AN APPRAISAL OF THE ADEQUACY OF ELECTRONIC BANKING LAWS

ON CONSUMER PROTECTION IN UGANDA

NAME REGISTRATION NO.

AMONG SHAKILA MWENYI 2019-08-06410
KYOMUGISHA EVAS 2019-08-06856
MUSIIMENTA ANDREW 2019-08-07051
NABWIRE MARY PATIENCE 2019-08-07092
NANTONGO BRENDA 2019-08-07124
NANYANZI REBECCA 2019-08-07082
NYAKOOJO SIMON 2019-08-06895
NZALA ABDUL SHAKULU 2019- 08 -06933
OPIO SARAH 2019-08-07047
SSENFUKA DAVIS 2019-08-06879
TUKAMUSHABA EVAS 2019-08-06853

SUPERVISOR:
MR. NUWAGABA SHERE

A RESEARCH PROPOSAL SUBMITTED TO THE SCHOOL OF LAW IN

PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF A
BACHELOR OF LAWS DEGREE OF KAMPALA INTERNATIONAL
UNIVERSITY

FEBRUARY, 2024
ABBREVIATIONS
B.O.U: Bank of Uganda
U.B.A: Uganda Bankers Association
F.I.A: The Financial Institutions Act
U.B.I: Uganda Banking Institution
 CHAPTER ONE
GENERAL INTRODUCTION
1.0 Introduction
This research aims to meticulously examine the effectiveness of electronic banking laws
in safeguarding consumer interests in Uganda. It encompasses a comprehensive
introduction, encompassing the study's background, problem statement, objectives, and
research questions. The significance of the study, a review of related literature, the scope,
methodology, research questions, and limitations are also systematically addressed. A
synopsis of the chaptalization is also explored.

1.1 Background to the study

Electronic banking may be defined as a means whereby banking business is transacted
using automated processes and electronic devices such as personal computers,
telephones, fax machines, Internet, EFTS (Electronic Funds Transfer), card payments and
other electronic channels.1 In 1998, the Bank of Uganda created the National Payment
System Secretariat (NPSS) and embarked on a systematic and planned process of
modernizing payment systems.2

The advancement in Information and Communication Technology has impacted

positively on service delivery in the financial sector of the Ugandan economy. In a bid to
provide a variety of advanced payment systems to the number of corporations and a
corresponding increase in transactions, the Bank of Uganda implemented the EFT for
both credits and debits in 2003. These included the introduction of Electronic Fund
Transfers (EFT) (both credits and debits), the development of a Real Time Gross
Settlement (RTGS) system. In August 2003, the Electronic Fund Transfer system was
implemented.3 The EFT system supports both credits and direct debits 4 and the EFT
1
L S Sealy & RJA Hooley commercial law text, cases and materials 3rd ed.
2
Bank of Uganda 40 years of service (1966-2006)
3
Bank of Uganda Annual Report 2003/2004
4
A credit card is a system of payment named after the small plastic card issued to users of the system. In the ease of
credit cards, the issuer lends money to the consumer (or the user) to be paid later to the merchant Credit cards are

1
transaction volumes and values have steadily increased since its introduction, and the
EFT system has proved popular for corporate salary payments and public servants. 5 The
EFT is expected to enhance efficiency and strengthen risk management in the digital
banking system.

Banks have continued to invest in payment technologies, including the Automated Teller
Machines (ATMs) whose numbers have greatly increased. Furthermore, the ATM has
continued to expand, and besides cash withdrawals and deposits, statement ordering and
account balance inquiry, some ATMs now provide for payment for utilities, loading of
airtime on mobile phones and inter -bank transfer of funds for example, Banks like, Cairo
international bank, Barclays, DFCU (Development Finance Company of Uganda Bank
Limited). The ATM distribution levels to the upcountry areas also increased, with ATMs
currently installed in more than 30 upcountry towns (now several of whom were elevated
to city status).6

