Uganda: Green Mandate for Ugandan Banks

Kampala, Uganda — Financial experts have called on banks and financial institutions to strengthen their commitment to green financing by implementing clear policies, enhancing human resource capacity, and aligning with regulatory frameworks to support Uganda's transition to a sustainable economy.

Speaking at the 2nd Annual Climate Finance Conference in Kampala, Goretti Masadde, chief executive officer of the Uganda Institute of Banking & Financial Services, underscored the importance of institutional preparedness for green financing.

She urged banks to build internal capabilities to manage sustainability-focused financial products while complying with the Bank of Uganda's supervisory framework.

"Terms like ESG may sound complex, but we are now challenged to implement them in a meaningful way," Masadde said. "Strong board oversight is critical, as highlighted in the Bank of Uganda's ESG framework. Financial institutions must define their environmental and social focus areas while ensuring robust reporting and disclosures."

She further stressed that accurate data collection, transparent reporting, and effective risk management are essential to ensuring that financial institutions integrate green financing into their operations successfully. In particular, she noted that banks should assess and support SMEs and other businesses transitioning to sustainable practices.

Data in product development

Ann Marie Mwaka Sabano, head of investments at aBi Finance Ltd, emphasised the role of data in assessing product development within green financing. She emphasized the need for financial institutions to establish clear policies before developing green financial products, particularly when seeking capital.

"To support green finance effectively, banks must have structures, systems, strategies, skilled staff, and shared values around sustainability," Sabano said. "A well-defined policy on green financing is essential, even before entering product development. Once financial institutions move to product development, they must align with shareholder mandates on aspects like interest rates and credit enhancement."

She revealed that aBi Finance has developed a master policy that financial institutions can tailor to their specific needs. They have also created a green financing product that banks and lending institutions can customize to suit their financial strategies.

She further pointed out that Uganda's National Taxonomy, which classifies sustainable investments, plays a crucial role in aligning financial products with regulatory and market expectations.

Meanwhile, small and medium enterprises (SMEs), the backbone of Uganda's economy, were urged to embrace green financing solutions to foster sustainable development and socioeconomic transformation.

Collin Besigye, the head of credit at Diamond Trust Bank, noted that SMEs have significant potential to drive green innovation, job creation, and wealth generation. However, access to affordable financing remains a barrier.

"SMEs have the potential to lead the charge in green innovation, but they need access to affordable and accessible financing," Besigye said. "By adopting green financing practices, SMEs can contribute to Uganda's environmental goals while positioning themselves as key players in the country's sustainable economic development."

Despite Uganda's growing participation in Africa's carbon market, with 33 million carbon credits, the local demand remains weak. Uganda largely depends on international buyers, making the sector vulnerable to global price fluctuations. Besigye emphasized the need for capacity-building initiatives to help SMEs access green financing and tap into sustainable investment opportunities.

The Bank of Uganda (BoU) is actively exploring ways to drive green finance, including developing a green finance curriculum and implementing policies that discourage investments in non-renewable energy sectors like charcoal production.

Experts at the conference discussed how financial institutions can integrate sustainable finance principles into their operations, align with Uganda's broader environmental goals, and build resilience against climate-related risks.

Media too has a role to play

Sam Barata, General Manager - Commercial at Nation Media Group, stressed the importance of media in shaping public opinion on green financing. He urged journalists to simplify technical jargon related to climate finance and sustainability to make it more accessible to the public.

"The media plays a critical role in asking tough questions on green financing to influence policy," Barata said. "We will continue publishing impactful stories on green finance--focusing on opportunities, success stories, and policies that drive sustainability. There is a hunger for knowledge on this subject, and we must bridge that gap."

As Uganda accelerates its transition toward a greener economy, experts at the Climate Finance Conference called for stronger institutional frameworks, better financing mechanisms, and increased awareness to unlock the full potential of green finance.

With SMEs at the heart of Uganda's economic growth, targeted investments in sustainability will not only drive innovation but also fortify the country's position as a leader in Africa's green finance movement.

Source: All Africa