Opening speech by Mr Ramathan Ggoobi, Permanent Secretary/Secretary to the Treasury at the Conference on Reshaping the tax system to support the Financial Sector Development Strategy (FSDS) Kampala, Uganda, 14th–15th December 2022 The two-day conference was convened by Uganda's Ministry of Finance, Planning and Economic Development, and co-hosted by ICTD's DIGITAX Research Programme and TaxDev.

1. 1
MINISTRY OF FINANCE, PLANNING AND ECONOMIC
DEVELOPMENT
REMARKS ON THE FINANCIAL SECTOR
DEVELOPMENT STRATEGY
BY THE PERMANENT SECRETARY/SECRETARY TO
THE TREASURY
DELIVERED AT THE CONFERENCE ON RESHAPING
THE TAX SYSTEM TO SUPPORT THE FINANCIAL
SECTOR DEVELOPMENT STRATEGY
Sheraton Hotel, Kampala
14th
December 2022

2. 2
Deputy Governor, Bank of Uganda
Commissioner General, URA
Heads of Government Institutions,
CEOs of Financial Institutions,
Development partners, the private sector, and civil society,
Distinguished guests, ladies and gentlemen.
Good morning,
I’d like to begin by thanking you all for joining us here today. The
ministry has convened this conference in partnership with the
International Centre for Tax and Development and TAXDEV
consultants through the Digitax programme. As we have heard, over
the next two days we will be discussing how a good tax system can
support our Financial Sector Development Strategy (FSDS).
As we implement the FSDS – and a range of other supplementary
programmes – it is vital that our tax system meets the needs of a
vibrant financial sector, helping to build a thriving economy that
works for every Ugandan.

3. 3
The discussions across the next few days will flow from the Financial
Sector Development Strategy, so I am going to set the scene for the
conference by telling you more about this key document.
The strategy was developed against the backdrop of steady economic
development pre-pandemic, with annual GDP growth averaging more
than 5% between 2017 and 2019. However, Uganda was not immune
to the destructive economic impacts of covid-19. As we know all too
well, economic activity plunged, and poverty spiked.
And so, the key challenge of delivering inclusive economic growth for
our citizens is as important now as it ever has been. What’s more,
our Vision 2040 has set the aspirational goal of achieving middle
income status by the year 2040. Vision 2040 articulates the
government’s ambition to raise productivity and achieve structural
transformation, shifting the economy from subsistence agriculture to
commercial agriculture, manufacturing and high value-added
services. Our third National Development Plan, published in June
2020, is no less ambitious than Vision 2040. It seeks to transform
Ugandan society “from a Peasant to a Modern and Prosperous
Country within 30 years”.

4. 4
There can be no doubt as to the critical role of the financial sector in
achieving these national ambitions. Any economist will tell you that
the financial sector fosters growth by mobilising and pooling savings
for the allocation of capital in productive investment. It ensures that
resources go where they are needed and all of society is included. It
is no surprise that countries with mature financial sectors enjoy
stronger and more inclusive economic growth.
In the years before the FSDS was formulated, progress had been
made in financial sector development, but significant challenges
remained. For example, though the percentage of adults that were
formally included rose from 28% in 2009 to 58% in 2018, this figure
was still too low. Uganda also lagged behind its neighbours in
mobilising long-term savings and allocating these savings to private
sector investment. For example, in 2019 bank deposits in Uganda
were the equivalent of 16.3% of GDP, compared to 36.6% in Kenya.
Insurance penetration stood at 0.72% in Uganda compared to 3% in
Kenya.
Given its importance for national economic development, it was vital
that these weaknesses were addressed. The sector was also being
rocked by external forces, not least the rapid advancements in digital

5. 5
technology that were revolutionising the way finance operated across
the globe. To get to grips with these forces we needed to update our
approaches to financial regulation, management and innovation.
And so, the Financial Sector Development Strategy was born. The
FSDS has been developed not as a siloed initiative, separate from the
rest of the economy, but as one of this government’s key strategic
forces as it drives Uganda’s economic transformation. The FSDS is
central to our economic aspirations. It articulates a holistic vision in
which “Uganda has a sound and integrated financial sector that
supports sustainable and inclusive economic growth”.
From this context flows the FSDS’s three strategic objectives:
financial services for all, financial services for markets, and financial
services for growth. First, I want to take you through each of these in
turn and tell you why they are important. Then I will explain what we
are doing now and in the future to achieve them.
Financial services for all means that every Ugandan has access to
the financial services they need. There should be a suite of financial
services that provides for all sections of society. This is not simply an
issue of fairness. Rather, financial inclusion combats multiple

6. 6
economic ills, including slow growth and income inequality. It
ensures no opportunities for entrepreneurship and innovation are
missed. Economies in which financial services are available to all are
fairer, more innovative and ultimately more prosperous.
Financial services for markets means a financial environment
conducive to new firm entry, business innovation and growth. Easing
financial constraints can spur the entry of new firms into our
markets, making them more competitive. It can also catalyse
investment by existing firms, boosting productivity and creating jobs.
Financial services for growth means an efficient and effective sector,
with savings mobilisation, capital allocation and risk management all
contributing to economic growth. It links the first two objectives,
mobilising the savings of a financially included population and
allocating these resources to productive economic activities.
Financial services geared towards growth play a critical role in the
structural transformation necessary for economic development.
So, there we have our three strategic objectives of the FSDS. To
achieve these objectives, we identified 4 areas of intervention.

