Introduction

In the wake of independence, Uganda sought to assert control over its monetary system and central banking. This ambition came to fruition with the establishment of the Bank of Uganda (BoU) in 1966—a milestone for national sovereignty, financial stability, and monetary independence.

Historical Context: From Currency Board to Central Bank

Before 1966, Uganda—alongside Kenya and Tanzania—relied on the East African Currency Board (EACB) based in London, which managed currency issuance and exchange matters for the region MonitorWikipedia.

By the early 1960s, political unity across East Africa faltered, prompting Uganda to pursue a national currency and financial governance Monitor. On May 16, 1966, the Ugandan Parliament passed the Bank of Uganda Act, laying the legal framework for a national central bank MonitorScribd.

Formal Establishment and Early Mandates

The Bank of Uganda officially opened on August 15, 1966, marking the end of the East African Shilling and the birth of the Ugandan Shilling Bank of UgandaMonitorScribd.

From its inception, the BoU was entrusted with key responsibilities:

• Issuing legal tender and managing currency controls
• Formulating and implementing monetary policy
• Regulating and supervising financial institutions, aligning closely with the Ministry of Finance Bank of Uganda+1Wikipedia.

The initial mission was to promote price stability and a sound financial system in support of Uganda’s socio-economic transformation Bank of Uganda.

Leadership and Structure

The first Governor, Joseph Mary Mubiru, appointed in July 1966, served until September 1971, setting the foundation for Uganda’s monetary policy framework Wikipediahakipensheni.blogspot.com. As specified under Ugandan law, the Governor and Deputy Governor are appointed by the President, with the Board of Directors—including other appointees—overseeing governance Wikipedia+1.

Early Challenges and Institutional Milestones

In 1969, Uganda passed the Banking Act, clarifying the BoU’s supervisory and regulatory role over commercial banks—a crucial step in strengthening oversight MonitorWikipedia.

Yet, the late 1960s brought turmoil. President Obote’s Nakivubo Pronouncement (1970) initiated widespread nationalization of foreign-owned enterprises, often without consultation with the BoU newvision.co.ugMonitor. Under President Amin’s regime, from 1972 onwards, economic policies including the expulsion of Asian business owners severely weakened the banking system. Branches closed, and regulatory oversight faltered newvision.co.ugWikipedia.

Remarkably, amid this chaos, the BoU managed to maintain currency issuance and basic regulation, though its effectiveness was often undermined by political interference newvision.co.ug.

Later Evolution and Legacy

Over the decades, the BoU evolved significantly:

• 1993: The BoU Statute granted the central bank autonomy over monetary policy, while the Financial Institutions Act enhanced regulatory capacity MonitorScribd.
• 2000: A consolidated Bank of Uganda Act reinforced its mandate over legal tender issuance, reserves, and financial stability Scribd.
• 2004, 2016, and 2020: Subsequent reforms addressed red tape, enabled agent and Islamic banking, and gave the BoU regulatory authority over mobile money and payment systems Scribd.

Conclusion

The founding of the Bank of Uganda in 1966 marked a turning point—replacing colonial-era currency mechanisms with a sovereign, structured, and locally governed central bank. Despite political challenges and economic upheaval, the BoU has endured and evolved—expanding its mandate, adapting to new financial systems, and anchoring the country’s monetary stability.