Latest news with #BankofUganda
TimesLIVE
17-07-2025
- Business
- TimesLIVE
Uganda's reserves rise by a third due to central bank forex purchases
Uganda's foreign exchange reserves rose by about a third over the past year, after what a central bank official described as direct purchases by the bank following healthy forex inflows from commodity exports and offshore sales of government bonds. Gross reserves stood at $4.3bn (R76.93bn) in June, equivalent to 3.8 months of import cover and up from $3.2bn (R57.25bn) a year earlier, the finance ministry's Permanent Secretary Ramathan Ggoobi told a press conference. Jimmy Apaa, the central bank's director for financial markets, told Reuters the bank had bought close to $2.2bn (R39.36bn) from the foreign exchange market from July 2024 to June 2025 to boost reserves. Healthy foreign-currency inflows from exports of commodities such as coffee and cocoa and offshore flows into Ugandan government bonds for their relatively high interest rates had helped the bank make the purchases, Apaa said. The Bank of Uganda has previously said it plans to buy gold to diversify its reserve holdings. Uganda's economy has recorded strong growth in recent years, supported by oil-sector investments and infrastructure spending. But rising government debt and servicing costs have threatened the sustainability of public finances.
Zawya
30-06-2025
- Business
- Zawya
Uganda's export revenues dip on high informal trade
Uganda's exports to East African Community (EAC) markets have declined by Ush820.5 billion ($228.19 million), blamed on a host of challenges confronting business owners in the past one year. These challenges, including non-tariff barriers, are pushing traders into informal channels as they seek to dodge red tape. The Bank of Uganda's (BoU) latest trade data shows Uganda's exports to South Sudan, Tanzania, Kenya, and Rwanda took big hits, due to a combination of domestic protectionist tendencies, geopolitical tensions, and other non-tariff barriers. Combined, Uganda exports through both formal and informal transactions to the four markets dropped from $1.88 billion in May 2023-April 2024 to $1.66 billion in April 2024-May 2025. While reading the 2025/2026 EAC budget, Beatrice Askul Moe, chairperson of the EAC Council of Ministers and Kenya's Cabinet Secretary for East African Community, Arid and Semi-Arid Lands, said that at least 47 non-tariff barriers were reported in different member states in the previous fiscal year. Only 16 NTBs were resolved, and 31 remain. This means, despite the EAC's efforts to promote free trade, some of these NTBs are pushing many East Africans into informal cross-border trade, which creates an uneven playing field for formal businesses. Some of the goods, which dominated informal trade in Uganda are maize, beans, fish, fruits, bananas, eggs, onions, cattle and tomatoes. Uganda Bureau of Statistics also names footwear and parts, clothes, maize flour, alcohol/spirits, mattresses, bags, soda, bed sheets, sacks, cement, and synthetic hair as some of the industrial goods traded in the EAC informal market. Democrativc Republic of Congo remains Uganda's biggest informal export market, which surged from $318.84 million in May 2023-April 2024 to $359.70 million in May 2024-April 2025. The huge informal market flourishes even after Uganda Revenue Authority closed operations at Uganda's borders with eastern DRC on March 3, 2025. This means there is growing smuggling of goods from Uganda to other East African markets after the taxman closed Cyanika in Kisoro district and Katuna in Kabale district, as well as the Uganda-DR Congo border of Kyeshero and Ishasha in Kanungu district. In South Sudan, Uganda's exports also suffered steep fall, from $661 million to $556.12 million, after Juba ran into financing difficulties when revenues from oil exports were cut because of the war in Sudan. A World Bank report, A Pathway to Overcome the Crisis, confirmed the gravity of the situation when it reported that South Sudan suffered a 30 percent GDP contraction, a $7 million-per-day revenue loss, and sky-high poverty levels. Uganda's formal exports to Kenya also took a hit from Kenya's continued use of tariffs and quotas to protect its domestic market from