The Bank of Uganda has cautioned regulators against using climate-related financial rules in ways that could unnecessarily limit access to credit, as the country works to strengthen its financial system's ability to manage environmental risks. During the signing of a cooperation agreement between the Bank of Uganda and the European Investment Bank on Wednesday, Deputy Governor Augustus Nuwagaba said the central bank must "strengthen resilience without unnecessarily constraining access to finance". He emphasised that Uganda needed a financial system capable of identifying emerging risks, allocating capital effectively and continuing to finance productive activities. "Our objective is a financial system that understands emerging risks, allocates capital effectively and continues to finance productive activity," Nuwagaba said, adding that achieving this would require cooperation across sectors, technical expertise, reliable information and sustained implementation.
Under the agreement, EIB Global, the European Investment Bank Group's international development arm, will provide technical assistance to strengthen the Bank of Uganda's climate-risk supervision, improve disclosure and reporting by financial institutions, and develop a roadmap for greening Uganda's financial sector. The support will help the central bank implement the National Green Taxonomy, which was launched in 2025 to classify economic activities according to their environmental sustainability. Beyond the central bank, the programme will support selected commercial banks to improve climate-risk management and develop policies to expand lending to environmentally sustainable projects, with Housing Finance Bank the first Ugandan commercial lender expected to benefit.
The partnership reflects growing recognition that climate change poses risks to macroeconomic stability and the financial system. Uganda is seeking to mobilise $28.1 billion for climate action by 2030. European Investment Bank Vice-President Marco Primorac said improving financial institutions' ability to identify and manage climate risks would help banks finance environmentally sustainable investments with greater confidence. "Banks can't manage a risk they can't see," Primorac said.
The programme is financed by Germany and Luxembourg in coordination with the NDC Partnership, a coalition that supports countries in advancing their commitments under the Paris Agreement on climate change. Uganda joins Kenya, Rwanda, Nigeria and Ethiopia among the countries receiving support under the initiative.