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BOU acknowledges mobile money as revolutionary force in enhancing financial services

Governor, Prof. Emmanuel Tumusiime-Mutebile speaking at a breakfast discussion organised by the Financial Sector deepening Uganda. (PHOTO/Courtesy)

KAMPALA – The Governor of Bank of Uganda (BOU) Mr. Emmanuel Tusiime Mutebile has on July 10 revealed that the introduction of mobile money services in Uganda in March 2009 revolutionized the formal financial services sector.

While addressing participants of the breakfast discussion on ‘Redefining the approach to financial inclusion in Uganda’ organized by Financial Sector Deepening Uganda (FSDU) at Kampala Serena Hotel, Mr. Mutebile said that after several years’ stagnation in the uptake of formal financial services, mobile money pushed formal usage from 28 percent in 2009 to 58 percent in 2018.

“Mobile money and other supply-side technological developments have redefined financial inclusion through reduction of transaction costs, counterparty risk, and information asymmetry,” he said.

Mr. Mutebile added that “Accordingly, financial inclusion statistics count most when they reflect the unlocking of economic potential through harnessing national resources, most especially through job creation; thereby reducing poverty and fostering prosperity for all.”

He further said that they amended the financial laws in Uganda to include Agency banking and mobile banking so as to foster financial Inclusion in Uganda.

“We championed the amendment of the Financial Institutions Act to support agency banking, banc assurance, and Islamic finance, which are expected to enhance financial inter-mediation and extend access to financial services in a rationalized manner,” Mr. Mutebile revealed.

He noted that BOU also has a duty to ensure that the regulated financial institutions fruitfully balance risk mitigation and innovation.

“Bank of Uganda’s main focus will be on minimizing the risks associated with the country’s natural resources like oil,” he said.

According to the incoming Executive Director, FSDU Rashmi Pillai Uganda’s economy is growing, however, the growth isn’t inclusion.

“Uganda’s agriculture employs nearly 70% household. How do we mold financial systems to work better for the poor in our societies?” she remarked.

Panel discussion on the role of the financial sector in the shaping of inclusive growth. (PHOTO/Courtesy)

The Executive Director Uganda Manufacturers Association (UMA) Daniel Birungi said there’s a need for Uganda to invest in agro-processing as a driver for economic growth.

“Banks too need to come on board to help some of these sectors through establishment of incubation centres for capacity building,” Mr. Birungi said.

However Ms. Victoria Ssekitoleko one of the panelists said agriculture is the safest investment to make in Uganda as there are many improper and unknown systems in the country.

“The systems in Uganda keep failing us for example supermarkets have been advised not to put up products without the Q-Mark by UNBS. Many farmers do not even know what this mark means,” she said.

Ms. Ssekitoleko added that “For anything to work well, it has to be part of a system”. Despite an amenable natural environment for agriculture, it remains a risky sector to lend if the systems that support agriculture from end to end are inadequate including awareness.”

A report from FSDU shows that the most popular channels used by Ugandans in accessing bank accounts are; 73% Bank branch, 41% – ATM, 12% – Mobile Phone, 2% – Internet and 5% Agent banking.

In 2018, 11% of adults used banking services; 9% had accounts while 2% did not have accounts.

Using banking services without, having accounts include over the counter (OTC) transactions such as paying school fees & bills & using an account of a relative/friend.

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