competition. For instance, Brookside Uganda, which used to export over 90 percent of its milk to Kenya, has been blocked for about three years now. Rwanda's imports from Uganda also registered a slight decline, from $311 million to $292.75 million. Formal exports slowed from $291.44 million to $251.61 million. Over the past four years, Kigali has been building its industrial production capacity, cutting some supplies from Uganda. For instance, before 2019, Rwanda was importing over 59 percent of cement and most building materials from its northern neighbour. But Narendra Raval, executive chairman of Devki Group, which owns Cimerwa Cement, earlier told The EastAfrican that Kigali was racing against time to be 100 percent import-free, a move that would save $160 million in foreign exchange Rwanda has been spending on cement imports. Cimerwa increased production from 600,000 tonnes to 1.2 million tonnes annually. Uganda's exports to Tanzania also declined from $202.33 million to $171.8 million. Uganda also suffers from low production capacity and, as such, the country is struggling to satisfy the domestic market. Shadow Finance minister Ibrahim Nganda Ssemujju said that most of his country's 2,263 agro-processing facilities (APFs) established nationwide, including zonal industrial hubs, industrial parks, and urban markets, are struggling.'Forty percent of the APFs are non-functional, and more than 50 percent are performing below capacity,' Ssemujju said in an alternative budget he presented in Parliament. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
Zawya
13-05-2025
- Business
- Zawya
Uganda's central bank holds policy rate, citing inflation risks
KAMPALA: Uganda's central bank kept its key lending rate at 9.75% for the third monetary policy meeting in a row on Tuesday, citing heightened global risks to the inflation outlook. Core inflation rose to 3.9% in annual terms in April from 3.6% in March, moving closer to the bank's medium-term target of 5%. Bank of Uganda Governor Michael Atingi-Ego said the Monetary Policy Committee considered the current policy stance appropriate to keep inflation on target while supporting sustainable economic growth. "In light of the prevailing domestic and global uncertainties and the elevated risks to the inflation outlook, the MPC decided to maintain the Central Bank Rate," Atingi-Ego told a press conference. Inflationary risks included stronger domestic demand, an escalation of geopolitical tensions, and new trade restrictions that could disrupt global supply chains, he said. The central bank's economic growth forecast for the financial year to the end of June 2025 was unchanged at between 6% and 6.5%, supported by improved agricultural and industrial activity, and increased investments particularly in the extractive sector. The East African country aims to start pumping crude oil commercially from the middle of next year. The inflation outlook remains broadly aligned with forecasts from the last MPC meeting in February, with core inflation averaging between 4.5% and 5% next financial year before converging on the 5% target in the medium term, Atingi-Ego said. "While inflation remains contained, the balance of risks suggests a greater likelihood of upward pressures in the near term," the governor said.
Business Recorder
13-05-2025
- Business
- Business Recorder
Uganda central bank holds lending rate for third time in a row
KAMPALA: Uganda's central bank maintained its key lending rate at 9.75% for the third monetary policy meeting in a row on Tuesday amid heightened global risks to the inflation outlook. Core inflation rose to 3.9% in annual terms to April from 3.6% in March, moving closer to the bank's medium-term target of 5%. The Bank of Uganda's Governor Michael Atingi-Ego said the Monetary Policy Committee (MPC) considered the current policy stance appropriate to maintain inflation within the target while supporting sustainable economic growth. 'In light of the prevailing domestic and global uncertainties and the elevated risks to the inflation outlook, the MPC decided to maintain the Central Bank Rate,' Atingi-Ego told a press conference.
Zawya
10-04-2025
- Business
- Zawya
Why majority of depositors in two failed Ugandan banks cannot be paid?
