NON-LEGAL ASPECTS
TO UNDESTAND THE NATURE OF CONSUMER EXPLOITATION TO CONSUMER
OF SERVICES IN UGANDA.
This chapter is going to capture what constitutes consumer exploitation, consumer of services
and how the non-legal aspects lead to consumer exploitation and in particular the consumer of
services in Uganda and conclusion.
CONSUMER EXPLOITATION DEFINED
According to the current marketing trend, the consumer is the heart of all marketing operations
and functions. The oxford advanced learners dictionary defines exploitation as a situation in
which someone treats someone else in an unfair way, especially in order to make money from
their work.
Consumer exploitation is generally caused by illiteracy and ignorance of the consumer,
increasing supply of spurious services, deceptive advertising, fraudulent, unethical and
monopolistic trade practiced on the side of service providers.
Unchecked market forces and policies that relax regulation in an effort to open financial markets
to serve the bottom of the pyramid can result in consumers that are harmed as a result of
financial access. Harm can range from over indebtedness due to excessively high prices and
predatory lending, to loss of savings or pledged assets when unscrupulous actors enter the market
for short-term gain. ----af policy paper
CONSUMER OF SERVICES
Section 1(1)1 defines a consumer as a person who purchases goods or services for final use or
ownership rather than for resale or use in production.
In the case of Morgan Stanley Mutual Fund v Kartika Das (1994) 4 SCC 225, AIR 1994
SCW2801, court observed that “the consumer as the term implies one who consumes. It is one
who purchases goods for private use or consumption.
The term consumer commonly refers to a person who purchases goods and services for personal
use.
The United Nations Guidelines for Consumer Protection were first adopted in April 1985
and provide international legitimacy to consumer rights. They were revised in the 2015 and
recognize that consumers often face imbalances in economic terms, educational levels and
bargaining power and they have the right to access to non-hazardous products as well as the right
to promote just, equitable and sustainable economic and social development and environmental
protection2.
1
The sale of Goods and Supply of Services Act, 2018
2
Consumer and the market, Sheetal Kapoor
A consumer has rights and duties 3. A consumer has the right to safety, to be protected against the
marketing of goods that are hazardous to health of life.
The right to be informed, to be protected against fraudulent, deceitful, or grossly misleading
information, advertising, labeling or other practices and to be given the facts he needs to make an
informed choice. In the case of Asea Georges Aswa v Housing Finance Bank limited (misc
application No.952 of 2020), it was observed that Where a consumer chooses a product or
service, a financial services provider shall before the consumer buys the product or service;
provide the consumer with a key facts documents for the product or service, give the consumer
a copy of the terms and conditions for the consumer’s agreement or consent and inform the
consumer of the applicable charges, fees or additional interest the consumer will bear should the
consumer decide on early termination of any contract.
Where a consumer chooses a product or service, a financial services provider shall before the
consumer buys the product or service; provide the consumer with a key facts documents for the
product or service, give the consumer a copy of the terms and conditions for the consumer’s
agreement or consent and inform the consumer of the applicable charges, fees or additional
interest the consumer will bear should the consumer decide on early termination of any contract 4.
POLITICAL EFFECTS
Uganda constitutes an intriguing exception despite the availability of free primary education
since 1996,a barely changing minimum of 55 percent of Ugandans have endorsed the payment of
school fees due to years of political turmoil, the state was absent in service provision. It is also
partly due to a popular perception that payment of fees, whether for health or education is a
guarantee of better services despite evidence to the contrary. The explanation of why the NRM
government continues to campaign for free education in spite of the fact that more than half of
the population is in favor of paying tuition fees may thus be that it is the poor majority of the
population that counts to the ruling elite and this drivers of governments’ policy decisions. To
stay in power governments that need the support of the poor majority make very different policy
choices from those that need the support of wealthy citizens. Where the government education
policy targets the poor majority, it is likely to focus on broadening access because the poor are
unable to afford any form of education and for the majority of poor families, particularly those in
rural areas, what is important is being able to send their children to school, regardless of what or
how much they learn while they are at school.
Polices that target wealthier families, particularly in urban areas who can afford primary
education focuses on more affordable higher education and other forms of incentives for higher
education and it is assumed that the middle class is more than likely to vote against the ruling
elite. It is therefore not surprising that it is the majority of the poorest part of the population that
counts to the NRM government and for the more well off and educated Ugandan parents, a
3
[Link] i(accessed on 16/1/2024 at 4:06am)
4
Guideline 6(2) and (3) of the Bank of Uganda Financial Consumer protection Guidelines, 2011
quality education is important, and those who can afford it send their children to private schools
and it is these parents who have increasingly voted with their feet since UPE was introduced and
exited the government system in search of a quality education. However, the middle class
remains relatively small compared to the rural majority who constitute 80 percent of Uganda’s
population and therefore their exit is less important to the ruling elite in terms of votes 5.
Lack of political will to enable rural populations, or even the urban poor, access to modern
energy that is to say the extension of electricity services to rural areas in Uganda is politically
motivated were by it is a matter of pride for some rural populations to say that their districts are
connected to the national grid and they will vote politicians who have made that possible but in
actual sense they can’t afford tariffs put a unit of electricity6.
