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New UBA Boss Kakeeto talks banking industry direction, hurdles ahead

Following his election last week as chairman of the new Uganda Bankers' Association (UBA), Julius Kakeeto is opening up the state of the banking industry, opportunities for growth, and challenges that lie ahead. Kakeeto, who is also the Managing Director of PostBank, sat down for an interview, where he expressed confidence in the industry's stability and resilience, highlighting positive indicators like a 7.5% growth in total assets for Supervised Financial Institutions (SFIs) and a decrease in the non-performing loan ratio.

Julius Kakeeto is the new UBA Chairman
  • Julius Kakeeto is the new chairman of the Uganda Bankers' Association (UBA) and the Managing Director of PostBank
  • Opportunities for growth are identified in the unbanked population, Small and Medium Enterprise (SME) sector, oil and gas, construction, agro-processing, manufacturing, infrastructure development, and the service industry
  • Challenges include fostering a credit culture, addressing electronic fraud, reducing high operational costs, and mitigating the impact of climate change on credit portfolios
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"The industry is well-positioned," Kakeeto affirmed, attributing this in part to continued investment in ICT and digital channels. He pointed to a near doubling of industry spending on ICT in 2023 compared to the previous year.

Opportunities Abound

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Kakeeto identified a wealth of opportunity within the Ugandan market citing the huge unbanked population that needs services and a variety of products

He also pinpointed businesses, especially those in the Small and Medium Enterprise (SME) sector, as having significant unmet needs.

The burgeoning oil and gas sector, construction and real estate, agro-processing and manufacturing, infrastructure development, and the service industry were all mentioned as areas presenting exciting prospects.

"The industry is well positioned to harness this opportunity," Kakeeto reiterated, emphasizing the role of increased capitalization and digitization in this endeavor.

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Kakeeto acknowledged challenges as well. He pointed to the importance of fostering a credit culture that encourages responsible borrowing and repayment. Electronic fraud (e-fraud) was another concern he addressed, highlighting the need for increased public awareness to mitigate risks.

"The industry works with numerous third parties to deliver services," Kakeeto explained, "and if any link in the chain is weak, it can be exploited." He also emphasized the need to address high operational costs stemming from factors like delayed settlements and inefficient legal systems. The impact of climate change on credit portfolios was mentioned as another pressing concern.

Kakeeto underscored the banking industry's critical role in supporting the delivery of Uganda's National Development Plan III (NDP III). "We encourage savings and pool these savings to avail them for lending across all sectors of the economy," he explained. The industry, according to Kakeeto, plays a vital role in facilitating trade, manufacturing, infrastructure development, housing, education, tourism, and ICT development, all of which are cornerstones of NDP III.

Banks, Kakeeto elaborated, play a crucial role in tax collection and government lending, further contributing to the nation's development. Financial literacy initiatives and the channeling of funds through the Parish Development Model were also highlighted as areas where the banking industry is actively involved.

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"The industry is best viewed from an enabler or facilitator point of view," Kakeeto concluded, solidifying the banking sector's position as a key driver of Uganda's economic growth.

Kakeeto emphasized the importance of business sustainability and the newly elected executive's commitment to embracing the Environmental, Social, and Governance (ESG) Framework. This framework, he explained, would enhance the industry's responsibility towards society, customers, and stakeholders.

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