
• Resurgence of Uganda's Banking Sector
• Bank of Uganda Raises Minimum Capital For Commercial Banks From US$2 Million To US$12.5 Million (USh 4 Billion To USh 25 Billion)
• Bank of Uganda Working To Establish Islamic Banking In 2012
• List of commercial banks in Uganda