, the lowest for a generation, and never deviated more than one percentage point from that average. unemployment fell from almost 10 % to around 3 % on the claimant count, its lowest level for almost three decades, and has now been virtually unchanged for twenty months, by far its longest period of stability. the terms of trade moved in britain ’ s favour, raising our national standard of living. and output has risen in every single quarter since the middle of 1992, something that is true of no other g7 economy. why were the 1990s so successful? and can that success continue? four features of our economy lie behind this improved performance. first, the new monetary framework - based on an explicit target for inflation, a high degree of transparency, and, since 1997, independence of the bank of england made it clear to everyone that monetary policy was, and would continue to be, targeted on maintaining low and stable inflation. second, a substantial fiscal consolidation turned a deficit of 8 % of gdp in 1993 into a sustainable position for the public finances based on a set of clear rules for government debt. third, a continuing programme of supply - side reforms, over a period of 20 years, made it possible to reduce unemployment without generating higher inflation. fourth, although the unexpected twists and turns of the world economy did pose real challenges to monetary policy, especially in the latter half of the decade, those shocks tended to average out over time rather than cumulate in either an upward or downward spiral. in other words, the economic surprises alternated between good one year and bad the next, rather than adding up to “ one damn thing after another ”. in that sense, lady luck smiled on us. of course, we were not alone in enjoying the 1990s. in the united states growth was so rapid that at least two authors wrote books entitled “ the roaring nineties ” and another chose the title “ the fabulous decade ”. in contrast, continental europe experienced slow growth and heart - searching over structural reforms. as with much else, our economic performance lay somewhere between the excited exuberance of the united states and the relative disappointment of continental europe. so the uk experienced a non - inflationary consistently expansionary - or “ nice ” - decade ; a decade in which growth was a little above trend, unemployment fell steadily, and, supported by the improved terms of trade, real take - home pay rose without adding to employers ’ costs, thus allowing consumption to grow at above trend rates without putting upward pressure on

bank failures was poor corporate governance. in many of the failed banks, a dominant shareholder or group of shareholders was able to exert undue influence over the management of the bank which resulted in abuses such as pervasive insider lending. the losses incurred on insider loans were the single most important contributor to the collapse of these banks. the kenyan banking industry was also afflicted by multiple bank failures in the 1990s, with poor corporate governance playing a major role in these failures as it did in uganda. poor and abusive management was allowed to flourish in banks because their boards of directors were usually weak, lacking the professional expertise and often the independence and incentives to provide any effective oversight of bank management. the bank failures of the 1990s prompted the bou and the government to strengthen banking regulation. parliament enacted new legislation in 2004 – the financial institutions act – which, inter alia, raised minimum bank capital requirements, tightened restrictions on insider lending and mandated the bou to intervene promptly in failing banks before their bis central bankers ’ speeches capital is completely eroded and their depositors suffer losses. the fia also imposes a ceiling of 49 percent on the share of a bank ’ s equity which a single shareholder, or a group of related shareholders, can hold, in order to limit the influence of dominant shareholders, although this ceiling does not apply to shareholdings by reputable parent banks domiciled in other jurisdictions with good home country bank regulation. but we also recognised that statutory bank regulation and supervision by a public agency cannot be expected, on its own, to guarantee the sound management of banks. moreover, excessively heavy handed regulation, although it might protect depositors, can also stifle innovation and risk taking in banks, which would be detrimental to economic development. in a market economy, the onus for sound management, including the proper management of risks, must lie with the banks themselves. bank regulators cannot be a substitute for bad bank managers. as such good corporate governance is an essential complement to good bank regulation and supervision. this principle was made explicit in the financial institutions act, section vii of which was devoted specifically to providing a regulatory framework for good corporate governance in financial institutions. the provisions in section vii of the fia were supplemented by a set of corporate governance regulations which were issued by the bou in 2005. uganda ’ s corporate governance regulations were influenced by the guidelines published by the basel committee on banking supervision, based at the bank for international settlements, which is responsible for formulating global standards for bank