Uganda’s financial sector is grappling with a myriad of challenges, including rampant fraud, cybersecurity threats, health crises, and geopolitical instability.
The latest case of fraud in the banking sector is the theft of over Shs60Bn from Bank of Uganda, which has since led to the arrest of several senior officials from the Ministry of Finance, Planning and Economic Development.
In a bid to mitigate these risks, NCBA Uganda recently convened a stakeholders’ meeting in Kampala, bringing together members of the Uganda Bankers’ Association Risk Committee. The meeting aimed to discuss strategies for navigating the complex landscape of risks facing the sector.
Wece Calvin Onyang, an Internal Auditor at Opportunity Bank Uganda Ltd, emphasized the need for a proactive approach to risk management, stating, “Risk management needs a proactive approach through collaborations by way of timely analysis of each and every emerging phenomenon to ensure adequate cushion against risks.”
Recent Examples of Fraud in Ugandan Banks
In recent years, Ugandan banks have been hit by several high-profile fraud cases. For instance:
-In 2024, it was reported that over Shs60Bn was stolen from Bank of Uganda.
– In 2020, it was reported that hackers had stolen UGX 10 billion (approximately USD 2.7 million) from a Ugandan bank using a sophisticated cyberattack.
– In 2019, a group of employees at a Ugandan bank were arrested for allegedly stealing UGX 1.5 billion (approximately USD 400,000) from the bank’s vault.
– In 2018, a Ugandan bank was forced to shut down its online banking platform after discovering a security breach that had compromised customer data.
Cybersecurity Threats in the AI Era
The increasing use of artificial intelligence (AI) in the financial sector has introduced new cybersecurity challenges. AI-powered cyberattacks can be highly targeted and difficult to detect, making it essential for financial institutions to stay ahead of the threat curve. Implementing advanced technologies, such as machine learning algorithms and anomaly detection systems, can help detect and prevent cyber threats.
Risk Identification and Fraud Prevention
Identifying risk and preventing fraud are critical components of a robust cybersecurity strategy. Financial institutions must conduct regular security audits and penetration testing to identify vulnerabilities and ensure that defenses are up to date.
Geopolitical Risks and Health Crises
Geopolitical risks, such as the ongoing conflict in the Democratic Republic of Congo, can have significant implications for regional economic stability. Health crises, such as an Ebola outbreak, also pose significant risks to the financial sector. Uganda’s readiness for an Ebola outbreak is a critical concern, and financial institutions must be prepared to respond quickly and effectively in the event of an outbreak.
Impact of USAID Funding Cuts
The impact of USAID funding cuts and government rationalization on the financial sector is also a concern. Financial institutions must be prepared to adapt to changing circumstances and find ways to maintain stability and continuity in the face of uncertainty.
Election-Related Risks and Proactive Strategies
With the upcoming general election, financial institutions must also be aware of potential election-related risks and have proactive strategies in place to mitigate disruptions. This includes ensuring the security of voting systems and being prepared to respond quickly and effectively in the event of any disruptions.
Based on the above, it’s key to note that Uganda’s financial sector is facing a complex landscape of risks, from cybersecurity threats to health crises and geopolitical instability.
Financial institutions must therefore be aware of these risks and have strategies in place to mitigate them.
By staying ahead of the threat curve and adapting to changing circumstances, financial institutions can maintain stability and continuity in the face of uncertainty.