Uganda’s banking industry – The genesis

Uganda’s banking industry is older than the Bank of Uganda itself. Commercial banking operations in Uganda began in 1906 when the National and Grindlays Bank of Calcutta, India, opened a branch in Entebbe and later Kampala Road currently housed by Bank of Uganda

Over the next six decades, several foreign-owned banks established operations in Uganda. By the time the Bank of Uganda was established in August 1966, the country’s banking sector included institutions such

1. Standard Bank Standard Chartered ( Mother of Standard Chartered Uganda), incorporated in the UK in 1862, arrived in Uganda in 1912.
2. Barclays Bank Barclays ( sold out to Absa Group Uganda in 2018) DCO, incorporated in UK in 1836, opened its first branch in Jinja in 1927 and in Kampala in 1928.
3. Bank of Baroda, Bank of Baroda partner of Bank of India, began its operations in Uganda in 1953 and still present to now
4. General Bank of Netherlands, a Dutch concern, established its operations in Uganda in 1954.
5. The Ottoman Bank, an Anglo-French bank, started its business in Uganda in 1960.
6. Commercial Bank of Africa was established in Uganda in 1963 – that merged to form NCBA Group in 2019

A striking observation emerges from this history:

Only one of these institutions was indigenous. That institution was the seventh the Uganda Commercial Bank (UCB), established in 1965.

In many ways, UCB represented more than just another bank. It was an attempt to democratize access to finance in a market dominated by foreign banking interests. UCB added one more player to what was essentially an oligopolistic market dominated by the large British banks.

It was in fact the composition of the then Uganda Credits and Savings Bank (UCSB) which had been established in 1950 to finance individuals and enterprises which could not for one reason or another qualify for loans from the regular commercial banks.

In modern startup language, UCSB was solving a problem the market had ignored:

“What happens to people who don’t fit the lending criteria?”

The answer eventually evolved into Uganda Commercial Bank a fix to the financial inclusion challenge Uganda had been wrestling with of extending credit to the underserved.