In the Ugandan Health System, corruption hinders access to vital services, worsening poverty
and increasing inequality, the access to essential services across the country is often dependent
on the ability to pay a bribe to the public servants who act as informal gatekeepers and the need
to pay bribes or give gifts to health care providers has led to costs for patients that impact on
their ability to meet living costs that is to say some patients being unable to access treatment or
unwilling to access treatment in a timely manner worsening health care outcomes and these costs
are likely to fall more heavily on poorer households, who already have worse health outcomes
and resources that allow them to pay formally and informally (bribes)7.
SOCIAL EFFECTS
Financial losses, as it’s clear that Banks offer loans to their Customers inform of a Mortgage
with a mortgage security attached but it’s worth noting that some banks exploit their Customers
by charging higher interest rates and in most cases the value of the mortgage security is greater
than the mortgage it’s self and in case of default upon repayment the consumer suffers financial
losses for the loan he acquired and the property is sold at a low value for instance in the case of
Co-operative Bank Ltd v Shell Kasese Services Ltd &Ors[2005]UGCommC 8 where the
respondent sought and obtained a loan of Shs.200,000,000 at 21% interest per annum and upon
default to repay the bank sold the mortgage property at Shs 82,000,000 which the respondent
contented that it is value was Shs 500,000,000 though Court rejected his Argument and. found
that the price was not SO outrageously low for property in Kasese but this doesn’t eradicate the
fact that value for Land accumulate on a daily basis.
Poor health conditions, it is very difficult for low income earners to access medical services such
as weekly blood check ups, x-ray services among others due to high prices in the private
hospitals and nowadays government hospitals inclusive. This implies that a Ugandan from
Kyakatebbe would not be able to acquire specialized doctors, advanced treatment facilities etc.
5
Inclusion as political mobilisation:The political economy of quality education initiatives
in Uganda,Anne Mette Kjær and Nansozi K. Muwanga on pages 15&16
6
The Observer ,November 2, 2015 ;Politicizing energy is keeping Uganda in the dark by Dickens Kamugisha
7
Inspectorate Of Government,Cost And Extent Of Corruption In The Health Sector In [Link] 2021
High Costs of Living, this is evidenced in the transport system where by there’s no fixed rates
of transporting passengers and goods therefore the sector uses this as an advantage to charge
exorbitant transportation costs thus high costs of living for instance during festival periods Taxis
and busses which take long distances tend to increase transport costs case in point is that if at all
you have been spending Shs25,000 to travel to Mbarara from Kampala and during festival
periods it’s Shs40,000 this will increase in your costs of Living.
Low levels of literacy thus high levels of unemployment rates, it’s should be noted that
nowadays there are high rates of school drop outs this is as a result of high costs of education
services in Uganda for instance people find it difficult to join University level due to high fees
and dues therefore this leads to high unemployment rate since people do not have the pre
requirements for a particular job.
Limited access to legal services, some Law firms and Lawyers tend to charge exorbitant fees
from their clients which discourages others from access legal knowledge. This is the rationale for
rampant Land grabbings because once someone purchases Land bonafide doesn’t take the
necessary steps to register his interest in Land but the prima cause of this is that people fear to
seek for legal services
Economic Effects
Uganda, like many developing nations, grapples with various economic challenges that have
profound implications for its citizens. Despite efforts to promote economic growth, certain
factors contribute to the exploitation of consumers.
Inflation and Cost of Living:
One of the primary economic challenges in Uganda is inflation, which significantly impacts the
cost of living for consumers. High inflation rates erode the purchasing power of the local
currency, making essential goods and services more expensive. According to the World Bank
(2019), Uganda has experienced fluctuations in inflation rates, leading to increased prices for
basic necessities. As a result, consumers, especially those with limited financial resources, find
themselves vulnerable to exploitation as they struggle to meet their daily needs.8
Unemployment and Informal Economy:
High levels of unemployment in Uganda contribute to the growth of the informal economy,
where workers often face precarious conditions. The International Labour Organization (ILO)
highlights the challenges associated with informal employment, including lower wages and
limited job security. In such an environment, consumers may be exploited by unscrupulous
businesses taking advantage of the vulnerability of informal sector workers.9
8
Source: World Bank. (2019). "Uganda Economic Update: Unleashing the Potential of a Dynamic Economy."
Retrieved from[Link]
the-potential-of-a-dynamic-economy
Market Dominance and Lack of Competition:
Limited competition in certain sectors of the Ugandan economy allows dominant players to
exploit consumers without fear of losing customers to more competitive alternatives. The
absence of a robust regulatory framework accelarates this issue. A study by the Uganda
Communications Commission (UCC) highlights challenges in promoting competition in the
telecommunications sector, leading to potential exploitation of consumers.10
9
International Labour Organization. (2018). "Women and Men in the Informal Economy: A Statistical Picture."
Retrieved from
[Link]
10
Source: Uganda Communications Commission. (2020). "Competition in the Telecommunications Sector in
Uganda: A Market Study." Retrieved from [Link]
[Link]
