By Namugerwa Martha
Deputy Governor of the Bank of Uganda Louis Kasekende (PhD.) has launched the 10-Year Capital Markets Development Master Plan on behalf of the Governor of the Bank of Uganda Prof. Emmanuel Mutebile at Kampala, Serena Hotel today in order to develop the financial sector and ensure the maximize of its contribution to the economy.
While at the launch, Kasekende said that the bank formed the financial markets development committee (FMDC) which is headed by Prof. Mutebile in order to steer the development if financial sector and ensure that it maximizes its contribution to the country’s economy.
“The FMDC coordinates reforms across the banking, capital markets, insurance and pensions 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 the depositors in commercial banks,” Kasekende said.
He added that the premise behind the creation of the FMDC in 2008 was the recognition of the vital and varied roles which the financial system must have performed to support economic development, for instance, the financial system must mobilize savings from households and corporations, and allocate those savings to a variety of economic agents which can put them to productive use.
“The financial system must also provide other financial services which are needed in a modern economy, such as payments and insurance services,” Kasekende added.
Kasekende further added that institutions such as the Bank of Uganda and the Capital Markets Authority are to safeguard the interests of savers and other users of the financial system, which is an important component of the financial system as the capital market 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, efficient capital markets are much better suited than commercial banks to provide long term finance to the corporate and public sectors,” Kasekende added.
Additionally, he said that as the business sector of our economy 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.