. it is this which provides the primary rationale for the regulation of the financial system by a public agency. this regulation is prudential in nature ; it is intended to ensure that financial institutions are soundly manged and thereby to protect their depositors, or other customers such as holders of insurance policies, and also to protect the overall stability of the financial system. the regulatory framework in uganda uganda has four separate financial sector regulators which each regulate and supervise a specific set of financial institutions or financial markets. these four regulators are the bank of uganda, the insurance regulatory authority, the capital markets authority and the retirement benefits regulatory authority which regulate, respectively, deposit taking financial institutions, insurance companies, the capital markets and the pension sector. we have separate regulators rather than one single multi - sector financial regulator mainly because there are qualitative differences between the four main types of financial markets in terms of the objectives of regulation and especially with regard to the supervisory methodologies and techniques employed by the regulators. consequently, there would be little to be gained by combining the regulation of, for example, banks and financial markets, within one single regulatory agency. this is the case in most countries, where banking regulation and supervision is separate from that pertaining to non - bank financial institutions and markets. each regulator in uganda conducts its supervisory and regulatory operations according to the requirements of a specific piece of legislation. deposits taking financial institutions are regulated under the financial institutions act, 2004 and the micro deposit taking institutions act, 2003 ; insurance companies are regulated under the insurance act, 2017 ; capital markets are regulated under the capital markets authority act and its subsequent amendments ; the pensions industry under the retirement benefits regulatory authority act, 2011. hence all of the four financial sector regulators conduct their operations within a legal framework which has been legislated for by parliament, and which sets out their statutory responsibilities, objectives and powers. the primary objectives of each regulator depend on the characteristics of the financial market that they regulate. for example, the majority of the liabilities of banks are customer deposits. banks also dominate the financial sector and perform crucial functions in the economy, such as transacting payments. consequently the primary objectives of the bank regulator, the bank of uganda, is to safeguard the interests of depositors, so that they do not lose their savings as a result of reckless bank management or fraud, and to protect the overall stability of the banking system ; i. e. to prevent a banking crisis which would be extremely disruptive for the economy. in

this implies that if only banks and other financial institutions could lower their lending rates and expand the volume of their lending, substantial numbers of businesses in the economy would be able to borrow money for investment in order to boost their output while servicing their debt and increasing their incomes. while i remain uncomfortable with the high lending rates and believe that they should be reduced sustainably over time, i dare say that access to credit is not the ultimate binding constraint on economic growth. we must think holistically about the challenges holding back the power of finance to transform our economy. proper diagnostics must reveal the problems that constrain agricultural finance before we devise durable solutions. we must examine the borrowing capacities of the businesses in our real sector. on one hand, financial institutions are challenged to rethink their views of bankable projects so as to design page 4 of 8 solutions for potential borrowers at their level. on the other hand, formal sector creditworthy businesses, which have been the main clients of commercial banks, comprise a small share of the economy. informal business and micro - enterprises abound and their capacity to utilize credit effectively is constrained, including by inadequate business and technical skills, the high costs of inputs, and unpredictable market conditions. fortunately, some financial institutions have started tackling these problems through business incubation programs. moreover, through automation and adoption of new technologies for delivering financial services, it is possible for banks to reduce their operating costs, and pass on the savings to borrowers through reduced lending rates. i am also optimistic that banks will exploit the potential of bancassurance to exploit synergies with insurance to design products for the riskier borrowers. indeed, i am anxious to learn from the speakers about uba ’ s plans to de - risk financing and investment in agriculture. i must applaud the uba for embracing the role that can be played by the financial sector in transforming our people into a non - agrarian workforce and urban - dwelling page 5 of 8 populace. but i must add that it will take a comprehensive approach by all sectors to bring about this transformation. indeed, the fruits of higher labour productivity in nonagriculture sectors, and higher living standards in urban areas enjoin the government to develop the manufacturing and service sectors in order to absorb the youths who are migrating from rural areas. research conducted by the international growth centre has shown that it is possible for uganda to industrialise through prioritization of high productivity services or non - traditional “ industries