Mobile money transactions hit an all-time high across board in 2020 including deposits and withdrawals realising Shs10 trillion in value of monthly transactions in December.
Data from Bank of Uganda indicates that the value of mobile money transactions grew by 28.2 per cent in 2020 compared to 2019 while the number of transactions grew by 25 per cent during the same period.
According to the Central Bank, mobile money operators between January and December 2019 recorded 2.8 billion transactions compared to 3.5 billion during the same period in 2020.
The value of transactions also rose to Sh93.7 trillion in 2020 compared to Shs73 trillion in 2019.
2020 also marked the year transactions grew to double digits month-on-month having recorded Shs10.3 trillion in value of transactions in December.
Deposits and withdrawals equally grew to Shs2.5 trillion month-on-month from an average of Shs1.5 trillion in 2019.
The growth could be partly explained by the increase in subscriber numbers which grew from 23.5 million to 30.5 million users in December 2020.
Mobile money agents, who are the facilitators of the service, also increased their account balances growing their capacity to effectively handle various transactions.
Balance on agent accounts increased from Shs2.2 trillion in 2019 to Shs3.2 trillion in 2020, a monthly average of Shs170b in 2019 compared to Shs250b in 2020.
The growth in mobile money could be representative of a recovery in the economy, following the lifting of the Covid-19-related lockdown in June last year.
Effect of Covid-19
Data from Bank of Uganda indicates that in 2020, mobile money faced the worst declines in April, the month in which government implemented the lockdown, which had been announced in March.
Value and number of deposits and withdrawals both dropped in April but slowly recovered in May.
Growth amid 0.5 per cent tax
The growth comes in spite of the 0.5 per cent mobile money levy government imposed on the service in 2018. The levy had in June 2018 caused a lot of declines with experts worrying about the progress of one of the fastest growing sectors of the economy.
Impact of tax
The 0.5 per cent, according to Mr Ronald Amega, the Ernst &Young senior manager tax advisory, has not had a lot of negative impact on mobile money because the service is driven by the informal sector that often passes the additional costs onto the sender of the money.
However, if introduced on cash withdrawals in the banking sector, the tax will negatively affect the economy.