KAMPALA, Uganda — Bank of Uganda Governor Dr Michael Atingi-Ego has told Parliament that the central bank has significantly strengthened its internal controls following reported security breaches and fraudulent payment incidents, assuring lawmakers that the new safeguards are sufficient to prevent a recurrence.
Appearing before the Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (COSASE), chaired by MP Muwada Nkunyingi, Atingi-Ego said the central bank had moved quickly to address weaknesses identified within its systems.
“Where there are any perceived weaknesses, we’ve strengthened them,” he said.
The Governor, however, distinguished the incidents from a conventional cyberattack, insisting that the Bank of Uganda was not hacked.
“There was no hacking in the Bank of Uganda. There were fraudulent payments,” Atingi-Ego said.
He said the strengthened controls are intended to prevent further breaches and improve the bank’s ability to detect and respond to fraudulent transactions.
Parliament presses BoU on consumer protection
The COSASE hearing also turned to growing concerns over consumer protection in Uganda’s rapidly expanding digital financial services sector.
Lawmakers questioned the central bank over loan terms, recovery charges, disputed deductions from customers’ accounts and the mechanisms available to consumers seeking to resolve disputes with financial institutions.
Particular concern was raised over mobile money loans and other digital lending platforms, with MPs questioning whether consumers are adequately protected from potentially exploitative lending practices.
The Committee also questioned the regulatory framework governing products such as mobile money advances, noting that large numbers of Ugandans are paying interest on such facilities.
MPs further urged the central bank to establish or strengthen accessible mechanisms through which customers can resolve financial disputes without having to undertake lengthy and costly court processes.
‘Guarantors’ allegedly unaware of loans
Atingi-Ego acknowledged another emerging concern involving digital lenders and mobile money companies: the use of guarantors without clear evidence of their consent.
He said some borrowers provide the telephone numbers of individuals who are subsequently treated as guarantors, with the alleged guarantors only discovering their status when lenders begin recovery efforts.
“The concern is on guarantor. The mobile money agents, I think those lenders, require a guarantor. Unfortunately, I think there are no safeguards on requiring a consent from a guarantor,” he said.
According to the Governor, some lenders simply enter an individual’s telephone number and, when the borrower defaults, begin recovery from that person.
“They just fill your number, and upon failure to repay, these mobile money companies and online lenders proceed to recover from guarantors and the guarantors learn from the first time that they are actually guarantors when the companies are making attempts to recover from them,” he said.
The disclosure has raised questions about informed consent, transparency and accountability in digital lending, particularly as mobile-based credit continues to expand among Ugandan consumers.
BoU promises investigations into complaints
Responding to concerns over the regulator’s handling of consumer complaints, Atingi-Ego said the Bank of Uganda investigates formal complaints brought before it.
He said, however, that the regulator requires sufficient information about how particular financial transactions and lending practices are conducted before developing appropriate regulatory responses.
“A formal complaint submitted, like we’ve had now, we are going to look into it. We want to get more information on how this is being transacted. Then for us to come with a solution going forward,” he said.
The COSASE engagement places renewed focus on the balance between innovation in Uganda’s digital financial sector and the need to protect consumers from abusive or opaque financial practices.
For the Bank of Uganda, the challenge is increasingly twofold: strengthening the security of the financial system while ensuring that the millions of Ugandans using digital financial services can access clear information, effective safeguards and accessible channels for resolving disputes.
