African central banks must embrace artificial intelligence (AI) to strengthen financial supervision and ensure stability in an increasingly digital economy, Deputy Governor of the Bank of Uganda Prof. Augustus Nuwagaba has said.
Speaking at the Annual Meeting on Banking Supervision and Financial Policy Implementation at Lake Victoria Serena on September 24, 2025, Nuwagaba described AI as a game-changer for the financial sector but warned of the risks that come with rapid adoption. The meeting brought together deputy governors, regional central bank representatives, and experts from the Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI) and the Financial Stability Institute (FSI) of the Bank for International Settlements (BIS).
“AI is revolutionizing financial operations across Africa, driven by digital finance, mobile money, and FinTech innovations,” Nuwagaba said. He noted that AI is already enhancing credit scoring, customer service, and risk management, including fraud detection, anti-money laundering, and countering the financing of terrorism. “As regulators, we must embrace AI to support the delivery of our mandates,” he added, stressing its role in improving data analytics and regulatory oversight.
Nuwagaba, however, cautioned that AI adoption also increases exposure to cybersecurity threats, governance challenges, energy demands, and geopolitical risks linked to data center hosting. “The opportunities are high, but so are the risks,” he warned, urging a gradual, well-managed transition.
To maximize AI’s benefits, he recommended that central banks craft clear AI strategies aligned with national digitalization policies. He emphasized investment in skilled human resources, infrastructure, and cybersecurity, while also calling for regional cooperation to build supervisory capacity and support local innovation. He added that boosting digital financial literacy is key to ensuring inclusion.
His remarks come as African economies expand digital finance, with mobile money and FinTech driving financial inclusion. Nuwagaba said AI provides a chance to leapfrog outdated systems but underscored the need to safeguard data sovereignty and mitigate model risks. “This transition is our new normal,” he declared, urging regulators to embrace AI while safeguarding financial stability.
The two-day meeting ended with consensus that AI integration is not optional but a necessity for modern financial supervision and policy implementation across Africa.
