CYBER SECURITY CHALLENGES IN UGANDA’S BANKING SECTOR: AN INVESTIGATION INTO THE CAUSES OF CYBER ATTACKS

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Cyber attacks have caused a lot of loses to countries and individuals in different measures according to IMF’s Global Financial Stability Report (Adelmann et al., 2020), In the past two decades, nearly one-fifth of reported cyber incidents have affected the global financial sector, causing $12 billion in direct losses to financial firms, and from 2020 to 20224 direct losses amounted to an estimated $2.5 billion (Egerson et al., 2024).

Cyber attacks are currently one of the biggest challenges facing developing countries specifically Africa , though there has been a projected growth for African cyber security market , nations across the continent are loosing billions each year due to the increased cyber attacks, collectively African countries loose 4 billion Us dollars annually due to cyber attacks with specific countries like; Nigeria, Kenya, south Africa and Egypt lose more than $3.5b per annum as a result of digital attacks, Like many developing nations, Uganda has witnessed rapid adoption of digital technologies in recent years. While this digital transformation brings numerous benefits, it exposes the country to new risks of cyber-attacks. Cybercriminals capitalize on weaknesses in cyber security infrastructure, exploiting individuals, businesses, and government entities for financial gains or other purposes and as of 2022 Uganda lost 19.2 billion to cybercriminals and in 2023, over 245 cases were reported to police countywide, bringing a 5 billion loss.

1.2 Problem statement

The banks globally face a multitude of loses as a result of cyber criminals the size of these losses has more than quadrupled since 2017 to $2.5 billion (Natalucci, Qureshi,  & Suntheim, 2024). Africa and Uganda in particular are no exception, and as of  2022 Uganda lost  UGX19.2 billion to cybercriminals and in 2023, over 245 cases were reported to police countywide, bringing a UGX 5 billion loss (Daily monitor, Friday, April 05, 2024), in the banking industry direct and indirect loses like reputational damage or security upgrades are substantially higher, it is against this background that this study intends to investigate into cyber security challenges in Uganda’s banking sector: an investigation into the causes of cyber attacks.

1.3 Objectives of the study

1. To examine the influence of external cyber threats on the vulnerability of the banking sector
2. To investigate the influence of internal cyber threats on the vulnerability of the banking sector

• To determine the relationship between user technical awareness on vulnerability of the banking sector

1.4 Research Questions

1. What is the influence of external cyber threats on the vulnerability of the banking sector?
2. What is the influence of internal cyber threats on the vulnerability of the banking sector?

• What is the relationship between user technical awareness on vulnerability of the banking sector?

1.5 Scope of the study

This section will include the content, time and geographical scope;

1.5.1 Content scope

The contents of the study will include;  external cyber threats on the vulnerability of the banking sector,  internal cyber threats on the vulnerability of the banking sector and  user technical awareness on vulnerability of the banking sector.

1.5.2 Geographical scope

The study will investigate the banking sector specifically the banks centenary bank, stanbic bank and pride microfinance bank.

Conceptual Frame Work

Cybersecurity Challenges (I.V)                    Vulnerabilities in the banking sector (DV)

Mediating variables