Why custodial services could become Uganda’s next financial growth engine

When Centenary Bank launched its custodial services this week, the announcement may have sounded technical to many outside Uganda’s financial circles. But behind the jargon lies a development that economists and market analysts believe could quietly reshape the country’s investment landscape and strengthen its journey toward becoming a US$500 billion economy.

Presiding over the launch, Michael Atingi-Ego, the Governor of the Bank of Uganda, described custodial services as “the bedrock of trust in any financial system,” underscoring their role in safeguarding assets, validating transactions, reducing risk, and sustaining investor confidence.

For Uganda, the timing is significant.

The country’s retirement benefits sector is now estimated to manage nearly Shs30 trillion in assets, while demand for long-term financing continues to rise as the government pursues ambitious investments in infrastructure, energy, industrialisation, and private sector growth.

Yet one of Uganda’s long-standing financial challenges has been the shortage of “patient capital” — long-term investment funds that are stable enough to finance large-scale economic projects over many years.

This is where custodial services enter the picture.

In global financial markets, custodians act as trusted institutions that securely hold and administer assets such as securities, pension investments, and institutional funds on behalf of investors. Their presence reassures both local and international investors that assets are protected, transactions are transparent, and governance standards are maintained.

Financial experts say this trust factor is critical if Uganda hopes to attract deeper participation from pension funds, asset managers, development finance institutions, and foreign investors.

Atingi-Ego linked the launch directly to Uganda’s Tenfold Growth Strategy, which targets a tenfold expansion of the economy by 2040. Achieving that ambition, he noted, will require mobilising more than Shs400 trillion in long-term financing.

“Professional custody arrangements are no longer optional; they are essential,” he said during the launch.

For Centenary Bank, traditionally known for its dominance in retail and microfinance banking, the move signals a strategic evolution into more sophisticated financial services. Analysts see it as part of a wider transformation within Uganda’s banking industry, where lenders are increasingly diversifying into investment banking, digital finance, and capital market services.

The bank’s nationwide branch network could also give it an advantage in widening access to institutional financial services beyond Kampala, potentially supporting smaller pension schemes and regional investors previously underserved by complex financial products.

The broader economic backdrop is also working in Uganda’s favour.

According to the Bank of Uganda, the economy grew by 6.3 percent in the 2024/25 financial year, with growth expected to rise further to between 6.5 and 7 percent next financial year. Inflation has remained relatively contained at 3.4 percent, while foreign exchange reserves have climbed to US$6 billion, providing about four months of import cover.

Uganda’s improving financial ecosystem has not gone unnoticed internationally. The country now ranks third in the Absa Africa Financial Markets Index, behind only South Africa and Mauritius, a sign that investors increasingly view Uganda as an emerging financial market with strong potential.

Still, challenges remain.

Atingi-Ego acknowledged that Uganda’s pension sector remains underdeveloped compared to the size of the economy, limiting the volume of domestic long-term capital available for investment. Weak market depth, limited investor participation, and low financial literacy also continue to slow the growth of capital markets.

However, industry observers argue that stronger custodial services could help address some of these barriers by improving transparency, governance, and confidence in investment systems.

The launch also reflects a growing recognition that economic growth is no longer driven solely by commercial lending. Increasingly, countries seeking rapid transformation must build financial infrastructure capable of efficiently channeling savings into productive investments.

For Uganda, that means creating systems that can support pension reform, deepen capital markets, and attract both domestic and international institutional investors.

“This launch is more than a corporate milestone,” Atingi-Ego said. “It is a foundation for mobilising the patient capital our economy needs.”

As Uganda positions itself for accelerated economic growth, the success of initiatives like custodial services may ultimately depend on whether the country can turn investor confidence into sustained long-term investment — institution by institution, reform by reform, and market by market.