Recently, a directive7 from the Central Bank of Uganda stopped all commercial banks
from honoring cheques above 20 million Uganda shillings, Ugandan banks have
introduced electronic means of transferring large sums of money from one bank to
another or a client's account. Real time gross settlement (RTGS), electronic funds transfer
(EFT), and internet banking have been introduced to reduce rampant bank fraud,
especially risks associated with physical cheques of large sums. However, not all clients
appreciate these efforts. Some still prefer the good old cheque and cash system to the
rather complex electronic banking system.8

issued after an account has been approved by the credit provider, after which cardholders can use it to make
purchases at merchant accepting that card and a direct debit card
5
Bank of Uganda Annual report 2005/2006
6
Daily Monitor of Tuesday, May 21,2019
7
Shs.20 million cheque limit Directive to commercial Banks 2007
8
Daily Monitor, Tuesday, April 8, 2008 Pg 27 by Martin Luther oketch

2
In line with international banking standards, the Bank of Uganda (BoU) and all
commercial banks are trying to provide their clients with tailor-made services to improve
delivery of services and cut out a niche in the nearly exhausted Ugandan banking market.
Standard Chartered Bank, Stanbic Bank, DFCU Bank and a few others have introduced
electronic Visa cards. Some have even gone a step further by introducing SMS and
Internet banking methods like Stanbic Bank, and Bank of Africa to their customers to
have access to banking services in the comfort of their homes.
Plastic money, credit and debit visa cards were introduced in the banking industry- the
BOU licensed Euro net to offer BANKOM services, and BANKOM to offer inter-bank
switch services in Uganda.

According to BANKOM (U) LTD Managing Director Michael Kagwa,9 the countrywide
level of electronic Payment System was running at full stifle with the ongoing operation
of multitude accepting Automatic Teller Machines and Points of Sale terminals as first
steps.

"Part of BANKGM'S mandate from the Bank of Uganda is to deploy sufficient

infrastructure to allow the functioning of an Electronic Payments System and we are
already making progress in that direction. Nile Bank and DFCU which pioneered the
service, have since been joined by Orient Bank, Cairo International Bank and Post Bank,
which are in the process of upgrading their technology platforms to the standards of
security, required by BANKOM':

Electronic banking was introduced in commercial banks in Uganda as early as 1997,

however, adoption by customers is only at 39%. Despite the recent studies that have been
carried out on e-banking and customer satisfaction, few studies have been conducted to
ascertain the relationship between e-banking and customer satisfaction in commercial

9
A Monthly Publication of Uganda Tourist Board No I February 2007

3
banks concerning satisfaction of customers with ATMs, online banking and mobile
banking.

A consumer is a person to whom goods, services or credit are supplied or sought to be

supplied by another in the course of business carried on by him. 10 The advent of
consumer protection is a pillar from which almost all laws relating to commercial
transactions and related business practices in Uganda that cut across manufacturing,
processing, distributing, marketing, labelling, Copyrights, trademarks, Protection of
Trade secrets and Patents and consumption of the products in the market relates.

Consumer Protection is the basis as to why most laws were enacted with provisions on
Consumer protection such as the Penal Code Act, Laws on Trade Marks, Copyright,
Measures, Banking sector, laws of contract, sale of goods and services, Uganda National
Bureau of Standards laws in which all, the draftsman intended to ensure monitoring of
products' safety and manufacturing, health standards among others. This advent of
consumer protection encompasses the initial preparation of food items and all
consumable products, services through blending, testing, packaging, parking, and
preservation, storage, branding, rendering services to clients, distribution and selling to
the final userE-banking exists in a variety of forms, which can be divided into various
groups: consumer electronic banking, corporate operate electronic banking, interbank
electronic banking product and plastic card. 11 Consumer Electronic banking includes
Automated Teller Machine (ATM), EFTPOS, Mobile Banking, Internet Banking, and
Home/Office banking,12 corporate e-banking and interbank e-banking are additional
examples. We shall focus on consumer electronic banking laws and their adequacy in
consumer protection.

