UGANDA Trends and Developments Contributed by: William Kasozi and Brian Banana Baine, AF Mpanga
maintaining a board with at least five directors vetted and approved by the bank, a majority of whom must be independent non-executive directors, and ensuring an odd number of mem - bers for decision-making efficiency. Institutions are also required to appoint a company secre - tary, implement a succession policy to address board vacancies, and develop a risk appetite statement tailored to the institution’s business and competitive environment. Moreover, the regulations mandate the establish - ment of several board committees to enhance oversight. These include: • an audit committee, composed of at least three independent non-executive directors and chaired by an individual with accounting or audit expertise; • an asset liability management committee; • a risk management committee, responsible for overseeing the institution’s overall risk strategy; • a compensation committee; and • a credit committee, tasked with supervising credit operations in alignment with the institu - tion’s credit strategy. These regulations reflect the key corporate governance principles previously outlined in the Bank of Uganda Consolidated Corporate Gov - ernance Guidelines 2022. With the enactment of the 2024 regulations, the provisions from the Consolidated Corporate Governance Guidelines now carry the force of law, ensuring enforceabil - ity and compliance across the financial sector. Environmental, Social, and Governance (ESG) Framework As part of its 2022–2027 strategic plan, the Bank of Uganda, in collaboration with the Uganda Bankers Association, launched the Environmen -
tal, Social, and Governance (ESG) Framework earlier this year. This initiative aims to promote sustainability within the banking industry and bolster the resilience of financial institutions. The framework’s primary objectives include support - ing Uganda in achieving its sustainability goals, ensuring financial inclusivity and social welfare, embedding ESG considerations into the opera - tions and policies of member banks, support - ing the Bank of Uganda’s ambition of promoting sustainability practices within Uganda’s bank - ing sector, and providing and communicating a strategic ESG framework, combining global best practices tailored to Uganda’s unique context. The framework’s recommendations are designed to align with internationally recognised standards such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), the International Sustainability Stand - ards Board (ISSB), and are guided by the Inter - national Capital Market Association’s (ICMA) Green Bond Principles (GBP) and Social Bond Principles (SBP). Some of the recommendations were already implemented by legislation cur - rently applicable in Uganda. The United Nations’ Sustainable Development Goals (SDGs), which cover various issues, ranging from hunger to poverty to inclusivity, also provided structure to the framework. The recommendations include: • having a robust governance and oversight mechanism in place for the project evaluation and selection process, representation in the board for ESG-related considerations; • incorporating ESG-related considerations into their existing policies, corporate governance guidelines, and/or committee charters to reflect the allocation of these responsibilities; • establishing a cross-functional senior man - agement team, inclusion of sustainability/ responsible business in the code of conduct;
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