The Bank of Uganda (BoU) is taking decisive action to integrate climate change into the nation’s financial bedrock.
Speaking on Thursday at the Inaugural National Private Sector Engagement Forum on Climate Finance held at the Serena Hotel, Kampala, Dr. Michael Atingi-Ego, Governor of the Bank of Uganda, announced the development of climate risk guidelines designed to provide explicit guidance on the identification, measurement, management, and disclosure of climate-related financial risks.
“These guidelines will ensure that climate risks are not an afterthought but a central component of risk management frameworks,” said Governor Atingi-Ego. He emphasised the urgent need for the financial sector to adapt to a changing climate.
Climate Change is a Pressing Financial Reality
The Governor underscored the critical timing and essential nature of the day’s dialogue. Climate change, he stressed, is no longer a distant concern but a present and pressing reality with tangible impacts on Uganda’s economy and financial stability.
Its effects, he noted, are already evident in altered rainfall patterns, disrupted food systems, strained energy supply, and direct threats to both price and financial system stability.
He pointed out that as a result of this, the economic cost of inaction is already significant.
Governor Atingi-Ego highlighted that in Fiscal Year 2019/20 alone, Uganda incurred over USD 154 million in losses due to weather-related disasters. This stark figure, he observed, serves as a powerful reminder of the financial vulnerabilities posed by climate change.
Proactive Management to Bolster Resilience
He revealed that the forthcoming climate risk guidelines from the Bank of Uganda signal a proactive approach to building resilience within the financial system. By requiring financial institutions to systematically assess and manage climate-related risks, the BoU aims to:
Enhance Financial Sector Stability
Reduce the potential for climate-induced shocks to impact banks and other financial entities.
Promote Sustainable Investment
Encourage lending and investment in climate-resilient projects and green initiatives.
Improve Transparency
Provide stakeholders with clearer insights into financial institutions’ exposure to climate risks.
Align with Global Best Practices
Position Uganda’s financial sector at the forefront of climate risk management in Africa.
This initiative, according to the Governor, is a crucial step in ensuring that Uganda’s financial system remains robust and capable of supporting the nation’s economic development in the face of escalating climate challenges.
It calls for collective action from both the public and private sectors to integrate climate considerations into every aspect of economic planning and investment.