10
Consumer Protection professional book Ltd by John Mickleburgpg P.3
11
Ibid P. 32
12
Ibid.

4
The digital banking landscape is very slippery, potentially exposing everyone involved to
risks of fraud, data breaches, unauthorized transactions, and snail-paced dispute
resolution among others. While digital banking has always symbolized convenience, it is
not without risks of fraud. As digital channels have multiplied, so have the routes
fraudsters can use. Justice Stephen Mubiru 13 holds a view that with increased automation,
financial institutions have become some of the most targeted by fraudsters, due to their
immediate access to funds and their ability to transfer them.

This called for the enactment of various laws and regulations to harmonize and control
the problems that were being raised by consumers as a result of electronic banking
transactions in Uganda.

To mention but a few, The Bills of Exchange Act, 14 The Anti-Money Money Laundering
Act,15 Electronic Transactions Act,16 The Financial Institutions Act, 2004 (as amended),17
The Foreign Exchange Act,18 The Bank of Uganda Act,19 the Companies Act, 2012, the
Bank of Uganda consumer protection guidelines,2011 and many others all embedded
with various provisions protecting consumers.

In conclusion, therefore, the laws as seen above are applicable in Uganda and cater for
the protection of consumers.

1.2 Statement of the problem

13
Atiku v Centenary Rural Development Bank Limited (Civil Suit 754 of 2020) [2022] UGCommC 146 (18 July
2022)
14
Cap. 68.
15
Act 12 of 2013 as amended.
16
No.8 of 2011 Atiku v Centenary Rural Development Bank Limited (Civil Suit 754 of 2020) [2022] UGCommC
146 (18 July 2022).
17
Act 2 of 2004 as amended.
18
Act 5 of 2004.
19
Cap. 51.

5
The payment mechanisms used by banks to effect payments in traditional banking
practices like the physical delivery of money from one person to another in bags or
briefcases, or via bullion vans proved to be very risky and expensive during transit, the
insurance costs were also very high.

This necessitated the transformation into a safer mode and hence the introduction of the
cheque system. Initially, this mode was very safe and reliable that's why it has
persistently remained in operation for this long.

However, as technology and time pass a lot of challenges associated with the cheque
system have been exposed including but not limited to forgery, fraud, and money
laundering. To curb these numerous problems, the evolution of the electronic banking
system has been suggested as a solution to the current problems of forgery, fraud, and
money laundering but the question of whether the existing legal framework together with
the advancement in technology sufficiently addresses the concern to consumer protection
is yet to be established until an exhaustive research is carried out to ascertain the
adequacy of the existing laws, practice and the electronic legal framework and
challenges.

This research will assess numerous problems consumers encounter within electronic
banking and solutions to the same problems

1.3 Objectives of the study

1.3.1 General Objective
To critically appraise the adequacy of electronic banking laws on consumer protection in
Uganda.

1.3.2 Specific Objectives

6
 i. To examine the Legal and Institutional Framework for Electronic Banking and
Practice in Uganda.

ii. To Analyze Electronic Banking in Uganda, the gap in the laws brought by
electronic banking: its associable risks to a customer and possible solutions.

iii. To determine the risks and control measures associated with electronic banking
and the impact of electronic banking on consumer protection.

1.4 Research questions.

i. What are the Legal and Institutional Framework for Electronic Banking and
Practice in Uganda?

ii. What is the status of Electronic Banking in Uganda compared to other

jurisdictions like Kenya?

iii. What are the risks and control measures associated with electronic banking and the
impact of electronic banking on consumer protection?

1.5 Hypothesis
The researcher intends to prove the following statement concerning customers in
electronic banking; the current legal framework does not afford legal protection of
customers in electronic banking in Uganda.

1.6 Significance of the study

The researchers believe that the study will cut open, in detail, the various inadequacies in
the legal framework governing consumer protection in E-Banking in Uganda.

