KAMPALA —The Central Bank has urged financial institutions under it’s watch to make deliberate effort to protect the integrity in the sector amid a thread of scandals ranging from insider trading, money laundering to misuse of funds for personal gain.

Speaking during a one day workshop on conduct and ethics in the financial services industry held in Kampala,
Dr. Tumubweine Twinemanzi, the Executive Director Supervision at Bank of Uganda tipped banks on how to cope with their ethical problems, in order to regain public acceptance.

The dialogue was organised by absa bank.

“Without ethics, you don’t have governance and when you don’t have it that is the beginning of the failure of the bank. If you don’t have ethics you can’t build trust yet the financial sector doesn’t sell loans or services but rather trust,” Dr. Tumubweine said, adding that, maintaining sector ethics are central to how financial institutions build trust.

“Despite what everyone thinks, banks sell trust that customers will be sure that by leaving their money with you, they will walk in tomorrow and it is still safe. This can only be built if the bank follows ethics.”

Dr. Twinemanzi, who holds a Doctor of Philosophy degree in Economics from the University of Texas at Dallas says emphasizing ethics is crucial at such a time when financial institutions are under pressure from stakeholders to make profits following the Covid-19 pandemic period that hit them badly.

“The economic circumstances we are in show that economic recovery is very slow , we have inflation, geopolitical tensions in Russia and Ukraine and the war in DRC all hitting the economy. Remember for the past two or three years, shareholders in these banks were not earning anything. They are putting pressure on these institutions to generate revenue for them but in an environment where you have pressure from employers to deliver in numbers and an uncertain economic environment, there is a tendency to want to sidestep ethical conduct to try and meet your targets. This needs to be dealt with”.

He, however, warned that financial institutions whose employees are engaged in sidestepping ethical conduct risk losing trust of customers.

Phumelele Zwane, Absa Bank head of ethics explained that the bank was taking deliberate measures to protect its integrity and mentoring employees to respect the same.

“At Absa, Bank, we do an ethics risk assessment and we understand what our risks are because it is important that all of us work as a team in absorbing the risks that might come out,” she said

“As a bank, we make sure that we hold leaders accountable; it is important that we issue the same level of accountability on a senior leadership level as the junior leadership level.”

On his part, Absa Managing Director Mumba Kalifungwa said the workshop also attended by other industry players sought address concerns regarding ethics in the banking industry.

“The banking sector is built on trust and the need to show customers that their deposits are safe with us is key. We think it is our duty to play a shaping role in our society by reminding players of their duty to ensure they follow ethics and create awareness in this industry,” Mr Kalifungwa said.

He noted that players in the financial sector have the power to make decisions but the same should have a positive impact towards the individual players and the entire sector at large.

“Whenever you are in a position of trust or authority, what you are directed to do should be the right thing with a positive impact on the industry and the particular customer you are serving. As human beings, there are points where we are put in positions of compromise but ethical guidelines will always save the situation. When you choose to ignore ethical guidelines there will always be consequences like people being jailed, losing a source of livelihood and all sorts of negative connotations.”