BoU Deputy Governor Warns Against Overly Restrictive Climate Lending Rules

Bank of Uganda (BoU) Deputy Governor Augustus Nuwagaba has issued a warning regarding strict climate-related financial regulations, stating they must not unnecessarily choke off credit to productive business sectors. Speaking during the signing of a crucial cooperation agreement with the European Investment Bank (EIB), Nuwagaba stressed that Uganda requires a resilient financial system that can identify risks while continuing to support economic growth.

“We must strengthen resilience without unnecessarily constraining access to finance,” Nuwagaba remarked. He noted that the ultimate goal is to foster a financial environment that allocates capital effectively and keeps vital economic activities funded.

The new partnership involves EIB Global providing technical assistance to help the central bank improve climate-risk supervision, enhance disclosure standards, and implement the National Green Taxonomy launched in 2025. This taxonomy aims to classify various economic activities according to their environmental sustainability.

Uganda is currently working to mobilize approximately $28.1 billion for climate action by 2030, recognizing the significant threats that environmental shifts pose to macroeconomic stability. Through the EIB collaboration, supported by funding from Germany and Luxembourg, selected commercial lenders like Housing Finance Bank will receive assistance to improve climate-risk management and expand green lending.

EIB Vice-President Marco Primorac highlighted the importance of visibility in risk management, noting that banks cannot effectively manage what they cannot see. Uganda joins nations like Kenya, Rwanda, Nigeria, and Ethiopia in benefiting from this targeted financial sector support.

For more details, read the full story on Nile Post.