Bank of Uganda Deputy Governor Prof. Augustus Nuwagaba has warned that efforts to manage climate-related financial risks should not unnecessarily restrict access to credit, urging regulators to balance financial resilience with continued lending to productive economic activities.

"We must strengthen resilience without unnecessarily constraining access to finance," Nuwagaba said on Wednesday during the signing of a cooperation agreement between the Bank of Uganda (BoU) and the European Investment Bank (EIB).

He said Uganda needed a financial system capable of understanding emerging risks, allocating capital effectively and continuing to support productive activities.

"Our objective is a financial system that understands emerging risks, allocates capital effectively and continues to finance productive activity," Nuwagaba said.

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He added that achieving this would require cooperation across sectors, technical expertise, reliable information and sustained implementation.

The agreement will see EIB Global, the European Investment Bank Group's international development arm, provide technical assistance to the central bank to strengthen climate-risk supervision, improve disclosure and reporting by financial institutions, and develop a roadmap for greening the financial sector.

The support will also help the Bank of Uganda implement the National Green Taxonomy, launched in 2025 to define economic activities considered environmentally sustainable.

The partnership comes as Uganda seeks to mobilise $28.1 billion for climate action by 2030, with climate change increasingly recognised as a threat to macroeconomic stability and the financial system.

Beyond the central bank, the programme will support selected commercial banks to improve climate-risk management and develop policies that can expand lending to green projects. Housing Finance Bank is the first Ugandan commercial lender expected to benefit.

EIB Vice-President Marco Primorac said strengthening the financial sector's 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 working to advance the Paris Agreement on climate change.

Uganda joins other countries receiving support under the programme, including Kenya, Rwanda, Nigeria and Ethiopia.