By Max Patrick Ocaido
Bank of Uganda (BoU) has released its 2019 Annual Report showing a decline in value of mobile money transactions and active subscribers.
Despite a huge growth in number of mobile money transactions, which increased by 87% from 1.35 billion in FY 2017/18 to 2.51billion in June 2019, the newly released BoU report indicates that the value of mobile money transactions decreased by 8.4% from Shs73.08 trillion to Shs66.95 trillion during the same period.
Comparatively, whereas the registered mobile money users increased by 12.4% from 22.7 million to 25.8 million during the year, the BoU report shows that only 15.5 million (59.9%) were active users. The decline in value of mobile money transactions is partly attributed to the recently passed mobile money tax.
In October 2018, Parliament passed the controversial Excise Duty (Amendment) No.2 Bill, 2018 also known as "Mobile money tax" to amend Excise Duty Act, 2014 to limit the taxable mobile money
Meanwhile, the value of banknotes in circulation increased by Shs263 billion from 4.16 trillion in 2017/18 to Shs4.42trillion in 2018/19 while coins increased by Shs10.03 billion.
“The increase in the value of currency in circulation in 2018/19 resulted from increased commercial banks’ withdrawals of banknotes and coins from the central bank that exceeded their deposits by Shs272.9billion. This net change reflected the public’s increased demand for money to finance their economic activities and withdrawals increased by 13.0% while the deposits increased by 16.1%,” the report says.
In his remarks, BoU Governor Emmanuel Mutebile acknowledged that the Ugandan economy continued to expand in FY2018/2019 albeit at a slightly slower pace than FY2017/2018 with Gross Domestic Product (GDP) expanding by 6.1% in real terms, a pace marginally lower than 6.2% in FY2017/2018.
Mutebile also noted that by June 2019, the Banking Sector remained in a sound financial condition, and was well capitalized with all Banks meeting the minimum capital adequacy requirements.
There are currently 24 commercial banks with 553 operational branches compared to 547 branches in 2018, following the opening of 15 new branches and closure of 9 branches during the year ended June 2019.