Savers in two collapsed Ugandan lenders were paid only 16.54 percent of their total claims by June 30, 2024, largely because of inaccurate information, hidden details and non-responsiveness to regulatory guidance, new disclosures show. This frustrated the compensation process after the closure of EFC Uganda Ltd and Mercantile Credit Bank in January and June 2024 respectively, allowing savers to only access Ush613.75 million ($164,543) of their total savings in the two institutions, and leaving Ush3.09 billion ($828,414) unpaid. The Uganda Deposit Protection Fund (DPF) says it held press conferences to inform the public and depositors about the procedures and timelines for reimbursement following the closure of the two banks, but the payout process has been ongoing with a few challenges, especially for depositors with incomplete Single Customer View (SCV) and Know Your Customer (KYC) data.'The Fund faced challenges in reimbursing depositors due to inaccurate information, untraceable KYC, and non-responsive depositors,' the DPF says in its latest integrated annual report for 2024.'To address this, the Fund issued reminders in the press, online, and via radio, and worked with the Bank of Uganda for additional Know Your Customer (KYC) details. Despite these efforts, the Fund remains unsure when depositors will claim their protected deposits.'A KYC check is the mandatory process of identifying and verifying the client's identity when opening an account and periodically over time. DPF data shows the total protected deposits (net of loan balances) in the two institutions stood at Ush3.71 billion ($1 million), of which only 16.54 percent ($164,543) was paid out to depositors, leaving an unpaid balance of Ush3.09 billion ($828,414) as at June 30, 2024. The deposit insurance scheme compensates victims of failed banks by up to Ush10 million ($2,680), with those customers having paid more than the excess from the liquidation proceeds. EFC (U) Ltd and Mercantile Credit Bank Ltd were closed by the Bank of Uganda (BoU) on January 19, 2024, and June 18, 2024, respectively, prompting the DPF to embark on paying the protected deposits up to a maximum of Ush10 million per depositor per institution. The EFC's total protected deposits (net of loans) stood at Ush655.63 million ($175,771), of which amount paid to verified depositors stood at Ush496.57 million ($133,128), leaving unpaid deposit balance of Ush159.05 million ($42,640.5). Its total loan balances recovered from depositors and not yet remitted to the liquidator (BoU) were Ush877.7 million ($235,307) as at June 30, 2024, with the total recovered loans amount payable as Ush877.7 million ($235,307). The total protected deposit balance (net of loans) for Mercantile Credit Bank Ltd stood at Ush3.05 billion ($817,690), of which Ush117.17 million ($31,412) was paid out to verified depositors, leaving an unpaid deposit balance of Ush2.93 billion ($785,518). DPF started to pay depositors of the two financial institutions within six days after closure in order to foster the much-needed confidence in the banking sector. Mercantile Credit Bank Ltd, a tier-2 credit institution, was shut down on account of insufficient liquidity levels and failure to comply with new capital requirements. The minimum capital requirements for a tier-2 credit institution were raised from Ush10 billion ($2.68 million) to Ush25 billion ($6.7 million) effective June 30, 2024, alongside increases applied to existing minimum capital requirements for both commercial banks and micro deposit-taking institutions (MDIs). Financial institutions regulated by BoU are required to contribute annual premiums to the DPF, where annual premiums are computed at 0.2 percent of the average weighted deposit liabilities for the contributing institution in the previous financial year, while risk-adjusted premiums are based on the quarterly ratings from the Bank of Uganda. An institution rated marginal pays an extra charge of 0.1 percent of average weighted deposit liabilities, while an institution rated unsatisfactory pays an extra charge of 0.2 percent of the average weighted deposit liabilities, in addition to the annual premium. After the closure of EFC (U) Limited and Mercantile Credit Bank Ltd, DPF embarked on the exercise of paying the protected deposits up to a maximum of Ush10 million, each marking the first payout since DPF was established as a separate legal entity from the central bank in 2016. Of the Ush10 million compensation, 98 percent of the value of the total deposits in the financial sector are fully protected, thus providing confidence in the sector by ensuring that a majority of depositors are paid in time if a contributing institution is closed, and the Fund is advised to payout. Total deposits within the banking sector grew by four percent to Ush36.4 trillion ($9.75 billion) as at June 30, 2024 from Ush35 trillion ($9.38 billion) as at June 30, 2023, of which 19.3 percent (Ush7 trillion -- $1.87 billion) of the total deposits were protected. The banking sector also witnessed an 11.7 percent increase (2.8 million) in the total number of accounts to 26.8 million from 24 million. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
