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UGANDA: Remarks by Dr. Louis Kasekende on state of the economy at annual meeting – AUTOMATION GONNA KILL YOUR JOB!

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The full speech is below on the link with text following it.  The formatting is not the same as in the PDF document.  However, we endeavour to post full text so that users on Social Bundles can have access without opening the Internet links.


The Council President, Chairman and Members of the Board, Senior Management of Bank of Uganda, Distinguished delegates, Ladies and Gentlemen, I would like to thank the UIBFS’ Council and Board for inviting the Governor, Bank of Uganda, who I am representing this evening, to be part of the Annual General meeting (AGM). I convey the apologies of the Governor, Prof. Emmanuel Tumusiime-Mutebile, who is unable to join us this evening due to other commitments.

Listening to the various reports, including that of the Board, and the remarks by the Council President, it is reasonable to conclude that the Institute is on a firm footing, both financially and in terms of its operational effectiveness especially with regard to implementing its strategic plan. I therefore wish to commend the Council, Board and management of the Institute for their good stewardship of the Institute over the past 12 months. I would like to speak briefly about what I envisage as two key roles the Institute and its Alumni and other institutions of learning can play in shaping the trajectory of the financial services industry and the economy as well. 
Let me start with the role of the Institute in supporting the future of our financial services industry. 2 Worldwide, the financial services industry is undergoing major structural change, much of it driven by the application of information technology both to reduce the costs of delivering services and to open up new channels of service delivery and new types of service. The most prominent manifestation of new technology in the East African region thus far has been the mobile money revolution, which has transformed the retail payments system in the region. Mobile banking is also now being used in East Africa as a platform for extending small amounts of credit to customers. 
A pointer to the direction in which the banking industry is moving is provided by the launch by Standard Chartered Bank of a 100 percent digital branch in Cote d’Ivoire, where even such processes as opening bank accounts is being carried out online. The structural transformation of the financial services industry will have profound effects on the size and skill requirements of employment in the industry. It is almost certain that the total number of jobs in the industry will fall substantially, as automation eliminates the need for many routine tasks to be performed by industry staff. 
A 2017 study by McKinsey & Company1 estimated that emerging technology could affect up to 375 million workers worldwide and about 30 percent of work activities across all industries could be automated by 2030. 1 3 It is also possible that information technology will reduce the need for even none routine and more highly skilled professional jobs in the financial services industry, such as loan evaluation officers, if banks use computerized credit scoring systems to determine loan applicants’ creditworthiness. 
As such, the loan officers employed by banks would have to focus on specific segments of the loan market in which the characteristics of borrowers are too heterogeneous and complex to be captured adequately by credit scoring methodologies. Clearly, these trends have major implications for training institutions like UIBFS. Financial institutions are likely to require a workforce with different skills and aptitudes to those which characterize their current workforce. They will probably require more employees with very highly specialized skills, which are necessary for certain essential tasks but not readily transferable to other tasks within the industry. Many of these types of professionals may be employed by specialist service companies to which financial institutions outsource particular activities. 
Furthermore, the pace of change in technology and business models may mean that the nature of the skills required by the industry changes much more rapidly in future than it has in the past, which might mean that the industry’s employees would need to undergo regular retraining to ensure that their skills remain relevant for the industry. 4 The digital revolution will require continuous infusion of new knowledge and skills. The UIBFS and other institutions of higher learning therefore need to be flexible to adapt their curriculum to respond to the very dynamic skills needs, in close consultation with their stakeholders who will be the employers or future employers of the students that they train. The second issue that I wish to talk about is the role of professionals in the financial services industry and academics in our universities in shaping public opinion on matters of public policy. 
I am concerned by the near dearth of empirical research and commentary by our local independent professionals on topical issues. For example, there is ongoing debate on global regulatory standards like IFRS9, fiscal policy decisions that have a bearing on financial services delivery, the optimal institutional arrangements for the pension sector, and financial sector regulation and resolution frameworks. On all these issues that have far reaching consequences for the financial sector and the economy as a whole, the debate has been dominated, rather unfortunately, by commentary that in all respects does not enjoy the advantage of professional experience, analytical rigor or academic knowledge in these complex matters. I therefore wish to call on academics and the professionals to undertake research and engage actively in public debate. 
The alternative to your active engagement will be sub-optimal public policy. 5 Before I conclude, I want to speak about the current exchange rate developments. There are fundamental factors underpinning the depreciation of the Uganda shilling against the US Dollar. On the external front, the US dollar has strengthened in the international market and this is reflected in the weakening, albeit with varying degrees, of currencies of most emerging market and developing economies. On the domestic front, the Balance of payments has weakened, reflecting in part the strong import demand from manufacturing, energy, trade and commerce sectors. 
Over the last few days, some element of speculative trading has creeped in, accelerating the pace of depreciation of the exchange rate. While the Bank of Uganda is committed to a market determined exchange rate that supports the economy’s adjustment to changes to the balance of payments, we are not indifferent to volatility especially that driven by speculative trading. I want to remind all forex traders and financial institutions, that the exchange rate is not a one-way bet and the Bank of Uganda has adequate reserve buffer (import cover of 4.9 months at April 2018) to support the currency whenever we deem the movements to be out of line with economic fundamentals. Indeed, we intervened today by selling dollars in the foreign exchange market and we are ready to do so again. Once again, I commend the Council and Board for superintending over the institute and wish you all the very best for the year ahead. 
Thank you for listening

—— AUTO – GENERATED; Published (Halifax Canada Time AST) on: June 27, 2018 at 11:58AM

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