Speaking at the Diaspora Exchange Forum hosted by Equity Bank, under the theme "Re-Routing Back Home: Funds Transfer for Powering Personal and Continental Growth," Prof. Nuwagaba explained that the high cost of borrowing to develop electricity infrastructure makes lower electricity tariffs unrealistic.
Ugandans should not expect a reduction in electricity costs due to the significant investments made in constructing power infrastructure, according to Prof. Augustus Nuwagaba, Deputy Governor of the Bank of Uganda.
Speaking at the Diaspora Exchange Forum hosted by Equity Bank, under the theme "Re-Routing Back Home: Funds Transfer for Powering Personal and Continental Growth," Prof. Nuwagaba explained that the high cost of borrowing to develop electricity infrastructure makes lower electricity tariffs unrealistic.
"The reason Ugandans say electricity is expensive is because the cost of money used to invest in these dams has been high. If the money has not been cheap, how would we expect electricity to be cheap?" he stated.
He also emphasized the importance of utilizing financial instruments, such as diaspora bonds, to raise capital for infrastructure projects and commended commercial banks for their role in financial intermediation.
He urged them to continue supporting investment initiatives.
Prof. Nuwagaba further addressed the challenges surrounding remittances, noting the high costs, particularly in Sub-Saharan Africa, where transaction fees average 7.9%, significantly above the Sustainable Development Goal (SDG) target of 3%.
"The cost of sending remittances remains a major challenge. For instance, sending $200 can attract fees as high as 6.4%. This discourages formal remittances and forces people to resort to informal channels," he explained.
He emphasized the need to keep money circulating within the financial system to boost economic growth.
"If money remains outside the financial system, such as being stored in mattresses or informal savings, the economy freezes. The velocity of money reduces, slowing economic activity and financial depth," he warned.
Prof. Nuwagaba highlighted Uganda's open economic policies, which provide a conducive environment for capital inflows, distinguishing the country from others in the region that impose restrictions on foreign investments.
"Our foreign exchange policies are well aligned. Unlike Ethiopia, where capital movement is highly regulated, Uganda remains open to investments and foreign currency inflows," he stated.
He reaffirmed the Bank of Uganda's commitment to maintaining a sound financial system and ensuring compliance with money laundering laws, calling on financial institutions to promote transparency and accountability in financial transactions.
During the webinar, Equity Bank Managing Director, Gift Shoko, assured Ugandans living abroad that the bank is committed to meeting their financial needs and improving services based on customer feedback.
He acknowledged the growing demand for streamlined banking solutions, particularly regarding access to national identification cards and diaspora investment products.
"We have taken note of the concerns raised by our clients in the diaspora, especially regarding access to IDs and investment options such as diaspora bonds. These are areas we are actively working on to ensure our customers receive the best service possible," said Shoko.
He also highlighted the bank's efforts to enable seamless cross-border transactions within the East African region. With operations in Uganda, Kenya, Tanzania, Rwanda, South Sudan, and the Democratic Republic of Congo, Equity Bank has facilitated easy financial movement for customers across these countries.
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"Our cross-border interoperability ensures that Ugandans in any of these countries can transact as if they were in their home nation. This is part of our broader strategy to support regional trade and financial inclusivity," Shoko added.
The bank also addressed concerns over remittance costs, promising to review and lower transaction fees for Ugandans sending money home. Shoko emphasized the importance of using formal banking channels to avoid the risks associated with informal remittance methods.
"The safety of our clients' money is a top priority. We encourage all remittances to be done through official channels, and as a bank, we will ensure our rates remain competitive to maximize value for our customers," Shoko noted.
