Money in circulation grew by 24 per cent in the period ended June despite a remarkable slowdown in economic growth, according to the Bank of Uganda annual report released yesterday.
The growth was much higher than the 6 per cent registered in the same period in the 2018/19 financial year.
The report, which covers the period between June 2019 and June 2020, indicates that the increase could have been influenced by a growth in withdrawals to support economic activities, especially during the first half of 2020.
During the period to June, the report indicates, money in circulation increased to Shs5.7 trillion compared to Shs4.59 trillion that was registered in the same period during the 2018/19 financial year.
Bank notes, which grew to Shs4.41 trillion from Shs4.15 trillion composed the largest share of money in circulation compared to coins which grew to Shs177.1b down from Shs167.1b.
According to the report, the value of banknotes in circulation increased by Shs263b while coins increased by Shs10.03b.
The increase, the Central Bank said, resulted from amplified commercial bank withdrawals, reflecting the public’s rising demand for money to finance different economic activities.
During the period to June, withdrawals increased by 13 per cent thus necessitating a 14.7 growth in processed and re-issued banknotes.
The Central Bank also noted that the value of mobile money transactions, during the period, grew to Shs79.7 trillion from Shs66.9 trillion in the 2018/19 financial years.
The volume of mobile money transactions grew to 31 billion compared to 2.5 billion in the same period in the 2018/19 financial year.
Mobile money continues to register rapid growth, becoming one of Uganda’s most important medium of transaction.
There are at least, according to the Uganda Communications Commission Market Performance report for the period ended June, 25.9 million mobile money subscribers with at least more than 90 per cent shared between MTN and Airtel.
However, the report indicates that only 21 million subscribers are currently active having transacted in at least one billable mobile money transaction in the 90 days preceding June 30.