Dr Adam Mugume, the Executive Director for Research Bank of Uganda says that banks incur expenditures to offer services and there is a justification for users of these bank services to contribute to the running costs.
Bankers have advised parents paying school fees, to use alternatives
if they do not want to pay bank charges.
Most commercial banks are also charging at rates far beyond what
they submitted to the Bank of Uganda, which it publishes regularly.
This comes as more parents prepare to send back their children to
school starting next month, amidst reduced incomes due to the effects of the
covid- 19 pandemic.
Most parents are worried about how they will raise the required
money to pay for the educational requirements of their children and incomes
Some surveys show that many children have already dropped out of
school, with some in candidate classes failing to return when they were recalled
in October last year. Most parents either lost their jobs or had their
incomes reduced when they or the reality of the pandemic hit.
A good number has also remained in the situation to-date, and the
thought of schools re-opening causes nightmares, and are calling for government
intervention to see that schools reduce the fees.
Schools have generally turned down requests to reduce the fees,
arguing that the cost of living has generally gone up and that they too need
more money to sustain the operations.
On the contrary, some are demanding arrears from the period that
the children were sent home after a government directive in March last
The government, which is appealing to the schools to be
considerate to parents, says it cannot compel the owners to reduce the fees or
Banks have also been accused of contributing to the costs to the
parents by charging them whenever they or their children are banking the
fees. The bank charges on depositing of school have for long been
challenged by parents, who question what the money is for and who benefits from
The argument is that the parent is depositing money into a school
account, not their account and that if any charge were to be made, it should be
met by the school, whose money it is.
“I am not the one who chose to pay fees through this bank. It is
the school that chose it and forced it on me. Why should I be made to pay for
it?” says an angry parent at Centenary Bank main branch.
Some say they have quarrelled with the banks, but they do not get
any response. Others decide to bank the exact fees as asked for by the schools,
but some schools treat them as unpaid school fees because the banks deduct them.
The parent is then forced to pay it later.
In 2011, Sam Anguyo, a proprietor of a school in Arua unsuccessfully sued
commercial banks which were making the charges on fees asking the court to
compel the banks to bear the cost, since the people paying the fees are not
customers to the said banks.
The banks, which included Centenary Bank and eight others, argued
that they are doing legal business which is well-known to the regulator, the
Bank of Uganda. Anguyo failed to secure an injunction from Justice Geoffrey
Dr Adam Mugume, the Executive Director for Research Bank of Uganda
says that banks incur expenditures to offer services and there is a
justification for users of these bank services to contribute to the running
BOU regularly publishes the various bank charges for each
commercial bank, including charges levied on school fees. It urges the public
to choose banks according to convenience, including charges.
Of all the 23 commercial banks regulated by BOU, only one, Bank of
India, makes no charges on school fees deposits.
According to the BOU bank charges sheet, Equity Bank and Absa make
the highest charges at 2,600 Shillings while ABC Capital, Cairo, Stanbic,
Standard Chartered, Tropical, NCBA and Bank of Africa charge 2,500 Shillings.
The sheet shows that Bank of Baroda charges 2,300 Shillings while
the rest of the banks ask for 2,000. BOU says it is illegal for any bank to
make charges above the stated ones.
“Bank customers who are being offered/charged differently from
what is published, are advised to report to Bank of Uganda”, says a statement
on the sheet.
Stanbic Bank Head of Corporate Affairs, Cathy Adengo says if the
parents pay by mobile money using the shortcodes provided, they can avoid the
charges, because the system is free.
“The system is aimed at not only saving time for the depositors
and reducing congestion in the banking halls but to reduce the cost to the
payers,” she says.
A Kampala lawyer, Ali Barekye Turyahikayo says it is wrong for two
parties to a contract, to pass on the cost of their transactions to a third
"As per the contract Act, you would not be charged. The
contract is between the school and the bank. Even if the bank is acting as an
agent, the agent is paid by the principal, in other words, the one who
appointed the agent. However, under the duties of a bank and a customer,
you may be charged as per the terms and conditions set forth by the bank,"
The Uganda Bankers Association Head of Communications and
Corporate Affairs, Patricia Amito Lutwama, says the banks are serving the
parents and the parents should pay for it.
“You are paying for a service, the way you pay a fee to send money
to a mobile money account, pay you water bill, Umeme etc through mobile money.
If you are not willing to use the service through the banking hall, then there
are alternatives like school pay that some banks have created,” says Lutwama.