7
It is envisioned that the study will add knowledge to the existing body of literature
relating to electronic banking and consumer protection in Uganda and other similar
developing economies in Africa and the world at large.

The researchers believe that stakeholders such as parliament will use the findings from
this study as a solid persuasive ground for making decisions in future legislation on
Consumer Protection in this alluring digital banking landscape.

The upshot of all is that the study will enable researchers to earn an award of the
Bachelor of Laws degree of Kampala International University according to the university
rules.

1.7 Research methodology

The research will be purely doctrinal—appraising the adequacy of electronic banking
laws on consumer protection in Uganda, the researcher will rely largely on the
Constitution of the Republic of Uganda,1995 (as amended), Statutes, Policies, and
textbooks, seminar papers, articles from various law journals on the subject, newspapers
among others. However, it should be noted that a great deal of knowledge has been
obtained from the Internet given the fact that little materials have been written on the
subject matter in the Ugandan context.

1.8 Scope of the study

1.8.1 Content Scope
The study will be carried out on the legal, institutional framework and regulatory aspects
of electronic banking and practice as regards consumer protection in Uganda.
1.8.2 Time Scope
The research will be carried out for a period of two months (February—April 2024).

8
1.8.3 Geographical Scope
The study will be carried out within the territorial boundaries of Uganda.

1.9 Limitations of the study

Even though this study shall yield results, there are several challenges that the researchers
are likely to encounter along the way.

The researchers are limited by time as it may not be possible for them to
comprehensively study all the materials available on electronic banking within two (02)
months.

1.10 Literature Review

Many sources have been used in carrying out this research. Textbooks, papers, journals,
articles and other references have been useful. It is important at this stage to review some
of these materials.

While reviewing the literature, it is important to note that there exists a gap in the
literature about the subject apart from the few papers presented at seminars, as will be
seen. It should be noted from the onset that Uganda has greatly relied on foreign
materials regarding this subject.

A bank or financial institution means any company licensed to carry on financial business
as its principal business as specified in the second schedule to the Act and includes all
branches and offices of that company in Uganda.20

A bank includes a body of persons whether incorporated or not who carry on the business
of banking21 Lord Denning MR, described a bank by reference to the essential

20
Section 3 Financial Institutions Act Cap. 54 of 2004.
21
Section 2 of the Bill of Exchange Act Cap. 68 Laws of Uganda 2000

9
characteristics which constitute banking business and stated that such characteristics
include; stability and probity and in the case of doubt, he suggested that one should look
at the reputation of the firm amongst intelligent commercial men other words the banking
community should lesson a banker when they see one.22

Section 3 of the Financial Institution Act of 2004, defines a bank as any company
licensed to carry on banking business as its principal business, as specified in the second
schedule to the Act and includes all branches and offices of that company in Uganda. A
bank includes a body of persons, whether incorporated or not, which carries on the
banking business. This is provided for under S.2 of the Bill of exchange Act Cap 68, laws
of Uganda.
According to the Federal Trade Commission, a commission based in America, electronic
banking is explained also as electronic fund transfer (EFT), which involves the use of
computers and electronic technology in place of cheques and other paper transactions.
EFTs is initiated through devices like cards or cords that let you or those you authorize,
access your account. For example Automated Teller Machine (ATM).

In defining what payment is, Sealy and Hooley,23 define payment as a gift or loan of
money or an act accepted in performance of a money obligation payment may be made
by physical delivery of the money. Sealy further argues that the payment by physical
delivery can be both risky and expensive and these difficulties have led to the
development of various forms of payment systems.

Sealy24 also discusses the nature of funds transfers and argues that the funds' transfers
involve the adjustment of balances on the accounts of the payee and payer. He further
assesses the duties of banks involved in EFT, however, his assessment of the law of E.
Banking is based on the UK and European context and this may not be so helpful in the
22
Charley and Smart, leading cases in banking at 276
23
Commercial Law Text cases and materials, 3rd edition
24
Ibid

10
Ugandan context however the literature provides a clue of the nature of the EFTS and
risks involved in EFTS notwithstanding this work will be used to analyses how EFTS are
used.

