Author: Ankita Handoo

On 24-25 September, a two-day workshop on Risk-Based Supervision (RBS) was facilitated by the International Fund for Agricultural Development (IFAD) and Cenfri to enhance financial oversight and inclusivity.

This initiative is part of the broader PRIME Africa Programme, co-financed by the European Union in collaboration with the Bank of Uganda (BOU), Capital Markets Authority (CMA), Insurance Regulatory Authority (IRA), Financial Intelligence Authority (FIA), and Uganda Microfinance Regulatory Authority (UMRA).

The workshop is part of the recently launched Remittance Innovation Toolkit, which seeks to boost regulators’ capacity to adopt and implement risk-based supervision practices. This toolkit empowers regulators to identify and address key risks within Uganda’s financial ecosystem while fostering inclusivity, especially for marginalized populations.

Importance of risk-based supervision

David Kalyango, Executive Director of Bank Supervision at the Bank of Uganda, inaugurated the workshop with opening remarks that underscored the importance of an adaptive, risk-sensitive supervisory framework. He stressed the importance of not applying “one-size-fits-all” regulatory frameworks, often leading to the unintended exclusion of vulnerable groups.

“The different topics for this two-day workshop are key to an effective risk-based supervision regime and enable us to develop ad hoc work plans,” Kalyango said. “I would like to remind all of us, as regulators, of the potential negative effect of applying standardized measures since these, in the same case, don’t fit marginalized people, especially in rural areas. Therefore, let’s try as much as possible to balance enforcing compliance and promoting financial inclusion.”

The workshop targeted 22 public officers from Ugandan financial oversight authorities, aligning with the overarching goal of the PRIME Africa Programme, which strives to reduce the cost of remittances and promote inclusive financial systems across the African continent.

Strengthening Uganda’s Financial System

The Risk-Based Supervision Workshop came at a pivotal moment for Uganda’s regulatory environment. Uganda was removed from the Financial Action Task Force (FATF) grey list, a global watchlist of countries requiring increased scrutiny due to their financial systems’ vulnerabilities, just a few years ago. Kalyango recognized the efforts of various regulatory bodies, including the CMA, IRA, UMRA, and FIA, in achieving this milestone but also cautioned that maintaining compliance and fostering inclusivity are ongoing challenges.

“I would like to thank all the agencies present here (IRA, UMRA, CMA, and FIA) for their outstanding work over the past few years. Their efforts have been instrumental in ensuring that Uganda was removed from the FATF’s grey list. Approaching this workshop, we were asked what success looks like. I believe our success should go beyond staying off the grey list.”

Core elements of risk-based supervision

The workshop included sessions on the core elements of risk-based supervision, including identifying, assessing, and prioritizing risks based on their potential impact. It aimed to provide a comprehensive understanding of how regulators can develop more effective supervisory strategies that adapt to the realities of different sectors of the economy, thus ensuring stability and integrity in Uganda’s financial system. The workshop facilitated discussions on various approaches regulators could use to implement this model effectively while maintaining a sharp focus on inclusivity.

Way forward

Hannington Wasswa, Director of Commercial Banking at the Bank of Uganda, delivered the closing remarks. He acknowledged the importance of such initiatives in keeping Uganda’s financial system resilient and forward-looking. He thanked IFAD and Cenfri for their instrumental role in organizing the training.

“I wish to thank IFAD and Cenfri for putting together this critical training on risk-based supervision to enhance BOU and other authorities and keep the country off the grey list,” Wasswa stated.

Wasswa’s comments reflect the broad consensus among Uganda’s regulators that continuous learning and capacity-building are essential to maintaining a strong, inclusive, and transparent financial system. The success of the Risk-Based Supervision Workshop in Kampala is not just measured by the knowledge shared during the two days but also by its potential long-term impact on regulatory practices across Uganda.

In an increasingly interconnected world, financial supervision that can adapt to local contexts, prioritize risks, and foster inclusivity is more important than ever. The workshop marks a key milestone on Uganda’s journey toward a more robust and equitable financial system.

Remittances play a pivotal role in socio-economic development of many countries globally, especially in low and middle-income countries. Ensuring accurate and timely data collection on these financial flows is crucial. Uganda, a country with a vibrant remittance ecosystem, has increasingly recognized the need for a more refined approach to capturing remittance data. The Bank of Uganda (BOU) is leading the charge toward improving remittance data collection.

During the 7th National Remittance Stakeholders Network (NRSN) meeting, held on 26 September in Kampala, the BOU’s Statistics Department presented its plans to revolutionize how remittance data is collected, analyzed, and used. This event showcased the Bank’s efforts to move beyond traditional data collection methods and adapt to the rapidly changing financial landscape.

Moving from aggregated to granular data

One of the major highlights of the NRSN meeting was the presentation by BOU’s Statistics Department, led by Milly Nalukwago Isingoma, the department’s director. In her remarks, Isingoma explained that BOU’s current methods include collecting returns with inherent qualitative limitations and conducting annual surveys on personal transfers. These approaches, while helpful, lack the precision needed to inform forward-thinking public policy.

“We aim to move from aggregated to granular data using technological advancements,” said Isingoma. “By doing so, we can better support policymakers, particularly in monetary policy, while enhancing the remittance and labour-related enabling environment.”

This transition to granular data means that instead of simply collecting total figures, the BOU can further break down the data by various factors such as value, volume, geographic region, demographic group, transfer method, cost, and even the intended purpose of remittances. This detailed data can be of immense value to policymakers and market players.

Collaboration with Remittance Service Providers

Remittance Service Providers (RSPs) are integral to the success of this new data collection strategy. Their cooperation and feedback are crucial for improving data collection and management.

At the NRSN meeting, the BOU facilitated the sessions with representatives from these RSPs to discuss the proposed changes. The sessions provided a collaborative space where the RSPs could voice their opinions, concerns, and suggestions, allowing for a two-way dialogue to shape the future of remittance data collection in Uganda.

As Isingoma noted, “We are approaching you at the beginning of the journey to consider your perspectives and establish a mutual engagement to achieve the most suitable way to collect remittance data.”

IFAD’s role in steering remittance data innovation

IFAD’s FFR has provided technical assistance to BOU, offering its expertise and resources to help drive this initiative forward. David Berno, Remittances and Inclusive Digital Finance Officer for IFAD’s FFR, took the stage during the NRSN’s final session to outline the role of the PRIME Africa programme in shaping remittance ecosystems. He highlighted the critical importance of collecting detailed and disaggregated data to inform both public policy and private sector strategies.

“Detailed, disaggregated data, broken down by value, volume, geographic region, demographic group, transfer method, cost, and intended purpose, is a goldmine of insights,” said Berno. “It informs public policy towards greater financial inclusion and supports private sector market strategies.”

Berno’s presentation also laid the groundwork for continued engagement with RSPs, setting the stage for the 2025 plan of work, which will focus on expanding the network’s impact on Uganda’s remittance ecosystem.

Future of remittance data collection

The collaboration and partnership between BOU, IFAD, and RSPs indicates the commitment to improving remittance data collection practices in Uganda. For the government, the enhanced data will allow for more informed decision-making in public policy, especially in monetary policy, financial inclusion, and the labour market. For the private sector, RSPs will gain access to valuable insights that can inform their market strategies and improve financial services for Ugandans both at home and abroad.

Conclusion

The Bank of Uganda’s drive to enhance remittance data collection marks a significant step towards modernizing Uganda’s financial ecosystem. This new approach promises to provide invaluable insights that will shape public policy, support market strategies, and, ultimately, boost the country’s economic growth.