Uganda: Cashless Transactions Rise With Covid-19, Says BoU

Mar 11, 2021 | Monitor - All Africa

Internet and mobile banking grew with disruptions occasioned by the Covid-19 pandemic, a Bank of Uganda review has shown.

The two platforms were some of the digital channels that registered strong performance in the financial services sector.

The quarterly financial stability review for the year ended December 2020 indicates that the value of Internet and mobile banking transactions rose by 30.2 per cent and 135.2 per cent, respectively while mobile money grew by 28.2 per cent compared to a 2.9 per cent growth in 2019, which represented an equivalent of Shs93.7 trillion.

However, the Bank of Uganda report noted that whereas the Central Bank supports growth of digital financial service delivery, Supervised Financial Institutions (SFIs) must address the associated cyber risks, which increase the risk of fraud.

In October last year, the mobile money and banking sectors experienced a massive attack in which close to Shs4.4b was siphoned through simcards that had been earlier created with the assistance of people working for telecoms.

However, while a report about the matter has not been released, banks have initiated enhancements to protect their systems from further attacks.

Fintechs react

Mr Peter Charles Kawumi, the chairman of Financial Technology Service Providers' Association of Uganda, a non-profit, membership-based association representing Uganda's local and global fintech community, said the growth could have been supported by Covid-19, which accelerated adoption and use of financial technologies.

"Many people now who use mobile banking, mobile money and other digital financial services," he said, noting that whereas Covid-19 had ravaged the larger economy it had created opportunities in other sectors such as fintechs.

The March-June lockdown, he said, forced a number of people to use digital transactions, which is why, according to Mr Kawumi: "we see an increase in the use of digital financial services driven by Fintechs", which has also pushed small businesses into realising their potential.

"The future is digital and we believe that this growth is going to continue," he said.

Internet shutdown

However, the Central Bank warned the performance was interrupted by the January 13-18 Internet shutdown in which a number of digital payment platforms were rendered useless for close to five days... Read more on All Africa

Source: All Africa