Paget, in the law of banking, discusses payments by EFT and describes it as being the
third of the great ages of payment though he concedes that there is no universally
accepted definition of EFT for example in the US the EFT Act 1978 25 defines EFT as any
transfer of funds other than a transaction originated by cheque, draft or similar paper
instrument which is initiated through an electronic terminal telephonic instrument or
computer or magnetic tape to order, instruct or authorize a financial institution to debit or
credit an account. Paget further discusses the various types of EFT systems, the nature of
credit and debit transfers, electronic credit and debit transfers, international EFT
consumer-activated EFT systems which include cash dispenser CDS, and automated
teller machines ATMS, Electronic funds transfer at point-of-sale EFTPOS teleshopping
digital cash home and office banking. In our view, he also examines the legal
implications of EFT, however, his analysis dwells more on the UK and makes no
reference to the legal implications in other jurisdictions and does not discuss the
challenges either.

Morris-Cotterill, ATMs have extended banking services to remote areas depositing and
withdrawal of funds can be carried out in rural areas. He adds that this has enabled the
loading and unloading of cash in small communities or in widespread communities where
people gather, however, real cash ATMs for general use and deposit would require more
servicing and more security (Morris-Cotterill, 2002). We take cognisance of the fact that
the learned author raised concerns about the security at ATMs–this continues, however,
to be a going concern up to date with notable cases litigated associated with unauthorised
withdraws at ATMs. A case in point is the Ugandan case of Post Bank Uganda Limited v
Egesa (Civil Appeal No.007 of 2019) [2023] UGHCCD 272 (18 September 2023). It is
25
Title xx of the financial institution regulatory control Act

11
among the few cases wherein E-banking legislation has been brought to serious checks
on consumer protection. We will find out to what extent the laws in place currently boost
security concerns highlighted by the learned author.

A Kampurira, in his article on the evolution of payment systems in Uganda 26, discusses
a detailed assessment of the evolution of payment systems in Uganda and the payment
systems reform from 1988 to date. He argues that to provide a variety of adequate
payment instruments to the growing number of corporations and a corresponding increase
in transactions. The Bank of Uganda implemented both credit and debits in 2003. he
further analyses the challenges ahead of banking for example there is no legal and
regulatory framework for monitoring the efficiency of safety and security of the cashless
payments that are introduced in the market by the commercial banks, lack of hardware or
software malfunction, communication, infrastructure failure, human error, omission or
commission of any other type of risk.

In our view, the writer attempts to discuss payment systems at a wider scope though he
omits to make a concrete analysis of electronic banking and its legal and institutional
framework, he doesn't also contrast electronic banking in Uganda with other jurisdictions
like Kenya and Tanzania where at least Electronic Banking is developed. His article is
not so broad on whether the payment systems and institutional framework can adopt
Electronic Banking in Uganda. Notwithstanding this article is of considerable help in my
research because it lays a foundation for me to start looking at the challenges of
Electronic Banking in a wider context.

Anthony C.K Kakooza, Embracing E-Commerce in Uganda Prospects and challenges27

The paper attempts to discuss E-commerce. It highlights the likely constraints that stand
in the way of an effective conversion from the traditional ways of doing business to
26
Bank of Uganda Magazine 40 years of service
27
Advocate and lecturer in law a paper presented at the Annual Lawyers Day, KTU Law Society on the theme legal
directions in E-commerce and human rights vis vis development in the region.

12
taking on a touch of modern technology in commercial transactions. In Our view, the
author discusses the challenges of E-Commerce but he does not elucidate on Electronic
Banking, the relationship between the two. However, the work is useful because it tries to
give a detailed discussion of E-Commerce; the arguments propounded therein may be
relevant to an analytical discussion of E-banking especially foodstuff control measures
associated with electronic banking–breaking down the various proviso on consumer
protection embedded in the Bank of Uganda Consumer Protection guidelines,2011 and
other relevant laws hence answering the third research question.

