CSBAG Perturbed with Uganda’s Prolonged Lack of Bank Governor

The Civil Society Budget Advocacy Group (CSBAG) has expressed concern about Uganda having no Governor of National Bank now close to a period of three years, since the lose of Prof. Emmanuel Mutebile the former Governor.

Addressing the press in kampala,Wednesday, on the key economic issues that have transpired in 2024, the Executive Director, Mr. Julius Mukunda said, that Civil Society Organisations say the growing threats and increasing vulnerabilities in the financial sector is as a result of government's failure to appoint the central bank governor for the last three years.

He also indicated how the central bank plays a critical role in overseeing and regulating financial institutions, ensuring their stability and public's trust in the financial system and without the governor there is a significant leadership void that hampers effective oversight, governance and response to emerging financial threats such as rising incidences of cybercrime and operational lapses in the banking sector.

Mukunda emphasized that such threats highlight the critical need for competent and active central  bank governor to restore oversight ,enforce regulatory measures and improver cyber security within Uganda's financial sector.

He, however, drew his attention on the capping of money lender rates, were he described how a commendable move it is, being taken by the government, but it rather addresses only a symptom of a deeper, more complex issue, he said.

 “The real problem lies in the fundamental drivers of the demand for expensive credit, even when reasonably priced alternatives are available through commercial banks. The high demand for costly loans is largely driven by the government's consistent borrowing from the domestic market, which has crowded out private sector credit growth. By September 2024, cumulative credit to the government had reached 22 trillion UGX, compared to just 24 trillion UGX extended to the private sector,”  noted Mukunda

This large-scale borrowing by the government not only raises the cost of credit for businesses and individuals but also limits the availability of funds for the private sector, which is forced to pay higher rates as a result, said Mukanda.

The Government should therefore support initiatives to avail risk-related information on sectors and borrowers in the economy to enable transparent pricing of credit. It should on priority popularize the financial consumer protection guidelines 2019 and related regulatory frameworks that protect the consumers of financial products and services, he added.