Uptake of digital banking solutions still slow in Uganda

Friday April 08 2022
Financial services.

As more services get easier and safer with cashless payments, refugees remain overlooked yet they are a profitable population. PHOTO | FILE


The financial sector in Uganda has been slow in adopting digital solutions yet official data shows that 27 million out of the estimated 45 million Ugandans own a phone, with 13 million of them connected to the internet.

Industry players blame general financial illiteracy which has slowed down the penetration and uptake of digital platforms and software.

Speaking in Kampala late last month, fintech operators, start-ups and established ones in agriculture, banking and transport, said it hard to penetrate new markets, especially in rural areas because they don’t understand the need for financial innovations.

Alex Mukundo, a developer with the agriculture social enterprise, One Acre Fund, said many farmers in rural Uganda tend to shun digital innovations because they don’t see much value in them. One Acre Fund offers smallholder farmers in the region asset-based financing and training services.

The stakeholders were discussing the power of digital transformation in corporate governance.

Financial literacy


Eunice Mwende, a co-ordinator of the Uganda Cash Working group — which draws members from international organisations such as the World Food Programme and the UN High Commissioner for Refugees — said low financial literacy keeps away fintechs from refugees even when they are increasingly becoming a potential top market for fintechs.

Phone ownership and internet access are up in refugee camps in Uganda, home to 1.6 million people. According to Ms Mwende, about Ush190 billion ($52.5m) was transferred to refugees in 2021. This is expected to grow, and increasing preference of mobile money transfers to cash, there is big opportunities in digital transformation of the sector.

“The refugees are a segment we overlook and yet they are a profitable population we can no longer afford to ignore when making digital products, their literacy levels notwithstanding,” she said.

But all is not lost. Uganda has a number of digital start-ups mostly confined to urban centres where internet connectivity, phone ownership and financial literacy levels are higher.

Safe Boda, a ride hailing motorcycle service for example operates in Kampala metropolitan area, Nairobi and Lagos. Also, Frank Taremwa runs the Akatale Fresh, an online platform for purchase and delivery of groceries and vegetables, in Kampala.