7. 7
The first area of intervention is to increase access to and use of
finance. The Government of Uganda has a target of 80% of Ugandans
being formally financially included. To achieve this, interventions will
include boosting the range of products available, expanding delivery
channels, improving financial education and continuing to
strengthen the development and supervision of Tier 4 institutions
and money lenders.
Central to this will be the second Financial Inclusion Strategy, which
begins this year. The first strategy ran from 2017 to 2022. It
developed a consolidated definition, vision and strategy for improving
financial inclusion in Uganda, with the ultimate goal of families being
financially secure. The second strategy redoubles our commitment to
advancing this agenda.
Financial inclusion is also being driven by the Emyooga programme,
which continues to gather pace. The programme has so far set up
6,644 SACCOs with a total membership of 4.1 million Ugandans.
249 billion shillings has so far been disbursed as seed capital and 72
billion shillings of savings have been mobilised.

8. 8
The Parish Development Model is well into the process of introducing
more than 10,000 new SACCOs into the most financially excluded
sections of society. In its entirety, the PDM is a multi-sectoral
strategy to create socio-economic transformation by moving the 39%
of households out of the subsistence economy into the money
economy. The new SACCOs – along with complementary activities,
such as business development services – form the financial inclusion
pillar of the PDM. This pillar deepens formal savings and strengthens
credit delivery mechanisms to support inclusive growth at the
household level. It is supported by the Parish Revolving Fund to the
tune of 1 trillion shillings per year.
The second area of intervention is increasing access to long-term
finance. This will boost the ability of companies to raise capital to
implement long-term strategies to expand their businesses. It will
also increase the capacity of households and firms to address life-
cycle challenges. Interventions include enhancing the development of
capital markets, improving the government securities market,
creating an enabling environment for infrastructure bonds,
promoting municipal bonds, fostering the development of the
corporate equity and debt markets, expanding retirement benefits
and increasing life insurance penetration – to name but a few.

9. 9
Under this area of intervention, the government, in partnership with
the private sector is implementing the Small Business Recovery Fund
in the wake of Covid-19. The Fund is helping businesses to bounce
back after the economic shock of the pandemic by providing an
affordable credit facility. What’s more, with support from government
the Uganda Development Bank now has capital worth 1 trillion
shillings. The Bank provides affordable long-term financing for
investment in infrastructure, tourism and along the agricultural
value chain.
The third area of intervention is strengthening innovation and
supporting infrastructure. To foster financial innovation, we are
creating an enabling environment for FinTechs, providing supportive
regulation and promoting digital payments, including through
migrating government payments to digital platforms. In terms of
financial market infrastructure development, the strategy
strengthens data collection, use and sharing. It also expands the
coverage of the Credit Reference Bureau and the use of the movable
chattels security. Furthermore, we are working to improve the
insolvency regime contract enforcement.

10. 10
The fourth area of intervention is strengthening financial stability
and integrity. This area recognises that government plays a key role
in coordinating, supervising and regulating stakeholders across the
financial system. We are working to build a sector that inspires trust
and is a pilar of stability within the economy. This means improving
our framework for coordination and cooperation through promoting
strategic partnerships between regulators, development partners and
think tanks. It also means strengthening the system’s regulatory and
supervisory capacity, complying with international standards and
coordinating with domestic financial service providers. We will also
seek to strengthen the framework for financial crisis detection and
management, partially through the Financial Sector Stability Forum.
In this vein, the introduction of the National Payment Systems Act,
2020 and subsequent regulations provide for the oversight of our
evolving systems of payment, including mobile money and other
branches of fintech. They bolster consumer protection, ensuring all
those making digital payments are safeguarded.
In addition, the FSDS seeks to strengthen the framework for Anti-
Money Laundering and Combating the Financing of Terrorism. On
this, we have already made significant progress in implementing the

11. 11
Financial Action Task Force (FATF) action plan for Uganda, including
the amendment of five laws: the Anti Money Laundering
(Amendment) Act, 2022; the Anti-Terrorism (Amendment) Act, 2022;
the Companies (Amendment) Act, 2022; the Trustees Incorporation
(Amendment) Act, 2022; and the Partnerships (Amendment) Act,
2022. We have also strengthened domestic and international
cooperation and boosted awareness of these issues.
Moreover, the fourth area of intervention improves consumer
protection. This includes raising the awareness of consumers,
strengthening Bank of Uganda’s supervisory techniques and working
with financial service providers to ensure compliance with our
Financial Consumer Protection Guidelines.
Those are our four areas of intervention articulated in the FSDS. As
can be seen, within them lie a multitude of targeted polices,
programmes and actions. I hope that our level of commitment to
building a prosperous financial sector is clear.
As I mentioned at the beginning of my remarks, we need a tax
system that supports the strategic objectives of the FSDS. That’s why
we commissioned Dr Christopher Wales to produce a report on “The

12. 12
taxation of the financial sector in Uganda”. Its remit was to identify
opportunities to improve the design and functioning of Uganda’s tax
system, specifically as it relates to providers and users of
conventional and digital financial services.
I am very pleased to have received a draft of this report and would
like to thank Dr Wales and the appreciate the efforts of the
International Centre for Tax and Development and TAXDEV team.
This report can form the basis for discussions today, tomorrow and
beyond. These are discussions that the ministry is keen to have. We
recognise the importance of developing constructive working
partnerships and building consensus across the tax and financial
services sectors to deliver on the ambitions of the FSDS.
The ministry is open to ideas in this regard, and I am hopeful that
this conference will provide plenty of them. So, I encourage you to
engage openly and honestly, and I remind you that we are all
working towards the same ultimate goal – a prosperous and inclusive
Uganda.
I thank you.

13. 13
Ramathan Ggoobi
PERMANENT SECRETARY/SECRETARY TO THE TREASURY