Policy advocacy - The Financial Institutions Act (FIA) amendment bill
Primary Target Groups: All
Tools of impact: Technical Assistance
Achievements: Provisions for Agency banking, Islamic Banking and Bancassurance in Uganda.
The Financial Institutions Act (FIA) amendment bill – The Financial Institutions Act 2004, is a fundamental law that relates to the licensing, supervision, regulation, control and discipline of financial institutions. FSDU supported the Ministry of Finance, Planning and Economic Development (MoFPED), the Bank of Uganda (BoU) and the Ministry of Justice (MoJ) in reforming this crucial law. The revision – called the Financial Institutions Amendment (2016) – that FSDU supported allowed for three key provisions – Agency banking, Islamic Banking and Bancassurance. The objective of Agent Banking was to increase the density of the banking infrastructure across the country by more than 100x, while Islamic Banking allowed for supervised financial institutions to formally serve a large clientele with products and services that were Shariah Law compliant . Bancassurance amendments on the other hand removed the prohibitions on banks to engage in and sell insurance services and products to customers. FSDU’s TA included continued support around inputs and amendments to the FIA Bill and subsequent regulations that emerged from the bill (e.g. Agent Banking Regulations)and a peer-learning trip for representatives from the above-named institutions to explore how Islamic Banking has been established and regulated in other countries. The Financial Institutions Act (FIA) amendment bill was passed by Parliament in January 2016. BoU and MOFPED acknowledged that without the technical assistance provided by BoU, the Bill would have remained longer in the Ministry of Justice and Constitutional Affairs where it had already been for two years.
Following the FIA amendment, FSDU in partnership with CGAP supported the development of Africa’s first shared interoperable agent banking platform. FSDU provided TA, and directly funded project management expertise that allowed the banking industry to agree on key rules of engagement, governance rules, technical standards and revenue principles, to facilitate collaboration. FSDU support further enabled the Uganda Banker’s Association (UBA) to build and test models for a shared agency banking platform.