Emmanuel Tumusiime-Mutebile: Promoting financial independence in
Uganda
Speech by Mr Emmanuel Tumusiime-Mutebile, Governor of the Bank of Uganda, at the
official opening of Uganda Finance Trust Ltd. Head Office at Katwe and unveiling of a new
corporate identity, Katwe, 30 January 2008.
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The Chairman and Board of Directors Uganda Finance Trust MDI Ltd,
The Management and staff of Uganda Finance Trust MDI Ltd,
Invited Guests,
Ladies and Gentlemen
I would like to thank Uganda Finance Trust for inviting me to this auspicious occasion of
launching the new head office, and main branch, and the unveiling of the new corporate
identity of Uganda Finance Trust Ltd. I congratulate the Board, Management, and Staff of
Uganda Finance Trust on these achievements.
Today's event is truly significant in the history of Uganda Finance Trust as an institution and
as a strong player in the microfinance industry. Having been the pioneer microfinance
institution which was started by a group of professional women in 1984, Uganda Finance
Trust is living up to its mission of "Promoting Financial Independence" by providing unique
financial services to low income people in Uganda hence empowering them to be
independent financially.
The then Uganda Women Finance Trust, started as an NGO in 1984 offering microfinance
business to its customers when the savings capacity of the poor was still doubted. Of course
in some other developing countries, it had already been proved that the poor can save and
invest. Uganda Women Finance Trust focused mainly on low income households and the
small scale entrepreneurs, who were least likely to receive the attention of formal financial
service providers. When it became clear that the poor, even in Uganda can save, more
microfinance institutions emerged, but Uganda Women Finance Trust remained outstanding
for its focus on reaching poor women, both in the rural and urban areas. The Uganda
Women Finance Trust opened a number of branches countrywide, gaining national
recognition as well as outreach and experience.
In October 2004, Uganda Women Finance Trust was transformed from an NGO limited by
guarantee, to Uganda Finance Trust (MDI) Limited, a company limited by shares. Then the
Company obtained a licence as a Microfinance Deposit-taking Institution in October 2005
and it became the fourth licensed MDI in the country. This not only led to Uganda Finance
Trust redesigning its operations but also it set the stage for the Company to pursue financial
sustainability.
I am glad that the achievements so far made by Uganda Finance Trust Ltd have enabled the
Company to continue to serve its original targeted clients. Today, Uganda Finance Trust
operates 21 branches across the country and serves close to seventeen thousand clients
(17,000), with an outstanding loan portfolio of Shs 14.9.billion and a customer deposit base
of Shs 7.8 billion. However, I am made to understand that a large portion of the loan portfolio
of Uganda Finance trust is still funded by long-term borrowing at market interest rates. This is
costly. I would, therefore, encourage Uganda Finance Trust to endeavour to get access to
relatively cheap funds through rigorous mobilisation of deposits so that the institution can
ensure substantial reduction in product pricing and thereby continue with increasing outreach
and market visibility.
The occasion we are celebrating today is a clear testimony that the institution has now
embarked on another phase signified by its "coming closer to its target clients" and "unveiling
of new corporate identity". I believe the timing is right, particularly in the face of increased
competition both from bigger and smaller institutions that are also aiming at the same clients.
The appropriate positioning of the institution's corporate identity as well as its policies,
procedures and practices, is critical. The challenge of attracting new clients and depositors,
as well as retaining the existing ones will definitely increase.
With reference to risk assessment evaluations which Bank of Uganda applies in examining
financial institutions, I note, that Microfinance Deposit-taking Institutions (MDIs) are
particularly exposed to governance risk, credit risk, liquidity risk, operational risk, interest rate
risk and reputation risk. On the other hand, I also note that the Institutions have in general
experienced stable growth in capitalisation, asset quality, management, liquidity and
profitability. With particular reference to Uganda Finance trust, I am glad to note that the
institution's overall performance as at end December 2007, was satisfactory under the
CAMELS rating system. The risk management framework was adequate, signifying the fact
that the institution has put in place adequate systems to identify, measure, monitor and
control risk inherent in its operations. The challenge for the Board and management of
Uganda Finance Trust is to meet regulatory requirements on an on-going basis through good
corporate governance and ensuring continuous observance of adequate risk management
practices.
On its part, Bank of Uganda will continue to ensure macroeconomic stability and to provide
adequate regulatory environment for the financial sector. The supervisory and regulatory
capacity of Bank of Uganda is strong. The risk based supervision methodology that is applied
in the examination of financial institutions, enables us to identify the warning signs in the
supervised institutions well in advance and to take appropriate corrective actions. We shall
also continue to work closely with Government Ministries and agencies to ensure that
operations of other microfinance institutions are properly conducted. The proposals for
streamlining policy on regulation and supervision of the different forms of microfinance
institutions have already been undertaken by Government.
You will note that of recent, Bank of Uganda has made public statements in the print media
warning that the operations of unlicensed deposit taking business in Uganda constitutes an
offence punishable under the provisions of the Financial Institutions Act 2004 and under the
Microfinance Deposit-taking Institutions Act 2003. I, therefore, strongly advise the general
public not to risk losing money deposited or placed in unregulated institutions. In addition,
Bank of Uganda will continue dialogue with the Commissioner for Cooperative
Development/Registrar for Cooperative Societies, and other stakeholders in the microfinance
industry to ensure that the microfinance industry is governed in accordance with the relevant
regulatory requirements.
The Association of Micro Finance Institutions in Uganda (AMFIU) has also published lists of
Micro finance institutions and SACCOS affiliated to it in the news papers. The list for
registered Cooperative Societies can be obtained from the Registrar of Cooperative
Societies/ Commissioner of Cooperative Development in the, Ministry of Trade, Tourism and
Industry. I urge the public to take note of these developments.
Finally, it is now my privilege and honour to declare the new Uganda Finance Trust Ltd
Head Office and Main Branch open and I, also, hereby unveil the new Corporate Identity.
I thank you for your attention.