Deposit Protection Fund total assets grow by 15% 

The Deposit Protection Fund of Uganda (DPF) recorded a 15 per cent growth in total assets in the financial year ended June 30, 2022.

This was disclosed by Julia Clare Olima Oyet, the chief executive officer, as she officially released the DPF annual report 2022 at the DPF headquarters in Nakasero, Kampala on January 30, 2023.

Oyet said the total assets growth shot to Shs 1,150 billion in June 2022 from Shs 1,000 billion in June 2021. The fund’s investments in government securities increased from Shs 989 billion to Shs 1,128 billion over the year. Meanwhile, the income increased to Shs 218 billion from Shs 177 billion. This 23 per cent increase was mainly attributed to investments and premium contributions.

She noted that the government securities continued to constitute 98 per cent of the fund’s total assets, in line with the fund’s endeavour to strike a delicate balance between capital preservation, liquidity and return, and keeping with the statutory investment options it has.

Oyet noted that DPF’s current protection limit of Shs 10 million fully covers 98 per cent of the total number of accounts in Uganda’s banking sector, which is above the benchmark of 90 per cent put in place by the East African Monetary Affairs Committee. The fund currently protects 18.4 per cent of the total deposits in the banking sector, which is above the 10 per cent benchmark put in place by the East African Monetary Affairs Committee.

The above situation contributes to the growing confidence that the public has in the country’s financial sector; hence the total number of bank accounts grew by 8.4 per cent to 20.7 million as at June 30, 2022 from 19.1 million as at June 30, 2021.

OTHER ACHIEVEMENTS

Oyet reported a number of achievements that include the establishment of a business recovery site at Bank of Uganda, the installation of critical information technology infrastructure and operationalisation of all the fund’s functions, including audit and procurement.

Although the fund’s investment portfolio was previously managed by external fund managers during the period under review, the fund took control of 50 per cent of the investment portfolio, which is being managed in-house. This has significantly reduced the annual fees that were hitherto paid to the external fund managers by Shs 560 million.

Another achievement is the development and rollout of the Depositor Payout and Premium Management System, which would enable the fund to pay depositors fast and conveniently using various payment platforms.  

The fund started on-site inspections of its premium-contributing institutions to ascertain the accuracy of depositor records and deposit balances. It also built strategic alliances with more established deposit insurance entities in other countries.

Oyet reported that the fund’s expenditure stood at Shs 6 billion compared to Shs 20 billion the previous financial year. This big reduction was mainly due to the write back of a doubtful debt of Shs 11 billion, following a tax recovery made from the Uganda Revenue Authority.

The ratio of total cost to interest income stood at 10 per cent, which was below the 25 per cent cap approved by the board.

The operational independence of the fund has continued to grow. To ensure and safeguard more operational efficiency, the fund formulated and passed a number of policies and procedures during the year in the areas of finance, information technology, communications, human resources, administration, procurement and internal audit.

These policies are subject to regular reviews to ensure that they remain relevant and adaptive to the dynamics in the sector.

jmusinguzi@observer.ug