Mawaji Fred28 contends that Brian Harvey in his book "The Law of Consumer
Protection and Fair Trading"29 that consumer protection is a vast field much wider than it
generally realized, it includes not only the examination of consumer civil rights in respect
of the quality of goods and service but also a large number of statutes imposing criminal
liability on producers, distributors and retailers for conduct detrimental to consumers.

Brain Harvey in his book30 says that consumer protection is a vast field. It entails civil
and commercial rights as well as penal sanctions to counteract the abuses and offences
committed against consumers and he forth goes on to state that the laws are designed to
protect the consumers. Or in connection with the supply of services for consumers and
which relates to " certain matters for example unfair course of conduct which will be
regarded as unfair if it consists of certain breaches of law. This will help us analyse to
what extent the existing legal framework provides remedies to victims of risks in E-
Banking, which, in our view, will help in reaching a logical conclusion on the adequacy
of these E-Banking laws on consumer protection in Uganda.

It's pertinent to note that even though consumer protection is a basement for all other
laws relating to contracts, sale of goods and health standards laws in Uganda, it has not
28
Mwaji Fred 2012 (Critical analysis of consumer protection in Uganda) KIU 2012
29
2"' Edition, Butterworth, London P.18.
30
The Law of consumer protection and fair. 3"' edition, Butterworth, London 1987, p.5-7

13
been given attention by most businessmen or the commercial sector, its therefore notable
that, despite of the ongoing campaign by Non-Governmental Organizations such as the
Uganda Consumer's Protection (UCPA) and Consumer Education Trust (CONSENT) to
promote consumer protection in ensuring that an ordinary buyer of such products and
services is protected from hazardo4s food stuff, it has not been effective because the
Government though has tried to implement some consumer protection laws, it has not
worked hard to ensure that such laws are observed by the business people.

It's worth noting that most of our statutes were designed from the English laws of
contract and sale of goods respectively in I890`s and also from the common laws of
England that make them ineffective to suit the modern trends in technology, science and
sophisticated living standards of all kinds of consumers, that is literate and illiterate
consumers. This therefore calls for an in-depth investigation and reform if we are to
effect meaningful commercial and business practices that suit the aforementioned
problems to ensure the evaluation of the relevance and effectiveness of our commercial
laws in ensuring consumer protection.

John Mickleburgh31 contended that representation of consumer interests plays a great

role in the protection or advancement of consumer rights generally, that such interests are
represented bodies which he mentioned, in reference to Uganda such interests may be
represented by organizations like Uganda Communication Commission, Uganda National
Bureau of Standards Uganda Consumer Protection Association (UCFA), Consumer
Education Trust (CONSENT), and among others.

Kotlep32 explained that the consumerism movement aims to seek the lights and powers
of buyers relating them to those of sellers, but the problem underlying such movements is
that consumer protection is based on the order to satisfy a few people as a targeted market

31
Consumer Protection professional Books Ltd P.343
32
Marketing, management, analysis, planning, Implementation and control, 16th edition

14
and neglecting the majority who are the consumers. He points out the actual situation in
our Uganda economy because consumer protection has not been given adequate attention
by both businessmen and the Government too.

DJ Bakibinga33 in this book, just like Brian Harvey, Bakibinga expounded that where the
seller sells goods by reference to the description of them, the buyer should have the
remedy if the goods fail to comply with the description and the description should be
regarded as an express term hence protection of consumers.

Jane Kaufman Winn (2000)34 delves into legal challenges encountered during online
commercial transactions and what remedies are available for fixing them. She recognizes
the legal issues raised by doing business over the internet like patent, trademark and
copyright issues; advertising and consumer protection, privacy issues; antitrust and
deceptive trade practices; record retention, email policies; security procedures and access
controls; and tax law but does not sink into discussing them. The daily sale of goods
issues raised are signature and writing requirements; EDI trading partner agreements;
technology neutral and technology promoting legislation; digital signatures and public
key infrastructure; Extranets and trading agreements.

