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Time Is Now To ‘Genuinely’ Liberalize Pensions Sector-BoU

The Bank of Uganda (BoU) has said that genuine liberalization of the pensions sector will play a big role in the growth of Uganda’s capital markets and the economy at large.

This was revealed by Dr.  Louis Kasekende, the Deputy Governor, BoU at the of launch of the 10-Year Capital Markets Development Master Plan held at Kampala, Serena Hotel on Thursday.

“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,” Kasekende said.

He added: “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.”

He observed that capital market is an important component of the financial system which entails funds being mobilized by firms, institutions or the government directly from savers through the issuance of equities or bonds.

“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,” he said, adding that 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,” he said.

He explained that as Uganda’s business sector 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.

He commended the Capital Market Authority for their efforts to spearhead the preparation of the Master Plan for the capital market, noting that the Bank of Uganda will continue to play a role in supporting capital markets development in Uganda.

 

 

 

 

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Richard Kamya
Richard is a Digital Communication Specialist and an Entrepreneur

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