PRESENTATION ON UGANDA’S APPROACH TO PAYMENT SYSTEMS OVERSIGHT By Maureen Kiconco

Table of Content Current legal and regulatory framework Infrastructure developments Institutional arrangements Challenges, lessons learned and opportunities Any other aspects that deemed relevant

1. Current legal and regulatory framework GOU is participating in two major regional payment system systems namely: The East African Payment System (EAPS) and the Regional Payment and Settlement System (REPSS) EAPS is an East African Community (EAC) cross-border payment system connecting the existing RTGSs to facilitate transfer of funds in the currencies of the participating countries. EAPS went live on 25th November 2013 and currently four countries; Kenya, Tanzania, Rwanda and Uganda are connected. Burundi and South Sudan are expected to join the system. REPSS is a COMESA’s Regional Payment and Settlement System.

1. Current legal and regulatory framework continued Currently, there is no approved National Payments System (NPS) law However a National Payments System (NPS) draft law has been made with technical assistance from IMF East Afritac for; Licensing privately-operated payment systems Protection of payment and settlement systems Also the Bank of Uganda (BOU) Act is in the process of being amended to provide for regulation, supervision, and oversight of payments systems, payment system providers, and payment instruments However BoU has been performing some oversight activities

1. Current legal and regulatory framework continued The oversight activities carried out by Bank of Uganda are to do with mitigating risks in the payment systems and ensuring compliance with these international standards. The main activities are: Registration of all payment institutions and system operators ensuring that their operations will not compromise or pose a threat to the safety and efficiency of the Ugandan payment system. Monitoring to get understanding of how interbank systems function and interact and how the use of non-cash payment instruments are evolving. Assessing systemically important payment systems to determine their compliance with international standards e.g. Real Time Gross Settlement System (RTGS), Electronic Clearing System (ECS) and payment instruments such as mobile money and Automated Teller Machines (ATMs). Inducing change through moral suasion and the exercise of its statutory powers.

Payment systems in Uganda Retail Payments Systems Cheques Electronic Funds Transfer Bank drafts International cards (VISA Card, MASTER Card) Large Value Payments Systems Real Time Gross Settlement System (RTGS) Central Depository System- Government Securities Mobile money operators (MNOs) Oversight in collaboration with telecommunication regulator – ie UCC

2. Infrastructure developments Current payment systems modernization initiatives are: Upgrading of Real-time gross settlement systems (RTGSs) to provide for automatic confirmation of settlement messages to give feedback to the originator that the transaction has been settled/not. RTGS is a system used for transactions which are very high in value and need to be cleared immediately. The bank that receives the money has to credit the amount in the account within 30 minutes of receiving it. Regional CSD – discussions ongoing Regional CSD is East African Community Central Security Depository (EACCSD)

3. Institutional arrangements For East African Payment System (EAPS) , two agreements are signed, that is: (a) Commercial Banks with Bank of Uganda (b) Bank of Uganda with each regional (EA) Central Banks For Regional Payment and Settlement System (REPSS), two agreements are signed, that is: (b) Bank of Uganda with the COMESA Clearing House

Challenges Inadequate legal and regulatory frameworks. Enactment of laws take long, hence exposing the Central Bank to legal challenges. Failed transactions due to: cut off times – EAPS cut off is 8:30 – 4:00pm. Incorrect beneficiary details. Operational risks resulting from technology or human error. Technology changes requiring changes in the current payment systems Lack of skills to operate the payment systems Low public awareness

Lesions learnt There is bureaucratic and slow process in making laws There should be Political will There is need to mobilize the public and commercial banks to embrace EAPS and REPSS There is need for aggressive public awareness campaigns.

Opportunities Use of local currencies across the region Inter regional trade by using the available regional payment systems

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