E-Fraud still a challenge but banking sector is on a roll - Julius Kakeeto

BANKING | The newly-elected chairperson of Uganda Bankers’ Association (UBA), Mr Julius Kakeeto, says e-Fraud is one of the major challenges in the banking sector that he believes is on a roll.

At least two local banks have filed e-Fraud cases with Police in the last few months in a banking industry that works with numerous third parties to deliver services.

"If any link in the chain is weak, it can be exploited to occasion a fraud," Mr Kakeeto says.

The Managing Director of Post Bank says e-Fraud is also manifesting because of limited awareness among the population where they give unknowingly away their own access and security credentials.

And now that he is in a seat where one of his roles will be to devise policies the sector can work with, Mr Kakeeto's work seems cut out.

"So there is still plenty of work to do in order to curb e-Fraud," he says.

Mr Kakeeto was last week elected to succeed Citibank's Sarah Arapta in the bankers' top seat having served as her deputy prior to.

Uganda Bankers Association is an umbrella organisation for financial institutions licensed and supervised by Bank of Uganda.

While e-Fraud is one thing that bankers keep looking over their shoulders for, one of those they face head-on is the challenge of growing a large base of good borrowers.

Mr Kakeeto says this is one area they must continue working on collectively.

"Credit expansion thrives in an environment of ability and willingness to pay back what you borrow," he says. "A good credit culture spurs credit growth."

The industry is also faced with high operational costs or overheads as result of overall high cost of doing business manifested in many ways like delay in settlement of arrears, or delay in disposal of litigation cases or poor infrastructure limiting accessibility.

"Additionally, today we are all faced with climate related challenges," Kakeeto says. "In the banking sector, climate challenges expose credit portfolio to various risks."

Kakeeto and his executive of Michael Mugabi, Edgar Byamah, Mumba Kalifungwa, Sanjay Rughani, Patricia Ojangole, Shafi Nambobi, and secretary Wilbrod Owor will attempt to steer the banking sector against the headwinds with one eye on the positives that they must not only sustain but also grow.

The banking sector is at the forefront of supporting several pillars of the economy that are detailed in the National Development Plan III - including boosting exports and import substitution, development in transport and energy, as well as tourism.

The banking industry appears stable and resilient and the Supervised Financial Institutions with Tiers I, II and III have only recently published their first quarter financial performance that reflects overall growth of the industry.

Total assets for the SFI industry have grown by 7.5 percent from Shs45.8 trillion to Shs49.5 trillion, while non performing loan ratio reduced from 5.3 percent in 2022 to 4.6 percent as at December 2023.

Aggregate industry profitability also grew from Shs1.2 trillion recorded in 2022 to Shs1.4 trillion in 2023.

"There is continued investment in ICT and delivery channels especially digital channels," he says.

The industry nearly doubled spend in ICT at Shs694 billion in 2023 compared to Shs392 billion in 2022.

In a sector that is increasingly being driven by advancement in technology and one where banks have to reinvent to compete against several financial digital technologies, investment in ICT will likely continue to define Mr Kakeeto's executive.

The banking sector will have to do so with eye on opportunities beyond the conventional clients such a huge unbanked population that remains in the economy and businesses such as in the SME sector that present numerous unsatisfied needs.

But of more interest for the sector could be opportunities opening up in line with the growth of the economy in areas such as oil and gas, construction and real estate, agro-processing and manufacturing, and infrastructure development.

Kakeeto says even the services Industry is really growing by leaps and bounds, citing hospitality, health, education and ICT services.

"The industry is well positioned to harness these opportunities arising from the increased levels of capitalisation coupled with the digitisation," he says.

The new executive will also seek to ensure that the banking sector pushes ahead with facilitating trade through foreign correspondent banking relationships.

"We are living in an era where business sustainability is a priority. The newly elected executive will prioritise embracing the environmental, social and governance framework as this enhances the sector’s responsibility to society, its customers, and stakeholders," Mr Kakeeto says.

The seasoned banker has been the managing director and chief executive officer of Post Bank Uganda since November 2019.

Before that, from 2015 until 2019, he was the managing director and CEO of to I&M Bank Uganda (formerly Orient Bank).

Before joining I&M, he served as the Finance Director at Equity Bank (Uganda).

Since his appointment at Post Bank, he has led a restructuring process to reorganise the operations of the bank, resulting in the central bank granting PostBank with a Class 1 licence that allows it to operate as a fully fledged Tier 1 commercial bank.

Kakeeto holds a Master of Business Administration degree from Manchester Business School in the United Kingdom.

He is a Fellow of the Association of Chartered Certified Accountants (FCCA) of the United Kingdom, as well as the Institute of Certified Public Accountants of Uganda (ICPAU).

“Our banking sector has a lot to offer to drive economic growth and prosperity in Uganda and I am eager to contribute to it," Kakeeto said of his election.