Number of BoU-regulated Fintechs doubles

Fintechs continue to play a vital role in the growth of Uganda's financial system. Photo / File
What you need to know:
- Bank of Uganda-regulated Fintechs have grown from 24 in 2022 to 43
Bank of Uganda has indicated that the creation of a legal and regulatory framework and the rapid growth in payment systems has seen the number of financial technology (Fintech) companies double in the two years to December 2024.
In updates about non-bank payment service providers and payment system operators, the Central Bank noted that the creation of a legal and regulatory framework had provided overall stability in Uganda’s financial system, thus leading to the growth of payment service providers and payment system operators to 43 for the year ended December 2024.
The growth, Bank of Uganda noted was almost double the 24 Fintechs registered in the same period in 2022.
Bank of Uganda director for communications Kenneth Egesa, said the growth was a result of several factors, notably the creation of an enabling environment that includes the creation of legal and regulatory frameworks, which has ensured and promoted efficiency, reliability, and diversity in digital financial services.
“There is notably a pickup in innovative financial service products that have resulted in the higher supply of customer-centric products and services resulting in high mobile financial services penetration,” he said.
The growth in the Fintech sector has, however, coincided with an increase in cyber-related fraud that has seen the financial sector and users lose billions of shillings.
Fitechs have also enhanced the financial sector through different collaborations, which Dr Egesa said that although no specific study had been conducted, the Central Bank had observed a symbiotic relationship between banks and the Fintechs sector.
“Notable for example, this collaboration has enabled banks to partner with Fintechs and offer services such as Wallet to Bank and Bank to Wallet to execute transactions that previously banks either found too expensive or were out of their business product range. Hence, it is a positive impact on both parties,” he said.
Fintechs have also supported banks in terms of expanding their credit to previously unserved customers, while at the same time, they have been key in creating digital footprints through which lenders access and study potential borrowers.
The IMF and World Bank Fintech Market Participants Survey indicates that whereas Fintechs have been key in enabling remarkable growth over the past 10 years by transforming the provision of financial services along several dimensions, they have created challenges for financial institutions, demanding more innovations and constant service upgrades.
“Fintech offers many opportunities for governments, from making their financial systems more efficient and competitive to broadening access to financial services for the under-served populations. However, it can also pose potential risks to consumers and investors, and, more broadly, to financial stability and integrity,” the World Bank says.
Enabling growth
The IMF and World Bank Fintech Market Participants Survey indicates that whereas Fintechs have been key in enabling growth over the past 10 years by transforming the provision of financial services along several dimensions, they have created challenges for financial institutions, demanding more innovations and constant service upgrades.