The Court of Appeal has delivered a stinging rebuke to KCB Bank Uganda, faulting the lender for reneging on clear financing commitments and plunging a local contractor into massive losses, port penalties and auctioned goods.
In a damning judgment delivered on December 17, 2025, the appellate court dismissed KCB’s appeal in its entirety, finding that the bank made binding promises to issue Letters of Credit to a foreign supplier—and then simply failed to honour them, with devastating consequences for Kaaya L. Enterprises Ltd
Justices Cheborion, Christopher Gashirabake and Asa-Mugenyi upheld the High Court’s finding that KCB’s conduct amounted to an actionable misrepresentation, rejecting the bank’s attempts to blame its customer for delays and losses.
The case stems from a 2011 Uganda National Roads Authority (UNRA) contract awarded to Kaaya Enterprises to supply road construction spare parts. KCB initially financed the 30 percent advance payment to a Chinese supplier, but when the goods arrived at Mombasa Port and the remaining 70 percent fell due, the bank declined cash financing.
Instead, KCB assured the supplier—by email—that it would issue Letters of Credit within a week. The Court of Appeal found that this was not casual correspondence but a serious banking commitment on which Kaaya Enterprises reasonably relied.
“KCB held itself out as willing and able to resolve the payment dilemma,” the court held, noting that the bank later went silent and ultimately refused to issue the promised Letters of Credit without explanation
As a result, the goods sat idle at Mombasa Port as demurrage charges ballooned. Some were eventually auctioned off by port authorities, while UNRA withheld part of its payment due to non-delivery—losses the court squarely laid at KCB’s doorstep.
The appellate judges upheld:
- Shs100 million in general damages against KCB for the harm caused
- Special damages covering demurrage and wrongly debited banking fees
- An additional USD 53,313.90 for money UNRA withheld after goods were lost due to the delays
The court also rejected KCB’s attempt to inflate its counter-claim, ruling that the bank failed to properly account for alleged loan balances and interest.
In a particularly embarrassing blow to the lender, the judges dismissed arguments that KCB’s promises were “subject to head office approval,” noting that no such condition was ever communicated to the customer or supplier.
“KCB cannot escape liability after inducing reliance and then walking away,” the court ruled in effect, reinforcing that banks will be held accountable for representations made in the course of business
The appeal was dismissed with costs, leaving KCB not only liable for damages but also for the full costs of the appeal—an outcome that sends a sharp warning to financial institutions about casual promises and reckless client handling.
