bank are transferred to another bank ; a financially assisted merger of the failing bank with another bank ; or the provision of financial assistance to the failing bank to avert its failure as happens during statutory takeover by the regulator. page 6 of 8 mindful of the risk that deposit insurance would stoke moral hazard through encouraging banks to take greater risks, i want to assure you that the bou is committed to effective supervision of bank risk - taking, with particular attention to the quality and types of assets that banks acquire as well as the amount of capital that banks hold relative to the risks they take. in addition to the risk - based micro - prudential supervision, the bou also undertakes macroprudential regulation and supervision to ensure the stability of the entire system, including stress testing to ensure that the sector is resilient to various shocks. effective deposit insurance can contribute to financial stability, only with strong bank regulation and supervision in place. deposit insurance is no substitute for effective regulation and supervision of banks. through a risk - based supervision framework, the bou is committed to spotting problems well before insolvency occurs and compelling banks to take prompt and preemptive corrective action. as i come to the end of my remarks, i must stress the need for the nascent deposit protection fund ( dpf ) of uganda as an autonomous institution to prove its credibility and fitness for purpose before it gets tested in a period of difficulty. page 7 of 8 the dpf must be well funded, capably staffed, and should maintain the support of the central bank as well as that of the government as partners in ensuring the stability of the financial system. the dpf must also maintain strong links with regional and international peers so as to learn from the diversity of experiences and to maintain best practices. i look forward to working with the dfp as it plays its role within the africa regional committee of the international association of deposit insurers by contributing to the stability of financial systems through international cooperation and maintaining such a virtuous network as has gathered here for this conference. it is now my distinct privilege to invite the honourable minister of finance to address this audience. i thank you all for listening to me. page 8 of 8

transformation, because it allows an economy to invest in physical and human capital. uganda ’ s demographic transition has stalled because insufficient effort has been devoted to population policies. across the developing world, in countries with diverse cultures ( e. g. iran, malaysia, sri lanka ), fertility rates have been brought down because governments actively promoted smaller families, made contraceptives available to all the population and invested in reproductive health and women ’ s education. uganda should follow these examples and prioritise population policies to reduce the fertility rate as quickly as possible. 4. private investment in labour intensive modern industries uganda ’ s record of attracting private investment into labour intensive industries such as manufacturing is poor, which is one of the reasons why so few formal sector jobs in medium and large scale enterprises are being created. the essence of structural transformation is a large shift in the labour force out of low productivity, informal, traditional activities into modern, formal sector industries with higher productivity. this is what is driving structural transformation in developing asia. however, such a shift in the labour force is only possible if there is private investment in the modern sector, to create jobs in high productivity industries. private investment rates in uganda are around 20 percent of gdp, but this is only half the private investment rates in developing asia. uganda ’ s policies to boost private investment have been ad hoc and ineffective. fiscal concessions, such as tax holidays, by themselves, are not an effective tool for raising the overall rate of private investment, even if they are successful at attracting investment in a few individual cases. to boost private investment, many different aspects of the business environment must be improved, to reduce the cost and risks of doing business in uganda. these include : reducing the regulatory burden on business and the burden of lengthy customs procedures for exporters and importers, reducing the burden caused by demands for corrupt payments, strengthening the legal system to resolve commercial disputes fairly and expeditiously and improving the infrastructure in the transport and power sectors. because the ugandan domestic market is very small, the country will become a much more attractive destination for private investment only if firms located in uganda can serve the entire east african market. but this will only be possible if non tariff barriers ( ntbs ) to intra - regional trade in the eac are removed. the customs union in the eac has not yet been properly implemented because a multitude of ntbs are still in place, slowing down trade across borders within the region. bis central bankers ’ speeches