Allegations Of Influence Peddling And Bidder Favoritism As Bank Of Uganda Cancels Multi-Billion National Payments Switch Procurement Post-Award If proven true, the influence peddling allegations surrounding the tender cancellation of the National Payments Switch raise serious concerns about procurement integrity, transparency, fair competition and value for money. With the resultant delays, taxpayers risk losing twice—first through questionable procurement decisions and value for money and secondly by missing out on the system’s economic benefits, such as reduced transaction costs and efficiency resulting out of interoperability.

The Bank of Uganda (BoU) has come under intense scrutiny following its abrupt cancellation of the National Payments Switch (BNPS) procurement process. This move has raised significant concerns over transparency, security, and alleged undue influence. The central bank annulled the deal just days after awarding the contract to a Moroccan firm, Paylogic S.A., citing security concerns that had supposedly been overlooked earlier. 

However, industry insiders and procurement experts suggest that deeper issues of favoritism and influence peddling may be at play.  

The international bidding process, initiated in July 2023 under reference number BOU/NCONS/22-23/00378/C, attracted twenty companies vying for the lucrative contract. 

The companies are Network Global, ICPS/ HPS, Interswitch Group, AfricaNenda, Global Voice Group, Nexi Group, Sybyl / Hitachi, Terrapay, Mantra/Stanchion Payments, ACI Worldwide, and Technology Associates. Others are Impieger Technologies, CMA Small Systems AB, Compass Plus, Fintech Group, BPC, Copy Cat, Paylogic S.A, EFT Corporation Kenya Ltd, Blue Bytes, and Axiom Group. 

Interswitch Group, Axiom Group, Blue Bytes, and Pay Logic are said to have reached the final stages, leading to the award to Paylogic S.A.

Shortly after the award, Paylogic S.A. was informed that “some security gaps have been overlooked, and therefore the whole procurement had to be cancelled,” intimated a source very familiar with the procurement process. The source added: “Although the bidders were told that the procurement would be retendered, it has never been retendered. We do understand there is powerful influence peddling, and there are advanced efforts to handpick one of the bidders (name withheld) who hadn’t even made it to the second stage during the first evaluation stage.” 

This sudden reversal has raised eyebrows, with multiple sources indicating that efforts are underway to hand the contract on a silver platter to one of the companies (name withheld) that participated in the bid but failed to make it to the second procurement stage. This would be a significant breach of fair competition principles and procurement regulations if proven.

The CEO of East Africa Magazine has independently confirmed from multiple sources that the same forces who forced through the tender cancellation are now rooting for the bidder—a Ugandan-based IT company with a regional presence and several deals executed for governments and the private sector, especially financial services in the region.

Allegations have surfaced that the decision to cancel the procurement and favor this preferred firm is linked to a purported directive from the highest levels of government. Another source intimated to CEO East Africa Magazine that powerblockers for this firm claim to be working on instructions from the President’s Office. 

The deal, given a bid security of UGX 320,524,000 or USD 86,628, is estimated to be worth about UGX 32 billion, as bid security is usually about 1% of the total contract value.

BoU’s Evasive Response: Presidential Directive or Mere Speculation?

Given the gravity of these allegations, we sought clarification on whether an executive order had indeed been issued regarding the National Payments Switch procurement. Sandor Lyle Walusimbi, the Senior Press Secretary to the President, denied knowledge of any such directive. “I suggest you inquire from the Bank of Uganda. My desk has not received any information to that effect for public consumption,” he told CEO East Africa Magazine in a response sent via WhatsApp on February 13, 2025.

We inquired about the specific security concerns that led to the termination of the procurement process, including who raised these concerns and the basis upon which they were made. Additionally, we sought to understand whether the Bank of Uganda consulted any external security agencies before making this decision and, if so, which agencies were involved. Furthermore, we requested information on the steps taken by Bank of Uganda to verify the validity of these security concerns before deciding to cancel the procurement process. 

We also sought confirmation on whether there was any presidential directive instructing the Bank of Uganda to award the contract to one specific company, and if no such directive exists, we asked why this company is allegedly being considered despite not succeeding in the initial procurement process. Additionally, we requested clarification on the measures Bank of Uganda has in place to ensure transparency and fairness in the procurement process, particularly in safeguarding against undue influence from external forces. 

