The Deputy Governor of Bank of Uganda (BoU), Michael Atingi-Ego (pictured) commends Centenary Bank for accelerating digitalization in the country.
He made the remarks while officiating at the launch of Centenary Bank’s platinum Mastercard debit card on Monday 29 November, 2021 at Serena Hotel, Kampala.
In his speech, he pointed out that “The spike in the usage of digital financial and payment services during the pandemic has been astounding.” He commended Centenary Bank for having “played a part in this domestic acceleration of digitalization,” saying “the launch of its Mastercard Platinum debit card is only the next evolution of its digital channels.”
At this moment, he said, digitalization offers enormous potential, but the Covid-19 pandemic has introduced great uncertainty for the economy that has just been worsened by the emergence of the Omicron variant last week.
“The second wave of the Covid-19 pandemic interrupted the economic recovery that had gotten underway in 2021 due to supportive central bank and fiscal policies,” Atingi-Ego said, adding: “While more time is required to judge the impact of the Omicron variant, a balanced and proportionate response, together with
vaccination and the observance of the SOPs will help to keep the economy on the path to full reopening in 2022.”
He added that contingent on the evolution of the pandemic and the path for full reopening, economic growth is projected in the range of 3.5 – 3.8 percent in 2021/22 and is likely to gain strength to 5.5 – 6.0 percent in 2022/23 backed by private consumption, external demand, and investment in the oil sector.
Atingi-Ego noted that the banking sector’s resilience to the pandemic shock has been aided by the Bank of Uganda’s policy measures although systemic risks are heightened due to the slow pace of economic recovery.
“The banking sector non-performing loans ratio rose to 5.4 percent in the quarter to September from 4.8 percent in June 2021,” he said, adding: “In an environment of increased risk aversion, banks holdings of government securities spiked 31.1 percent in the year to September 2021.”
He added that private sector credit growth declined to 8.6 percent in the year to September 2021 from 10.2 percent in the year to September 2020.
“The banking sector remains liquid and profitable although strict vigilance must be maintained against the impact of potentially higher NPLs going forward,” he said.
He added that BoU has gradually reduced the central
policy rate from 9 percent in February 2020 to an all-time low of 6.5
percent in August 2021 and kept it steady beyond to stimulate the
recovery of economic activity.
“We continue to urge commercial banks to reduce lending rates in step with the central bank rate, especially since inflation has remained contained and its outlook is benign,” he said, adding: “Having maintained the credit relief measures for the hardest-hit contactintensive sectors that remain under pandemic containment restrictions, the BoU is pleased that commercial banks have committed to easing the debt burden facing the education and entertainment sectors, on a caseby-case basis and at the discretion of each lender.”
Atingi-Ego revealed that the value of payments by mobile banking, debit cards, POS, mobile money, and internet banking shot up by 84.4%, 75.6%, 46.0%, 43.1%, and 31.8%, respectively, from September 2020 to September 2021.
“The spike in the usage of digital financial and payment services during the pandemic has been astounding,” he said, adding: “Card and contactless payments are popular for obvious and subtle
reasons. They are cleaner than using cash, cheaper than wire transfers, quicker than using cheques, and, obviously, not as risky as sending cash via the post office or on a bus.”
