Uganda enters cash-light phase on road to cash-less economy
Uganda has experienced a significant increase in the use of internet and mobile device-based banking, as well as in debit and credit card usage, as the country steadily advances towards a cashless economy.
The country now has 2.9 million active debit cards, according to the Bank of Uganda Deputy Governor Michael Atingi-Ego.
Speaking at the launch of a smart card issued by the National Social Security Fund in Kampala this week, Atingi-Ego said the East African country is looking to establish a ‘cash-light’ economy’ before growing into a cashless economy.
Atingi-Ego added that the “most efficient way to bring all Ugandans into the money economy lies in democratising access to e-payments”.
There is little doubt that COVID-19 accelerated digital payment due to restrictions placed on movement with mobile money transaction values having increased by 46% in the twelve months ending March 2022.
Internet banking and mobile banking transfers also increased by 82% and 146% respectively.
“Regarding the card transactions, the number of active debit cards increased by 12.4% from 2.59m in March 2021 to 2.91m in March 2022,” explained Atingi-Ego. “Debit card transaction volumes increased by 28.01% from 4.4 million transactions in March 2021 to 5.68 million in March 2022, while credit card transaction volumes increased by 62% from 142,350 to 230,910 transactions over the same period.”
According to Atingi-Ego, there are several challenges to financial inclusion in Uganda, including “limited interoperability for card payments” which has “kept transaction fees high, resulting in low usage at ATM/POS terminals” across the country.
“Other factors that inhibit usage include cyber security threats and related online fraud.”
Uganda is keen to speed up implementation of the National Payment Systems Act which it hopes will “support financial innovations” after establishing a “regulatory sandbox through which financial innovations can be tested under the oversight” of the central bank.