Uganda Banking Sector safe
The banking sector in Uganda is safe and in perfect health according to governor Emmanuel Tumusimme-Mutebile. Governor Mutebile said this at a speech he read at an informal dinner organised by the Uganda Bankers Association(UBA) recently.
According to Governor Mutebile, there were factors which probably depressed economic growth in FY 2015/16, such factors he noted include the increase in market interest rates, the exchange rate volatility in the first half of the fiscal year and the presidential election in the third quarter which saw the incumbent Yoweri Kaguta Museveni defeat his rival Kizza Besigye.
Without an election, and with probably lower interest rates and hopefully less volatile exchange rates (although that is hard to predict), Governor Mutebile says that he would expect that conditions in the current fiscal year would be more conducive to growth and so expects Uganda will experience a small rise in the real GDP growth, to five percent or even slightly higher.
“In the last fiscal year, which ended in June 2016, real GDP growth was 4.8 percent, which is slightly below potential and the average of five percentage that the country has been experiencing, but is far from being a recession as some people have claimed,” he said. The Governor also acknowledged that trading conditions have been difficult for many businesses citing the increase in market interest rates and the exchange rate volatility.
In his speech, Governor Mutebile shades some light on the reason why the Uganda shilling was depreciating at an alarming rate against the US dollar. The Uganda shilling has depreciated against the dollar by 4.7 percent since October 2016. He attributable this depreciation to the strengthening of the US dollar against major currencies since the Presidential election in the US in November, which he says has led to expectations of higher interest rates in that country.