News Column

Ethics, Professionalism Seen Dropping Among EA Banks

September 2, 2014

Abduel Elinaza

EAST African countries introduced various reforms including liberalization of the financial sector about two decades to sustain their economic growth.

The countries namely, Tanzania, Uganda and Rwanda have seen huge gains but are paying a price at the expense of banking ethics and professionalism.

Before the liberalisation, central banks in the region were custodian of code of conduct and professionalism standards, plus controlling some macroeconomic fundamentals like pegging foreign exchange rates.

The liberalisation increased the number of banks and competition in the region. In Tanzania, for instance, has 44 banks at the moment, Uganda (23), Kenya (44), Rwanda (13) and Burundi (12).

But the competition has created a shortage of skilled labour, unfair practice to some bankers trying to make super profit by overcharging customers, mishandling them plus fraud.

"Competition in the market has redefined banking business in the world including the East African region," National Bank of Commerce (NBC) Head of Legal Department, Mr Felix Kibodya says.

The legal expert says modernity adds salt to injury because of technological advancement coupled with the changing customer demands who now need "made to fit" products.

"This poses a big challenge on professional ethics in modern banking," he says. "Professionalism in the banking sector no longer exists because an engineer can become a CEO in a bank," he says.

He says that worries are that marketing and sales units are becoming the most prominent function, but their roles are driven by specialists who lack in-depth understanding of banking business.

On combatting fraud, Ernst & Young, Country Managing Partner, Mr Joseph Sheffu says that banks are themselves to blame for not investing enough in securing their information technology systems. He says banks rely on the few highly-skilled ICT workers, instead of contributing to the training of ICT courses.

"Most banks want to hire ready made IT experts instead of trainingall their employees," he said. From Page i Nevertheless, bankers in the region have seen the shortfall and want to correct the situation sooner than later, in a bid to salvage ethics and professionalism among them.

They said the bloc needs universal banking code of conduct and standardise professional ethics, which an employee should understand and sit for an examination before one is certified as a banker.

This was also among the resolutions the bankers reached during the five-day East African Banking School held in the city and hosted by Tanzania Institute of Bankers.

To avoid the vice, Mr Kibodya says, banks should share information on how to weed-out bad elements to reduce fraud cases and serve better customers.

The Institute of Corporate Governance of Uganda President Leo Kibirango says there is need for institutes to have a mandatory code of professionalism and standards for individualism, which are supported by bankers associations and central banks. "We need a complete code of conduct for banking, similar to professions like medical doctors and lawyers.

They should be governed by professional associations," Mr Kibirango, former governor of Bank of Uganda, he says. On top of that bankers want an open window for customers to file their complaints when mistreated by banks or overcharged.

Kenya Institute of Bankers' Executive Director, Mr Stephen Anjichi, says the banking sector in the region needs to have universal code of ethics which would make bankers "loyal to the profession."

"In the absence of this document, there is no adherence," Mr Anjichi says, adding that "working in a bank does not qualify one to be a banker. Examinations should be introduced for one to pass and certified as a banker," he says.

He says that being an accountant or a lawyer or economist is not an automatic ticket to become a banker. "Doctors have to do internship or lawyers have to pass law school, bankers should emulate the same," he says. The meeting drew over 100 delegates.

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Source: AllAfrica

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