Following the termination of the procurement process, we also inquired about the current status of the National Payments Switch procurement. Specifically, we sought to know whether the Bank of Uganda intends to restart the procurement process afresh or whether an alternative approach will be adopted. We also asked about the steps being taken to ensure transparency and compliance with procurement regulations in the subsequent process. Moreover, we requested information on when the public can expect a final decision regarding the National Payments Switch procurement. 

We also inquired about how the Bank of Uganda ensures that such procurement processes comply with the Public Procurement and Disposal of Public Assets Act (PPDA). Additionally, we sought to understand whether the Bank of Uganda has engaged with the bidders to explain the reasons for the termination and, if so, what their responses have been. Finally, we requested clarification on the measures Bank of Uganda is undertaking to maintain stakeholder trust in its procurement processes.

In an emailed response, Kenneth Egesa, Director of Communications and Public Relations BoU, without delving into the veracity of our inquiry, said: “The Bank of Uganda cancelled the National Payment Switch procurement process that began in Financial Year 2023/2024. All participating bidders were notified of the cancellation and informed of the next steps. The procurement process will resume once the requirements of all relevant public and private stakeholders, including the Bank of Uganda, have been aligned. Further information will be provided to interested bidders upon completing this alignment process.”

This response from the Bank of Uganda lacks depth. It does not address key concerns raised, such as the specific security concerns cited for cancellation or the alleged favoritism towards a previously unsuccessful bidder. If no such directive exists, questions remain as to why this firm, whose bid previously did not make it to the second stage, is now being considered for a direct award. The lack of a clear and transparent explanation from BoU has fueled speculation about the motives behind the decision. 

Several pressing concerns remain unanswered regarding the National Payments Switch procurement. What specific security concerns led to the termination of the process, and who flagged these issues? Was an external security agency consulted before making the decision, and if so, which agency provided this advice? What steps did BoU take to verify the validity of these security concerns before reaching the drastic conclusion of canceling the procurement?

In addition to the security concerns, the procurement process itself is under scrutiny. If there was no executive directive, what justification does BoU have for allegedly considering a company that did not make it past the initial evaluation? If the original procurement process was compromised, why has there been no public call for a fresh round of bidding?

The integrity of the process is also being questioned in relation to compliance with the Public Procurement and Disposal of Public Assets Act (PPDA). Has BoU engaged with the original bidders to explain the reasons for the cancellation? How does the central bank intend to rebuild trust among stakeholders after this debacle?

The Financial and Strategic Importance of the National Payments Switch

The BNPS is a critical project designed to modernise Uganda’s digital payment landscape. Its primary purpose is facilitating interoperability among banks, mobile money operators, and other financial service providers. The system is expected to be a game-changer in Uganda’s financial sector by reducing transaction costs and enhancing security.

The BNPS is valued at an estimated UGX 32 billion (USD 8.6 million), a substantial investment in Uganda’s financial infrastructure. The system is expected to introduce real-time fraud monitoring, anti-money laundering (AML) protocols, and compliance with international security standards. Its implementation would benefit banks and financial institutions and enhance financial inclusion by allowing seamless transactions across different platforms.

However, handling its procurement raises concerns about governance, accountability, and potential financial misconduct. If the contract is awarded through non-transparent means, there is a risk that the system’s quality, security, and cost-efficiency could be compromised.

Transparency and Fairness in Question

Despite assurances from BoU that the procurement process will be realigned, skepticism persists. Key stakeholders in the financial and IT sectors argue that without a transparent and competitive process, the legitimacy of the National Payments Switch will be undermined.

Transparency advocates have called on the Bank of Uganda to strictly adhere to the Public Procurement and Disposal of Public Assets Act (PPDA) and ensure that any future procurement process is open to all qualified bidders. The expectation is that the process should be restarted from scratch to eliminate any doubts regarding favoritism.

Additionally, the lack of clear communication from BoU has only fueled further concerns. The secrecy surrounding the security concerns cited as justification for the cancellation, and the bank’s reluctance to provide specific details, cast doubts on the credibility of the decision-making process. 

What Happens Next?

The question remains: Will the Bank of Uganda opt for a fresh, competitive procurement process, or will the contract quietly be awarded to a preferred bidder under opaque circumstances? The stakes are high, and the credibility of Uganda’s procurement system hangs in the balance.

If BoU fails to act transparently, the incident could set a dangerous precedent where public contracts are awarded based on influence rather than merit. The consequences of such actions would extend far beyond this single procurement, potentially affecting future investor confidence in Uganda’s financial sector.

This is a rolling story. If you have more information about this procurement, please email us at ceomagazine@gmail.com. All correspondence remains confidential.