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Country Commercial Guides for FY 2000: Uganda Report prepared by U.S. Embassy Kampala, released July 1999   Note*

VIII. TRADE AND PROJECT FINANCING

Brief Description of the Banking System

Uganda's formal financial system is small and weak. The system includes Uganda's central bank, the Bank of Uganda (BOU), eighteen commercial banks, and two development banks. Three banks were closed by the BOU in September 1998, and two major banks were closed in 1999. On paper, the BOU has adequate auditing standards. However, it lacks auditors and regulators have reportedly overlooked BOU requirements for some troubled banks. To promote and maintain a sound and reputable financial sector, the Bank of Uganda has placed a moratorium on the licensing of banks and credit institutions offering banking services in the urban areas. New investors allowed entry into the sector must offer completely new financial services or take over existing banks. A deposit insurance fund with contributions from the GOU and banks has been put in place to protect depositors. The soundness of this fund is unknown.

Foreign Exchange Controls Affecting Trading

There are no foreign exchange controls affecting legitimate trade.

General Financing Availability and Terms of Payment

Finance is a major issue in Uganda. Banks are generally weak and hesitant to lend. In a survey by the Uganda Investment Authority completed in April 1995, the single most important impediment to investment in Uganda cited by investors was lack of finance. This is still a generalized sentiment.

While general financing is available through commercial banks and credit institutions, the interest rate spread over deposit rate is extremely high. Time periods for loan repayment are extremely short.

Types of Export Financing and Insurance Available

Eximbank is open in Uganda for short to medium term loans. OPIC is also open and can provide political risk insurance as well as financing for projects.

The Bank of Uganda provides export credit guarantee schemes which can be used through commercial banks. Letters of credit and other standard instruments are also used. GSM 102 credits have been available, but future availability depends on the soundness of participating banks.

Types of Project Financing Available

Multilateral institutions active in Uganda include the World Bank and the African Development Bank, as well as several European , institutions. Major development projects, in health, education, agriculture, and infrastructure, are financed by bilateral donors and/or international organizations.

Banks With Correspondent U.S. Banking Arrangements

Uganda Commercial Bank -- CitiBank, New York
Gold Trust Bank -- CitiBank, New York
Nile Bank -- CitiBank, New York
Barclays Bank (U) Ltd -- Barclays Bank PLC, New York
Bank of Baroda -- Chase Manhattan Bank, New York
Stanbic -- Bankers Trust, New York
Standard Chartered Bank -- Standard Chartered, New York