Deposit Protection Fund launches 2022-2027 Strategic Plan – September 30, 2022

The Deposit Protection Fund of Uganda launched its second Strategic Plan, which will be implemented between 2022 and 2027. The function was held at Serena Kampala Hotel on September 30, 2022.  The function was graced by Honorable Matia Kasaija – Minister of Finance, Planning and Economic Development, who was the Chief Guest. Present at the event too was the Deputy Governor, Bank of Uganda – Dr. Michael Atingi-Ego, DPF Board Members and staff of the Deposit Protection Fund.

In his keynote address, the Minister noted that the Deposit Protection Fund of Uganda was one of the State Corporations under the Ministry of Finance which had demonstrated an appreciation and understanding of the task that was set out for it to achieve and such, in a relatively short life span, the institution had entrenched itself firmly on the path of growth and development. He commended the Fund for its efforts with the IT payout system which would enable depositors to be paid in a few days, in the event that a contributing institution was closed.

Regarding DPF’s Strategic Plan 2022-2027, Hon. Kasaija noted that the Strategic Plan was a very important tool to enable the Ministry of Finance to monitor the performance of the Fund as well as provide accountability to the depositors, contributing institutions and other stakeholders on the operations of the Fund. “It constitutes the service contract between government and depositors. Government therefore has special interest to ensure that the Fund is well established like it is the case on the global scene” stated the Minister.

Hon. Kasaija appreciated the Bank of Uganda for taking keen interest in the process of operationalizing the Fund and commended both institutions for maintaining a close working relationship in their efforts to contribute to financial sector stability. He lauded the cordial working relationship between the Board and management of the Fund noting that some government institutions have failed due to poor work relationship. The Hon. Minister was pleased to note that his long-cherished challenge to the Fund to establish its own home rather than renting was given sufficient prominence in the new Strategic Plan.

On his part, the Deputy Governor stated that the “The Bank of Uganda and stakeholders such as the Ministry of Finance, Planning and Economic Development directly supported the birth of the DPF as a stand-alone entity and aided it through its infancy. As a result, the DPF had achieved its formative and developmental milestones and can now stand on its feet.”

He highlighted that a strong banking regulation and supervision regime and complementary safeguards, including a robust Deposit Protection Fund, helps the Bank of Uganda sustainably foster financial sector stability. He thus committed that Bank of Uganda would continue to support and work with the Fund, alongside key stakeholders, especially the Ministry of Finance,

He further noted that while harnessing institutional synergies, the BoU and the DPF would collaborate, to the extent possible, to entrench financial system resilience in a dynamic environment, during this new strategic plan cycle, including through:

• conducting joint on-site supervisory inspections of contributing institutions;
• contributing to enabling legal reforms;
• supporting the establishment of mechanisms for paying off eligible depositors quickly, should the need arise;
• sensitization on the vital role of an effective deposit insurance system;
• maintaining smooth engagement through quarterly meetings; as well as
• pursuing other mutually beneficial initiatives, such as participating in scenario planning and the simulation and maintenance of IT systems.

In his remarks, the Board Chairman – Mr. Ben Patrick Kagoro asserted that he was confident that the Board’s first term in office went on smoothly. He further noted that the achievements of the first term came with concerted effort by the Board, management and staff, coupled with collaboration from key stakeholders led by the Ministry of Finance.

Mr. Kagoro highlighted the following, among others, as the Fund’s key planned actions for the next five years, as laid out in the Strategic Plan for 2022-2027:

1. Work towards enactment of a stand-alone law for DPF.
2. Develop and gain approval for a financing framework with Government to ensure that the Fund has quick access to back-stop funding.
3. Conduct knowledge sharing session with Members of Cabinet and Parliament.
4. Acquire a permanent home for the DPF.
5. Roll out the payout system to all contributing institutions and conduct annual simulation tests with relevant parties to ensure that the system works as expected. The system will support the fast reimbursement of depositors.
6. Conduct more on-site inspections focused mainly on customer deposit holdings. This will include the large SACCOs once brought on board.
7. Grow the Fund to at least UGX 2 trillion in order to protect at least 3.5 percent of total deposits in the sector. This would be in line with best practice.
8. Design a robust crisis management plan to ensure depositors are paid fast in the event of a bank closure.
9. Conduct an IADI self- assessment to review the Funds’ compliance with the Core Principles on Deposit Insurance. This exercise will involve holding engagements with the key players in the financial sector safety net, including the Ministry of Finance.
10. Collaborate closely with more established Deposit Insurance entities to enable information sharing and capacity building of staff.
11. Ensure DPF remains one of the best employers in the country by creating a conducive work environment for all employees to thrive.

In her remarks, Mrs. Julia Clare Olima Oyet – the DPF Chief Executive Officer noted that the Fund was cognizant of the fact that the Strategic Plan constituted the marking scheme against which staff performance would be measured by the Board and the line Ministry. She thus committed to the public and stakeholders that the Fund would strive to effectively deliver on the objectives highlighted in the plan, while upholding the core values of Respect, Integrity, Transparency and Excellence (RITE).

Mrs. Oyet observed that by and large, most of the activities that were set out in the first Strategic Plan were achieved. She noted that the major achievements over the last five years were;

1. Increasing the deposit insurance limit from UGX 3 million to UGX 10 million, thus protecting 18 percent of the total deposits in the sector compared to the initial 9 percent.
2. Putting in place regulations to operationalize the provisions of the DPF as contained in the Financial Institutions Act 2004. This paved way for the recruitment of staff.
3. Fully operationalizing the Fund with all functions managed in-house. These include the areas of; IT, Procurement, Internal Audit and Financial Reporting amongst others.
4. Embarking on massive public awareness to enhance the previous actions which enabled more Ugandans to learn about DPF.
5. Setting up offices outside the Bank of Uganda premises where DPF was housed in its early years.
6. Completing the development of an IT payout system which will enable the fast and convenient reimbursement of depositors when called upon by Bank of Uganda.
7. Managing more than 50 percent of the investment portfolio in-house. This has saved the Fund billions of shillings in fund management fees.
8. Establishing a disaster recovery site at Bank of Uganda and installing critical IT infrastructure such as servers and routers, among others.
9. Conducting on-site inspections to ascertain the accuracy of depositor records and deposit balances. This has been conducted jointly with the Bank of Uganda.
10. Entering into MOUs with three (3) deposit insurance entities in Africa namely; the Nigeria Deposit Insurance Corporation, the Kenya Deposit Insurance Corporation and Deposit Protection Corporation (Zimbabwe).
11. Formulating policies and procedures in the areas of; finance, IT, communications and audit amongst others.

She appreciated the Bank of Uganda and the role it played in supporting the Fund during its nascent stage. Mrs. Oyet noted that the Central Bank gave the Fund the roots on which a strong foundation was established and that the Fund was well positioned to contribute more to financial sector stability. She emphasized the need for the relationship between the Fund and Bank of Uganda to remain strong, given that both institutions had a mandate to contribute to financial sector stability. The CEO reiterated that management and staff remained determined to grow the Fund for the greater good of the nation.