Given this article was written in 2000, its major concerns were addressed in adopting
legislation compliant with the model law on electronic banking transactions. However,
what the article does not tackle is whether these challenges continue to remain concerns
remain. The focus of the article is a developed economy with developed ICT
infrastructure and is general as opposed to this research, which is based on a developing
economy and focused on a specific trade area. She opines that not all commercial law
issues can be resolved through the slow accumulation of business customs and practices.
Regulations are required. That regulation works best when it corrects market failures,
33
The law of contract in Uganda
34
Jane Kaufman Winn, (2000), the Emerging Law of Electronic Commerce. In Michael Shaw… [Et al.] (Eds.),
Handbook on Electronic Commerce, p.723, Berlin; New York: Springer.

15
such as those caused by information asymmetries or unequal bargaining power in
summer transactions.

Ewelukwa Nnaemeka (2009)35 points out the adequacy of the legal framework within
which online business is transacted and concluded and the risks associated with online
buying and selling as trials.

The challenges of the legal framework range from technological advancements that
facilitate e-commerce outpacing the laws and regulations required for adequate legal
protection of business online. Legal disputes arising from online transactions are difficult
to settle owing to where technology and law are not carefully taken care of. The key legal
issues raised include data protection, formation of contracts on the internet, the
jurisdiction to handle legal disputes that arise, the law that governs, cyber-crime and the
mode of proving internet-related transactions. The second challenge of risks associated
with the Electronic banking business is where buyers or sellers fall victim to vices like
cybercrime, confirming the actual identity of the parties contracting, quality of the goods
or services offered and the means of payment, online identity theft among others. The
author opines that these concerns give rise to considerable uncertainty for those intending
to transact online and call for adequate legal and regulatory mechanisms. How these
challenges affect online motor-vehicle trade in Uganda in particular and whether they are
also experienced in Uganda as in Nigeria remains a question for investigation in this
paper.

Satyan Kanika (2015)36 observes that in a business ecosystem, the consumer is the most
vital element. Although they are that important, consumer protection is lacking largely
due to lack of effective and stringent laws and the ineffectual redress mechanisms
35
Ewelukwa Nnaemeka, (2009), ‘Is Africa Ready for Electronic Commerce? A Critical Appraisal of the Legal
Framework for Ecommerce in Africa’. http://www.acicol.com/__temp/Dr_N.pdf (accessed on February 1, 2024)
36
Satyan, Kanika, E-Commerce and Consumer Rights: Applicability of Consumer Protection Laws in Online
Transactions in India (July 2, 2015). Available at SSRN: http://ssrn.com/abstract=2626027 or
http://dx.doi.org/10.2139/ssrn.2626027 (accessed on feb 18, 2024)

16
especially in e-commerce or online transactions. He argues that the law for e-commerce
has proved to be stagnant, leaving many consumers remediless. He cites the non-
protection of data made available online, ineffective delivery systems, misleading
advertisements, and uncertainty concerning jurisdiction in case of disputes as some of the
emerging issues in the field of e-commerce. He proposes comprehensive legislation,
which would cover all the aspects relating to e-commerce. Grievance handling
procedures for addressing grievances including compensation policies should be
disclosed online, and consumers should become aware of their rights to be able to
appropriately seek redress for violations. This article is premised in the Indian
jurisdiction, which is more developed in terms of technological development, and
Internet penetration compared to Uganda. This research will clarify whether or not the
issues raised by Satyan are real in Uganda

Bwana, J.37 has lengthily discussed the implementation of electronic banking in Uganda.
The work of this author is precious as it includes the risks that a customer is likely to
encounter in electronic banking as a result of the inappropriate legal framework. The
author has also classified the relationship between banks and customers in electronic
banking in Uganda as being purely on a contractual basis. However, due to new features
of electronic banking, there is a need to come up with a piece of legislation to govern this
specific area of electronic banking which subjects customers to security risks.

