KAMPALA - A surge in fraudulent activity in Uganda has prompted the head of the country's biggest bank to call for greater risk management co-operation between firms.
Lamin Manjang, managing director of Standard Chartered Bank (Uganda), spoke out at the launch of a two-day training workshop designed to encourage banking officials to form collective agreements on how to stamp out fraud and operational risk losses.
Manjang said: "We compete as banks on sales, service and customers but when it comes to operational risk, it is an area where we need to collaborate. There is no point in one particular bank doing well to prevent fraud when some other banks are not at that same level. Banking is all about confidence and trust, and the health of all banks is something we should be very particular about."
Justine Bagyenda, the head of supervision at Bank of Uganda (the nation's central bank), echoed Manjang's comments and expressed her own concern at increasing levels of both internal fraud by staff and external fraud by experts.
"Frauds and forgeries are gaining momentum in our banking sector. It is not at an alarming ate but it is an evil act that needs to be controlled," she said.
She advised banks to introduce products and services they fully understand to be able to foresee and mitigate risks instead of gambling.
"Stick to your 'bread and butter' before going for a product; make sure you know all the risks that are embedded in it and know how you will deal with them," said Bagyenda.
The training, conducted by Standard Chartered's senior managers, attracted 25 Ugandan banking officials looking to gain the necessary skills to heighten awareness of fraud and operational risk, and better manage of operational risks, minimise fraud and operational losses, and apply risk controls.
To build public confidence in banks, Manjang said banks need to work together to strengthen their systems against risks and return to the basics of banking, despite the ongoing global financial crisis.
He said fraud was a threat to the industry that needed to be curbed by all means possible and that Standard Chartered had decided to organise the training as a collective responsibility in fighting the crime. Banks' assets lie in the bank's image and reputation, he said, which have to be protected at whatever cost.
"Fraud and operational losses impact the bank's image and reputation, and its financial performance, negatively. We are a chain, and we should not allow fraudsters to take advantage of any small weakness in the chain," he said.
This year saw Uganda ranked as the sixth worst place to do business in the world, according to a survey issued last month by the World Bank. The former British colony ranked worst on various indicators, including favouritism by government officials and main telephone lines per person.