louis kasekende : developments in uganda ’ s banking industry speech by dr louis kasekende, deputy governor of the bank of uganda, on the occasion of celebrating forty ( 40 ) years of tropical bank limited ’ s banking operations in uganda, kampala, 4 december 2013. * * * your excellency, the president of the republic of uganda the hon. minister of finance, planning and economic development the board of directors, tropical bank limited the managing director and senior management of tropical bank limited invited guests in your respective capacities ladies and gentlemen i wish to first and foremost, welcome and thank his excellency the president of the republic of uganda, president yoweri kaguta museveni for taking time off your busy schedule to come and join us at this auspicious occasion when tropical bank limited is celebrating forty ( 40 ) years of successful operations in uganda and also launching its new corporate identity. i also wish to congratulate the shareholders ( the governments of libya and uganda ) together with the board of directors, management and staff of tropical bank upon the attainment of 40 years of banking operations in uganda. tropical bank, as you have already heard, opened its doors to the public in uganda in 1973 under the name the libyan arab bank for foreign trade and development. in order to suit the changing trends and maintain its competitiveness in the banking industry, tropical bank has rebranded a number of times since inception in 1973. in 1994, the bank ’ s name was changed from libyan arab uganda bank for foreign trade and development to tropical africa bank limited. in may 2006, the bank again changed its name to tropical bank ltd. your excellency, please allow me also to point out that the bank has continued to work very closely with bank of uganda especially during its challenging times. in 2011, the un security council imposed a freeze on assets of the government of libya and associated entities including the libyan foreign bank, the majority shareholder of tropical bank. consequently bank of uganda on march 25, 2011 put in place measures that were intended to protect the interest of depositors. tropical bank continued to operate normally and remained in a safe and sound condition. the bank ’ s financial condition has remained strong with capital position of shs. 46. 51 billion ( well above the statutory requirement of shs. 25bn ), branch network of ten ( 10 ) and sixteen ( 16 ) atms. the bank has also improved its it platform in order to provide customized financial services in the

the capital markets authority, to safeguard the interests of savers and other users of the financial system. while we recognize that financial markets are characterized by market failures, it is often very difficult, in practice, for governments to correct these failures and efforts to do so are often counterproductive. an important component of the financial system is the capital market, which entails funds being mobilized by firms, institutions or the government directly from savers through the issuance of equities or bonds. although market based financial systems are sometimes contrasted with bank based systems, this is in some respects a false dichotomy. the capital market is not a substitute for the banking sector. instead capital markets and the banking sector are complements ; each catering for different needs of the economy in terms of financial services. in particular, efficient capital markets are much better suited than commercial banks to provide long term finance to the corporate and public sectors. the capital market is also better placed to accommodate the needs of investors – both institutional and personal – who require long term assets and have a higher appetite for risk than is typical among depositors in commercial banks. as the business sector of our economy develops and as a larger share of the population are able to participate in institutional vehicles for savings, such as pension schemes, the demand for capital market instruments will grow. in this regard, i would like to note that one of the most important reforms for stimulating capital market development in this country is the genuine liberalization of the pensions sector, so that all pension providers licensed by the uganda retirement benefit authority can compete on a level playing field to manage both mandatory and voluntary pension contributions. we have been discussing pension reform for the last 20 years. we have put in place the appropriate regulatory structure. now is the time to liberalize the sector and open it up to competition. monopoly is never conducive to the vibrant growth of a market. to conclude, i would like to commend the capital market authority for their efforts to spearhead the preparation of the master plan for the capital market. the bank of uganda is proud to have contributed to these efforts and we will continue to play a role in supporting capital markets development in our country. thank you for listening.