Mollel, A.38argues that information communication technology is more and more gaining
magnitude in almost all sectors of national development in developing countries.
Electronic transactions are replacing the old and traditional methods of transacting in all
walks of life. However, the full-fledged application of information communication
technology for development in most of these countries is seriously hindered by lack of

37
Bwana (2003) pp 1-10
38
Mollel, A. (1996). The legal and regulatory framework for ICT in developing countries: A case study of ICT and
the law of evidence in Tanzania.pp1-16. Available at http://cs.joensuu.fi/ipid2008/abstracts/Mollel Andrew_ICT4D
PAPER.pdf (Accessed on 1-2-2011)

17
comprehensive legal and regulatory framework for the subject. The author points out that
these challenges spin around the integrity, authenticity and security of electronic records.

Mambi, A, J.39 has discussed extensively on Information Communication Technology in

Uganda. As regards electronic banking, he is of the view that there is a lack of certainty
on electronic banking in Uganda and possibly the region of the East African Community
where electronic banking is growing explosively. As a result of an inappropriate legal
framework electronic banking may expose a customer to legal risks on questions of
privacy, cybercrimes and other related electronic financial results. The current legal
framework on financial and other related transactions does not suit electronic transactions
hence a barrier to e-commerce development. The laws do not accommodate online
transactions in cyberspace rather than offline transactions.

Schaechter, A.,40 presents a general overview of issues in electronic banking. He laments

that there are two other important sources of legal risk to customers. First, there can be
uncertainty; about which legislation applies to electronic banking transactions; the
legislation of the jurisdiction in which the (virtual) bank is licensed or in which the
services are offered. This is especially true when electronic banking has a cross-border
nature where different legislations might conflict with each other. And secondly, as a
consequence of this, enforcement can also be difficult. Moreover, enforcement of certain
emerging areas of law is uncertain, for example, laws related to electronic contracts and
digital signatures. This can lead to violations of customer protection laws, including data
collection and privacy, and regulations for soliciting could be important issues. In other
words the author is of the view that customers can only be protected clearly by a system
of law.

39
Mambi, (2010) pp 120-132
40
Schaechter,A.(2002).Issues in electronic banking: An overview. pp 10-20. Available at
http://www.imf.org/external/pubs/ft/.../2002/pdf06.pdf . (Accessed on 17-4-2012)

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Lloyd, J,41 discusses electronic banking as part of electronic commerce because electronic
banking enhances consumer confidence in electronic commerce. He further stated that
consumers in electronic banking are afforded legal protection by proper legislation
known as the Consumer Credit Act. However, this legal protection is afforded only where
a consumer is resident in the United Kingdom. The author implies that a customer in
electronic banking can be protected in his/ her respective country if in his/her country
there is a piece of legislation protecting him or her in electronic banking.

1.11 Chaptalization
The research is divided into five chapters. The first chapter gives a general introduction
to the subject of discussion. It provides a background to the dissertation and shows what
the dissertation sets to achieve, the statement of the problem, the method of carrying out
research and the literature review.

Chapter two will discuss the Legal and Institutional Framework for Electronic Banking
and Practice in Uganda regarding consumer protection and examines the risks and control
measures associated with electronic banking and the impact of electronic banking on
financial institutions, the banking risks and the regulators/supervisors.

Chapter three will critically Analyze Electronic Banking concerning consumer protection,
the gap in the laws brought by electronic banking: its associable risks to a customer and
possible solutions.

Chapter four will determine the risks and control measures associated with electronic
banking and the impact of electronic banking on consumer protection, it will also provide
an examination of the challenges of the traditional payment systems in Uganda, and
finally the developments in the banking industry.

41
Lloyds, J. (2008). Information technology law,5th ed. United States of America: Oxford University Press, pp 506-
507

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Chapter five will discuss the findings and conclusions and at the same time provide
recommendations for the findings.

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