Uganda’s mobile financial services continued to register steady growth with the quarter ending December 2019 realising 700,000 new mobile money accounts.

However, some high value Ugandans shifted from using money services to agency banking.

According to the latest Uganda Communications Commission report net additions in registered mobile money accounts between December 2018 and December 2019 stood at 2.6 million.

The quarter ended with 27.1 million registered mobile money accounts, up from 26.4 million in September 2019.

The figure does not represent the number of active mobile money accounts which stood at 16.6 million, according to the regulator.

“Active mobile money accounts stood at 16.6 million accounts in December 2019, up from 15.6 million in September 2019, representing a six per cent quarter on quarter growth” reads the report.

“Active mobile subscriptions refer to accounts that have conducted at least one billable financial service in three months,” which in this case covers the months of October to December 2019.

During the period under review, mobile money agents reduced from 225,879 in September to 219,577 as at the end of December 2019 which has been attributed to increased competition from agency banking, increased bank-to-wallet-to bank transfers and increased number of merchants accepting such payment, which has kept money in the ecosystem.

SHIFT

Last year, the Uganda Revenue Authority decried the shift of high value Ugandans from using money services to agency banking, which has lost the country revenue.

This was after the tax man failed to collect at least Ush30.5 billion ($7,903,980) in taxes after rich individuals switched to agency banking citing the no tax on withdrawals through bank agents making them cheaper than mobile money.

Agency banking is a system where commercial banks use agents like petrol stations, food kiosks, supermarkets, retail shops and others to collect money or help people withdraw their cash without physically going to the bank.

Ever since government introduced a 0.5 per cent tax on mobile money withdrawals in 2018, many customers have stepped away from the platform.