I have been keenly following the case of Uganda’s businessman, Hamis Kiggundu (Ham) of Ham Enterprises (U) Ltd against Diamond Trust Bank (Uganda) and Diamond Trust Bank (Kenya) of unlawfully debiting Shs 120 billion from his accounts.
When Ham had just filed this case, some Ugandans thought that it is just something new in the banking sector. It is not. Many people have experienced the same challenges like Ham.
In this case, Ham indicates that he provided security/mortgage at Plot No.923, Block 9 located at Makerere Hill Road to support the credit facilities he had got from DTB. After carrying out an audit and reconciliation of the loan accounts, he found out that DTB had taken Shs 34 billion and $23 million from his accounts.
However, the businessman wants the Commercial Court to declare that DTB breached the loan agreements entered with him when the bank recovered over and above what was agreed upon in the loan installments and interest payment deduction.
This silent growing problem has been here for long and now that Ham has come up to disclose what is happening to people’s accounts, the public should take interest in this case. A habit that affects those with billions on their accounts may also affect those with Shs 100,000.
Some people take it lightly when they find out that a bank has debited some amount on their accounts forgetting that however small it is, it counts and means a lot if cumulatively deducted on each customer’s account.
Regular monitoring and auditing of our bank accounts should be a lesson learnt from Ham’s case because it is an eye-opener to some of us who never mind to inquire about unclear transactions in form of direct debits and direct credits on our accounts.
Unlawful debiting of customers’ money does not only breach the signed agreements between the customers and the bank but also kills the integrity of the bank hence creating mistrust in the banking industry.
Politics shouldn’t divide us
With Uganda now fully engrossed in an election season, the youths are expected to use this opportunity to choose their leaders, and for some to make money.
That said, I want to caution the youths to tread carefully because during such times the stakes tend to be high. Uganda is still a developing country and the youths have a huge role to play in taking this country forward.
We shouldn’t let politics create permanent divisions among us. Uganda is bigger than the politicians. No matter who wins in the elections, Uganda will stay. That is why co-operation is paramount even with all our different political ideologies.
Eventually all this dust will settle, but it shouldn’t leave us with negative consequences like injuries, bankruptcy, enemity and loss of lives.
Use technology to tackle poverty
In attempts to combat rural poverty, both government and development bodies must harness the use of modern science and technology in agriculture and other life dimensions of the rural poor.
Since additional land for agriculture is either unavailable or at a high cost, the focus apparently has to be on reducing lands lost to water depletion, soil erosion and the unplanned rapid urbanization.
The role of government here is to harness agricultural technology by massively investing in irrigation systems, use of fertilizers, new plant developments and use of mechanical innovations, so as to increase the overall productivity of resources, particularly land.
For Uganda, since 1986, GDP growth has been recorded at an annualized average of 3.6 per cent while population steadily hiked at four per cent annually. This rapid population increase largely reduces agricultural lands in search for settlements.
Kenneth Waiswa Azaliya,
Ugandans should open more bank accounts
Most adult Ugandans (approximately 80 per cent) do not have an account in a commercial bank, which obviously restricts their ability to access financial services. This is due to two major factors.
First, the people excluded from the banking system have relatively meager incomes (some are subsistence farmers), and hence the balances they can afford to hold in bank accounts, and the value of other transactions that they might make through the banking system, are relatively small.
Consequently, the amount of revenue that a bank can earn (e.g. account fees), per customer, is very small. At the same time, the cost incurred by banks per customer is relatively high in providing banking services to low-income customers. This is because many of the excluded live in quite sparsely populated rural areas. As a result, banks have limited incentives to attract low-income customers.
Second, there are barriers to opening an account, such as having no job, lack of knowledge about opening an account and, for many people, a long distance to the nearest bank branch. In addition, the majority of Ugandans are not well-versed with the services and products of commercial banks.
They have limited knowledge and awareness, especially when accessing credit. Statistics indicate that the level of understanding of the terms and conditions of obtaining credit among the borrowers is low.
One way commercial banks are addressing this problem is by using the “integration” concept, which is to create a hybrid between traditional banking practices and low-cost modern technology practices such as mobile money and agent banking.
For example, reviewing the know-your-customer practice, which requires one to have a several documents, including a referee, to open an account, will go a long way in addressing one of the barriers to having a bank account. To open a mobile money account, a customer is required to present only one document: a national identity card.
A second innovation is agent banking, through which a customer can deposit and withdraw money from his/her bank account without physically visiting a bank branch.
This innovation has two advantages which can reduce financial exclusion. It reduces the costs to the bank of operating small accounts and it brings banking physically nearer to the customer.
Commercial banks also need to consider how they can improve their business models so that they can better serve the demands of low-income customers, such as small farmers and traders. This is likely to require developing innovative products to serve the specific needs of low income customers.
Finally, banks need good communications strategies so that their customers fully understand the nature of the financial products that banks have to offer.
Kelvin Kizito Kiyingi,