Transparency in the financial services industry has improved thanks to proper legal enforcements from the regulator – Bank of Uganda.
The Absa Group’s Africa Financial Markets Index 2022 shows that Uganda scored 90 percent in legal standards and enforceability, the highest score in pillar six.
This score reflects that there is a high level of transparency in the market being executed by players in the financial market and higher degree of enforceability of standards by the regulator and other financial service authorities in the palace.
This is because the higher degree of legal protection for both lenders and borrowers positively affects banking system performance or the financial services. Secondly, there is a positive relationship between the degree of law enforcement and banking system performance.
The annual Absa Financial Markets Index is measured on six pillars, which includes: Market depth Pillar, Access to foreign exchange Pillar, Market transparency, tax and regulatory, Capacity of local investors, Macroeconomic environment and transparency, legal standards and enforceability.
Uganda and Mauritius had the same score ranking third after Ghana, which was second and scored 95, Nigeria and South Africa scored 100 percent.
While presenting the report on January 31, the executive director and head of global markets Absa Bank Limited, Mr David Wandera said: “This is partly due to the legal provisions for the enforceability of collateral and netting-off. ”
Uganda’s transparency, tax and regulatory environment registered the largest increase to 81, from 60 in 2021.
Mr Wandera said this was due to an improvement in ESG initiatives after the Bank of Uganda launched a strategic five- year plan from 2022-27 which focuses on the ‘sustainability of the financial system and climatic risk’.
Regionally, Uganda was ranked number one in the East Africa followed by Rwanda at 43, Tanzania 55 and Kenya at 61.
