In the animal kingdom, the lion is feared because of its strength yet during seasons of great migration, it is often the patient ants that reshape entire landscapes. They build for the future while the lion protects its current territory.
Many Ugandan banks today behave like lions. They dominate their territories, defend market share and protect profits. But Uganda’s 10x growth ambition is not rewarding those who defend yesterday but will reward those willing to build tomorrow. That is the bad truth.
The strongest institution in one economic era is not automatically the winner in the next. And as I told one board recently, the numbers look impressive, but the strategy, and most importantly, its execution, does not. Because Uganda is attempting something unprecedented.
The Government of Uganda’s ATMS strategy seeks to transform the economy through Agro-industrialisation, Tourism development, Mineral beneficiation and Science and Technology. The ambition is not incremental growth but a tenfold expansion.
The banking industry has a crucial role to play. The question is whether the industry is ready. Ugandan banks are profitable enough to support the ambition. But their business models are not yet aligned to it.
Industry treasury investments stand at UGX 23.3 trillion, of which UGX 18.9 trillion is in government securities. As if that is not enough, Ugandan banks mobilised UGX 41.3 trillion from customers last year.
Yet they lent only UGX 23.6 trillion back to the economy. That means just 57 per cent of every shilling entrusted to banks finds its way into businesses, farmers, manufacturers and entrepreneurs. The remaining 43 per cent is largely parked in government securities and other low-risk assets. Think about what this means.
For every UGX 100 that Ugandans save, banks lend only UGX 57 to grow the economy. UGX 43 remains largely on the sidelines. The bad truth is that Uganda does not have a shortage of money, but a shortage of risk appetite. Banks have become exceptionally good at financing certainty.
But ATMS is not about certainty; it is about financing ambition. It is about backing the commercial farmer before harvest. Funding the mineral processor before exports begin. Supporting the tourism investor before the first guest arrives. Backing the technology entrepreneur before profits appear. This is why I say that Uganda’s banking challenge lack of courage, and not capital.
The banks that learn to convert deposits into productive risk capital will shape Uganda’s next decade. The rest may remain profitable. But they will finance yesterday while others finance the future.
Ugandan banks have become experts at financing the government. ATMS requires them to finance the transformation. Those are two very different businesses.
Stanbic is Uganda’s largest bank with assets of UGX 11.3 trillion and profits of UGX 586 billion. Customer deposits stand at UGX 8 trillion while treasury investments total UGX 3.56 trillion. Loans amount to UGX 5.1 trillion. The bank’s cost of deposits is approximately 1 per cent. Many executives call this efficiency, however I disagree. It is partly a structural advantage.
Stanbic banks some of Uganda’s largest institutions and corporate flows. The economics of such deposits are very different from those of smaller banks competing for retail customers.
That creates an invisible moat which is not necessarily superior banking, but privileged positioning.
Centenary Bank presents another story.
Assets stand at UGX 8.6 trillion. Deposits amount to UGX 5.3 trillion. Loans are UGX 4.2 trillion, and profits reached UGX 424 billion. Centenary is arguably the closest thing Uganda has to an inclusive developmental bank. Its branch network, rural penetration and SME reach align naturally with Agro-industrialisation.
If ATMS succeeds, Centenary may become one of its greatest beneficiaries.
Absa Uganda sits in an interesting position. Assets total UGX 7 trillion. Loans stand at UGX 2.1 trillion. Treasury investments amount to UGX 3.48 trillion. Think about that.
Absa invests more in treasury assets than it lends to businesses. The numbers tell a story. The safest customer is the government. So, the government is promoting ATMS, but it is also crowding out the private sector. What a dysfunction.
The most strategic customer should be Uganda’s transformation agenda. There is tension between those choices.
Standard Chartered faces a different challenge.
Assets amount to UGX 3.48 trillion. Loans stand at only UGX 583 billion. Treasury investments exceed UGX 1.2 trillion. This is not unusual. Many international banks optimise for risk-adjusted returns. ATMS demands something else. It demands commitment to sectors whose returns take years to mature.
Equity Bank is a fascinating case.
