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Mobile Money Transactions Rise to Shs113 Trillion – BoU Annual Report

The growth was attributed to the increased usage of the mobile money digital platform to mitigate the COVID-19 risks associated with handling of paper money. 
posted onOctober 20, 2021
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The value of mobile money transactions increased by 42.26 percent to Shs113.38 trillion from Shs79.7 trillion, according to the Annual Report for the financial year 2020/2021 released by the Bank of Uganda.

The report, which tracked performance from June 2020 to June 2021, shows that the volume of transactions increased by 0.73 billion from 3.16 billion to 3.89 billion.

The growth was attributed to the increased usage of the mobile money digital platform to mitigate the COVID-19 risks associated with handling of paper money. 

According to the central bank, the number of active mobile money users increased by 21.03 percent to 21.18 million during the year under review when compared to 17.5 million recorded during the year 2020.

The report also recorded that the 20 financial institutions on the Agent Banking shared platform had 11,262 agents compared to 17 financial institutions at the end of June 2020 with 7,592 agents deployed across the country.

The banking sector also registered growth with the tier 1 commercial bank assets increasing by 11.0 percent from Shs35.8 trillion in June 2020 to Shs39.8 trillion in June 2021, albeit slower than 18.3 percent growth in the prior period to June 2020.

“The growth in assets during the year under review was mainly on account of banks' holding of government securities which rose by 32.9 percent (or UGX 2.5 trillion) to UGX 10.2 trillion and gross loans and advances that increased by 7.0 percent (or UGX 1.1 trillion) to UGX 16.6 trillion,” reads the report.

“On the liabilities side, customer deposits rose by 8.7 percent from UGX 25.5 trillion to UGX 27.7 trillion over the year ended June 2021."

For tier 2 credit institutions, the aggregate total assets grew by 18.9 percent Shs182.4 billion) from Shs963.4 billion to Shs1.14 trillion.

With tier 3 micro-finance deposit-taking institutions, total assets increased by 5.5 percent (or Shs37.3 billion) over year to Shs712.6 billion as of June 30, 2021.

This was attributed to increases in government securities by Shs16.6 billion and gross loans by Shs16.0 billion.

Economic growth

Generally speaking, the growth of the economy remained subdued for the second year in a row, affected by the COVID-19 pandemic and measures undertaken to slow down its spread.

“Real Gross Domestic Product (GDP) grew by 3.3 percent in FY 2020/21, slightly higher than the 3.0 percent registered in FY 2019/20. On the demand side of the economy, growth was driven by final consumption expenditure and investment spending, particularly in the transport sector,” reads the report.

“On the other hand, aggregate demand was hampered by an increase in imports that outstripped the marginal growth in exports.”

Looking at different sectors, agricultural activities grew by 3.5 percent compared to the growth of 4.8 percent in the previous year; industry output grew by 3.4 percent, slightly higher than the 3.3 percent growth in FY 2019/20, mainly due to improved manufacturing and water supply; the services sector registered a growth of 2.5 percent in FY 2020/21, the same growth rate in the previous year.

The taxman collected Shs17.495 trillion, with net tax revenue of Shs16.235 trillion and Non-Tax Revenue of Shs1.26 trillion.

As of June 2021, the country’s debt stood at Shs67.395 trillion (45.5 percent of GDP), increasing by 17.3 percent in FY 2020/21.

“The increase was mainly due to a 35.2 percent growth in domestic debt stock. External debt stock also grew by 9.0 percent during the period under review due to increased borrowing from multilateral and bilateral creditors,” reads the report.

“External debt continued to make up the bulk of the public debt, accounting for 66.2 percent of the total public debt.”

The central bank says the country’s debt remains sustainable, with a low risk of default in the medium to long term.

“There are, however, some vulnerabilities arising from weak exports and low tax revenues reflecting subdued economic activity,” it says.

“Indeed, the ratio of debt service to domestic revenue has steadily increased over the last decade, rising to 25.6 percent in June 2021 from 12.7 percent in June 2010, reflecting higher debt service costs that may crowd out spending to priority sectors of the economy.”

In the last financial year, Uganda’s Foreign Direct Investment inflows remained subdued on account of the global economic uncertainty.

Net Foreign Direct Investment inflows, according to the report, declined to USD 847 million from USD 967 million in the FY 2019/20.

“Foreign Direct Investment is however projected to recover on account of the positive developments in the oil sector and in line with the projected recovery of the economy.”

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