NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, January 11, 2016

After nearly six years in the making, it took Members of Parliament a single day to pass amendments to the 2004 Financial Institutions Act.

The much-awaited reforms, expected to boost operations of banks in the country, were passed by the Parliament last Wednesday.

The legislators passed the Financial Institutions (amendment) Bill 2015 that introduces three new products: Islamic Banking, Bancassurance and Agent Banking, to Uganda’s banking sector.

“These amendments are a very welcome development in the banking sector as they enable enhanced latitude for the financial institutions to offer more and better and convenient services to clients thus enhancing financial inclusion. We are grateful to the legislators and Bank of Uganda (BoU) for this development,” Mr Fabian Kasi, the managing director Centenary Bank, told Daily Monitor.

The amendments await President Museveni’s approval before the implementation process begins.

Outdated law

At the time the proposed amendments were tabled in August 2015, state minister for Finance in charge of general duties Fred Omach said the Financial Institutions Act 2004 was outdated and did not provide an opportunity for the banking sector to explore new products.