54 percent of non - account holders cite cost as a reason for not having an account. these costs are still high and there is scope for lowering them. there are a number of options available that could be tapped into to address some of these problems. for instance banks, credit institutions and microfinance could open branches even where they are unprofitable in the interim so long as they could be funded by other profitable branches ; extending mobile banking services, set up agencies etc. developments in new technology particularly mobile and internet banking could be leveraged to provide a notable platform for improving financial inclusion and an opportunity to move towards branchless odongo, albert. “ why ugandan banks should start promoting a saving culture. ” 26 march 2012. accessed on 17th january 2013. [ http : / / www. africa - uganda - business - travel - guide. com / why - uganda - banks - should - startpromoting - a - saving - culture. html ] bis central bankers ’ speeches banking. with technology costs falling over time this is one opportunity for addressing some of the cost issues. this notwithstanding, commendable growth in terms of products, size and intermediation has been registered in uganda ’ s financial sector over the last decade or so. this growth has however not compromised its soundness, owing in part to the prudent regulation and supervision by the bank of uganda. for instance, commercial banks ’ lending to the private sector increased from shs. 681. 9 billion in december 2001 to shs 7, 755. 3 billion in december 2012, yet the non performing loans as a ratio of total gross loans declined from 6. 5 percent to 4. 2 percent over the same period. other positive developments in the sector include the increase in the number of banks from 20 in 1999 to 24, bank branch network to more than 455 branches compared to 153 in 1999, and atm ’ s to more than 600 from 430 four years ago. amid these developments, there have been other equally important developments in form of massive investment in human capital accumulation in the sector, leveraging of technology to deliver better services, and continued innovation to meet user demands as evidenced by some new products such as internet banking and mobile banking, dedicated products for sme ’ s, credit cards, points of sale services with major service providers and retailers, etc. it is in this regard that i wish to appreciate and applaud kfw / gtz / giz whose programs in

closing remarks by prof. emmanuel tumusiime - mutebile, governor, bank of uganda launch of the eighth edition of the world bank ’ s uganda economic update : “ step by step – let ’ s solve the finance puzzle to accelerate growth and shared prosperity ” kampala, serena hotel february 7, 2017 ms. christina malmberg calvo, world bank country manager for uganda, members of the diplomatic corps, distinguished panelists, staff of the world bank in uganda, distinguished guests, ladies and gentlemen. i would like to begin by commending the world bank for publishing the eighth edition in the series of uganda economic updates, which over the last few years, have provided a valuable source of economic analysis for everyone with an interest in the ugandan economy. i would also like to thank the presenters, discussants and other contributors for all of the important insights they have given us this morning. given the main theme of this latest economic update, i would like to take this opportunity to offer my own perspective on the development of the financial sector in uganda, its role in the economy, and the challenges which it faces. page 2 of 8 to begin, i think that it is important to recognise the progress which the financial sector, and especially the banking sector, has made over the last decade. between the 2005 / 06 and 2015 / 16 fiscal years, commercial bank credit to the private sector expanded by more than threefold in real terms, at an average real rate of 12 percent per annum. although bank deposits also grew strongly over this period, by two and a half times in real terms, there was a marked rise in bank intermediation, with the ratio of bank loans to bank deposits rising from 53 percent to 70 percent. secondly, there has been a notable strengthening of competition in banking markets. the herfindahl hirschman index of market concentration in the banking market fell from 1, 508 in june 2006 to 909 in june 2016, denoting a substantial reduction in market concentration and an implicit rise in competition. the fact that competitive pressures have intensified in the banking market over the last 10 years is also reflected in a secular fall in the industry ’ s after tax returns on equity, from 32 percent in 2005 / 06 to 14 percent in 2015 / 16. page 3 of 8 it is no longer tenable to argue that banks in uganda make excessive profits. thirdly, although there have been occasional incidents of bank distress and failure over the last 10 years, prompt regulatory