Mobile money has emerged as a crucial element in the push toward a cashless economy in Uganda, . Recent data reveals that approximately 80% of mobile money transactions originate from users in the informal sector, indicating a notable embrace of cashless payments in this segment.
Despite the significant volume of transactions by the informal sector, telecom companies report that they contribute only 20% to the total transacted value. According to Mr. Richard Yego, the MTN Mobile Money managing director, this trend suggests a faster adoption of cashless payments in the informal sector compared to the formal segment.
In an interview with Daily Monitor, Mr. Yego highlighted that high-value transactions, constituting the bulk of the total transaction value, predominantly come from the remaining 20% of users in the formal sector. This dichotomy results in an 80:20 scenario, with high volume and low-value transactions characterizing the informal sector and high-value, low-volume transactions dominating the formal segment.
Mr. Yego further elaborated that around 80% of transactions fall within the range of zero to Shs60,000, with 15% ranging from Shs60,000 to Shs250,000. The remaining 5% of transactions, mostly occurring in the formal sector, range from Shs250,000 to Shs5 million.
MTN’s recent announcement indicated a significant surge in daily transactions, reaching an average of Shs8 billion in exchange for goods and services through its mobile money pay platform by October. This amount marked a doubling from the previous 12 months, emphasizing the growing prominence of mobile money in daily transactions.
David Birungi, the Airtel public relations manager, echoed this sentiment, noting a noticeable uptick in Airtel Money pay usage. He observed that Ugandans are increasingly embracing digital financial literacy, contributing to the growing preference for cashless payments.
Mobile money’s pivotal role in achieving a cashless economy is evident, with the Bank of Uganda relying on technology-based platforms to reshape the payment system. Data from the Bank of Uganda revealed that, as of December 2022, mobile money pay registered significant values, recording 10.8 million payments through MTN mobile money pay alone, amounting to Shs1.2 trillion.
This figure could have been higher when considering Airtel Money pay transactions. Notably, the value from MTN surpassed debit cards and exceeded other platforms such as credit cards and points of sale during the same period. Debit cards emerged as the leader in terms of digital payments outside the realm of mobile money, surpassing points of sale and credit cards.