Governor Atingi-Ego Says BoU Auction Attracted Back Offshore Investors as Shilling Gains Strength

The Governor of the Bank of Uganda (BoU), Dr. Michael Atingi-Ego, has revealed that the central bank's latest auction has attracted offshore investors who had previously withdrawn from Uganda's securities market. This development has contributed to the appreciation of the shilling against the US dollar. Atingi-Ego made these remarks while appearing before Parliament's Committee on Commissions, Statutory Authorities and State Enterprises (COSASE).

According to Atingi-Ego, the recent interventions to stabilise the shilling must be complemented by deliberate efforts to strengthen domestic production and exports. He emphasised that promoting value addition to locally produced raw materials and prioritising exports over imports would help sustain the gains registered in the foreign exchange market and strengthen the economy.

The central bank governor also urged legislators to push the government towards implementing the country's 10-fold growth strategy. This strategy focuses on expanding economic production through value addition, industrialisation, and increased competitiveness. Atingi-Ego believes that this approach will help Uganda achieve sustainable economic growth.

Atingi-Ego cautioned that the Bank of Uganda's interventions to stabilise the shilling are largely short-term measures and cannot provide a sustainable solution without corresponding improvements in the productive sectors of the economy. He stressed the need for a combination of monetary policy measures and long-term economic reforms to strengthen Uganda's productive capacity.

As part of the monetary interventions, the Bank of Uganda increased the Cash Reserve Ratio (CRR) from 11 per cent to 13 per cent. The CRR represents the minimum proportion of commercial banks' total customer deposits and liabilities that must be maintained as liquid reserves at the central bank. This move aims to regulate commercial banks' lending and borrowing activities.

Atingi-Ego emphasised the importance of combining monetary policy measures with long-term economic reforms to strengthen Uganda's productive capacity, boost exports, and reduce dependence on imports. He believes that this approach will help the country achieve sustainable economic growth and stability.

The Bank of Uganda's efforts to stabilise the shilling have shown positive results, with the shilling gaining strength against the US dollar. However, Atingi-Ego stressed that sustained efforts are needed to achieve long-term economic stability. He encouraged the government to implement policies that promote economic growth, industrialisation, and value addition.

Key points

• The Bank of Uganda's auction attracted back offshore investors who had previously withdrawn from Uganda's securities market.
• The governor emphasised the need for a combination of monetary policy measures and long-term economic reforms to strengthen Uganda's productive capacity.
• The country's 10-fold growth strategy focuses on expanding economic production through value addition, industrialisation, and increased competitiveness.