BOU Calls For Calm
Sep 19, 2002
BANK of Uganda (BOU) continues to encourage the establishment of indigenous financial institutions, but warns they will not give them preferential treatment over foreign ones.
By Steven Odeu
BANK of Uganda (BOU) continues to encourage the establishment of indigenous financial institutions, but warns they will not give them preferential treatment over foreign ones.
This follows recent rumours that the Central Bank was trying to phase out locally-owned commercial banks in favour of strong foreign banks.
The Central Bank early this month closed Transafrica Bank, for insolvency, bringing to five the total number of locally owned banks closed in four years.
The new BOU Public Relations Chief, Juma Walusimbi, who officially replaced Mr. Walugembe Musoke on Thursday, said the financial sector was strong and stable.
“We gain nothing from killing the local efforts. The Central bank depends entirely on the strength of the financial institution. Our policy is to have strong banks in the sector and not those that are poor custodians of peoples’ monies,†said Walusimbi.
Walugembe, probably making his last official comments on the industry, said being an indigenous bank does not give a license to mismanagement of depositor’s funds.
“The Central Bank of India closed 150 poorly managed banks in a spate of ten days, while the Federal Bank closed 100 banks, most of them indigenous. We should not promote poorly managed banks, just because they indigenous,†Walugembe said.
Meanwhile the local foreign exchange market remained relatively stable in the past months, on the back of strong presence of the Bank of Uganda.
According to the latest Economic and Financial indicators released by the BOU, the monthly average mid-rate depreciated by only 0.2% from sh1802 per US dollar in July to sh1805.85 per US dollar in August.
The total impact of the BOU transaction in the market was a net sale of $18.5m, down from $31.55m in the previous month.
This has left the local unit relatively stable trading between sh1814/1818 for buying and selling respectively against the US dollar in major forex bureaux in Kampala.
The spread, which is the difference between the buying and selling remained relative narrow, declining from sh5.97 in July to 5.68 in August. Ends
BANK of Uganda (BOU) continues to encourage the establishment of indigenous financial institutions, but warns they will not give them preferential treatment over foreign ones.
This follows recent rumours that the Central Bank was trying to phase out locally-owned commercial banks in favour of strong foreign banks.
The Central Bank early this month closed Transafrica Bank, for insolvency, bringing to five the total number of locally owned banks closed in four years.
The new BOU Public Relations Chief, Juma Walusimbi, who officially replaced Mr. Walugembe Musoke on Thursday, said the financial sector was strong and stable.
“We gain nothing from killing the local efforts. The Central bank depends entirely on the strength of the financial institution. Our policy is to have strong banks in the sector and not those that are poor custodians of peoples’ monies,†said Walusimbi.
Walugembe, probably making his last official comments on the industry, said being an indigenous bank does not give a license to mismanagement of depositor’s funds.
“The Central Bank of India closed 150 poorly managed banks in a spate of ten days, while the Federal Bank closed 100 banks, most of them indigenous. We should not promote poorly managed banks, just because they indigenous,†Walugembe said.
Meanwhile the local foreign exchange market remained relatively stable in the past months, on the back of strong presence of the Bank of Uganda.
According to the latest Economic and Financial indicators released by the BOU, the monthly average mid-rate depreciated by only 0.2% from sh1802 per US dollar in July to sh1805.85 per US dollar in August.
The total impact of the BOU transaction in the market was a net sale of $18.5m, down from $31.55m in the previous month.
This has left the local unit relatively stable trading between sh1814/1818 for buying and selling respectively against the US dollar in major forex bureaux in Kampala.
The spread, which is the difference between the buying and selling remained relative narrow, declining from sh5.97 in July to 5.68 in August. Ends