Assets stand at UGX 3.56 trillion. Deposits total UGX 2.84 trillion. Loans amount to UGX 1.38 trillion. Treasury investments are UGX 1.53 trillion. The bank is profitable. But a large share of assets remains outside the productive sectors ATMS prioritizes. This pattern repeats across the industry.
DFCU holds UGX 1.68 trillion in treasury investments against UGX 1.27 trillion in loans.
KCB Uganda holds UGX 550 billion in treasury investments against loans of UGX 1.16 trillion.
PostBank Uganda, which could become Uganda’s agricultural powerhouse, holds UGX 681 billion in treasury investments and loans of UGX 749 billion.
The balance remains conservative. That is understandable. But ATMs require courage. The Government is betting heavily on Agro-industrialisation. Yet agricultural lending remains among the smallest and riskiest segments.
Tourism is expected to become a major foreign exchange earner. Yet few banks have specialised tourism products. Mineral beneficiation requires long-term financing. Most banks fund themselves with short-term deposits. Science and technology require venture capital. Commercial banks are not structured for venture financing. This creates Uganda’s financing paradox.
The economy requires patient capital. Banks are built around short-term liquidity. During a recent strategy retreat, I challenged a board. I asked: If the government achieves its tenfold growth ambition, where will the financing come from? No one replied.
Then I wrote four numbers.
- UGX 61 trillion.
- UGX 23 trillion.
- UGX 19 trillion.
- UGX 2 trillion.
The room stared at me. The industry has UGX 61 trillion in assets. Only UGX 23 trillion is lent. Nearly UGX 19 trillion sits in government securities.
Large loan exposures across the industry exceed UGX 7.7 trillion. Too much lending remains concentrated among a relatively small number of borrowers.
- ATMS requires diversification.
- Thousands of SMEs.
- Commercial farmers.
- Agro-processors.
- Technology firms.
- Mineral value addition projects.
- Tourism infrastructure.
This demands different underwriting models.
- Different risk appetites.
- Different talent.
- Different culture.
And that is where most banks are least prepared. Because transformation is not primarily a capital problem. It is a cultural problem. Banks still celebrate protecting yesterday.
ATMS requires building tomorrow. The winners will not necessarily be the largest banks. They will be those who deeply understand Uganda’s future economy. The others risk becoming highly profitable museums.
My challenge to boards is simple.
- Stop measuring success only by profit growth. Ask where the profits are coming from and whether those sources will still exist ten years from now.
- Stop treating Government securities as a permanent strategy. Treasury income is useful, but it does not transform nations.
- Build sector expertise around ATMS priorities. The winners will understand farmers, processors, exporters, innovators and industrialists better than their competitors.
- Invest in execution culture. Strategy without disciplined execution is driving a car in darkness without headlights.
Institutions that fail to reinvent themselves rarely disappear suddenly. They slowly become spectators in a future they once had every opportunity to finance.
Invite Mr. Strategy to brief your EXCO and Board
Uganda is entering a completely new economic era, not another business cycle. The ATMS agenda is reshaping where capital will flow, where profits will emerge, and which institutions will dominate the next decade. The winners will not necessarily be the largest banks. They will be those who understand the shift early, reposition decisively, and execute relentlessly.
The fact is that many leadership teams are discussing growth without fully understanding how Agro-industrialization, Tourism, Minerals and Science and Technology will reshape their business models, customers, risk appetite and sources of competitive advantage. That is where Mr. Strategy comes in.
Invite Mr. Strategy to deliver an exclusive Executive Committee & Board briefing on Uganda’s 10x Growth Ambition and the strategic implications for your institution. The briefing goes beyond theory. It provides a practical roadmap covering:
- What ATMS really means for your business.
- Which sectors will create the greatest value over the next decade?
- The hidden risks in current banking and business models.
- How to reposition your institution to capture emerging opportunities.
- The culture, capabilities and execution discipline required to win.
Mr Strategy combines deep financial analysis, boardroom experience and practical transformation tools to help leaders move from awareness to action. Because the future will not reward institutions that simply react. It will reward those who prepare. Execution is the Strategy.
Mr Strategy
