For the first time in over a year, mobile money withdrawals have overtaken deposits, according to details from Bank of Uganda (BoU).
BoU data indicates that since January last year, customer deposits have been more than withdrawals.
However, the streak changed in May, the month in which telecoms recorded the worst fall in deposits in over a year.
At least Shs990b was deposited on customer accounts compared to Shs1.5 trillion that was withdrawn in the period.
This probably shows the population had started to feel the impact of Covid-19.
The emergence of Covid-19 in March prompted closure of many of the economic activities in the country, which has affected incomes across the board.
Dr Fred Muhumuza, a Makerere University lecturer, at the weekend told Daily Monitor the low deposits were in line with the already declining trend that started in March and continued into April due to Covid-19.
However, he noted, the increased withdrawals could possibly have been driven by the fact that people withdrew savings during the period to restart their businesses.
“[Or] it could also be that people had saved but are beginning to run short of options,” Dr Muhumuza said.
The deposit performance in May is also the third worst in the trend of deposits in over a year.
The worst customer deposits were registered in March 2019, where only Shs594b was recorded from Shs1.5 trillion in February.
In October 2019, mobile money deposits dropped to Shs678b from Shs1.8 trillion in September.
However, on both occasions, withdrawals equally dropped, more than deposits. For instance, withdrawals dropped to Shs512b in March 2019 and Shs589b in October.
While it is not clear what had happened during both months, there was a drop in number of mobile money agents in both March and October.
In March agents dropped from 205,000 to 196,000 while in October they dropped from 316,000 to only 88,000.
It was also in October that there was an increase in mobile money robberies and murders with 50 cases of robbery and 10 deaths reported between January 2019 and October 2019.
Dr Muhumuza, however said, the drop then could have been a result of structural issues in data collection for March and October 2019.
The big dent, he said, is usually a result of errors in data rather than the economic process generating the data.
However, BoU data indicates savings on mobile money during the March-May lockdown increased.
Dr Muhumuza said, this could have been driven by the need to save on mobile money wallets because it was a safer option given the difficulty in movements.
“Imagine money was moved from banks and other sources. Even when banks were open, it was difficult for many to reach them and agents closed since their primary businesses were not functional,” he said.
BoU data also indicates that there has been a marked improvement in cashless transactions with person-to-person transactions increasing from 6 million in January 2019 to 20.5 million in May.
Person-to-person transaction value increased from Shs481b to Shs1.3 trillion in the period, which indicates that despite introduction of the mobile money tax, people still send money via mobile platforms.