What you need to know:
- A survey by the International Monetary Fund, which covers six years to 2022, notes that banks have scaled back on investment in branches and ATMs to invest in digital channels
The number of automated teller machines (ATMs) have considerably reduced in the six years to 2022, according to data from the International Monetary Fund (IMF).
The drop, albeit slight, was also experienced in commercial bank branches, even as data noted that the number has remained relatively stable with just minimal reductions.
The data, which is contained in the Financial Access Survey 2023, indicates that within the period, there has, however, been exponential growth in mobile money services, which has been key in driving financial inclusion.
The survey, which highlights trends and developments in financial access, indicates that the number of ATM points in the six years reduced from 4.31 for every 100,000 adult Ugandans in 2017 to 3.68 in 2022.
However, the report does not indicate how many ATMs Uganda currently has.
Available data from the Bank of Uganda Annual report indicates that the banking sector reported a drop in ATM points in 2021 from 851 to 837 machines.
The number could have dropped further, given that the IMF survey has been returning sustained reduction in physical banking facilities.
In the early 2000s, banks invested heavily in ATMs as a way of taking services nearer to customers. The move had also sought to decongest banking halls as well as reduce operational costs.
However, the introduction of services such as mobile money and digital banking means that financial institutions have had to revise their investment given that they have more avenues through which they can reach customers without necessarily having a physical locations.
The IMF report further indicates a reduction in the number of commercial bank branches, which in the six years to 2022 slightly reduced from 2.73 for every 100,000 adult Ugandans in 2017 to 2.34.
The Bank of Uganda Annual Supervision report had in 2021 indicated that Uganda had at least 566 commercial bank branches, which was a reduction from at 580 recorded in 2019.
However, the IMF report noted substantial growth in the number of commercial bank depositors and borrowers, who in the six years to 2022 rose to 596.73 and 43.43 for every 1,000 adult Ugandans, respectively.
The report notes that depositors grew from 373.77 while, borrowers grew to 31.27 for every 1,000 adult Ugandans respectively.
The report does not offer any reason for the drop in physical access to commercial banking services but this could be explained by the substantial growth in digital banking and mobile money, which in the six years to 2022, recorded one of the fastest growths in the financial services markets.
During the period, the report indicates that the number of registered mobile money accounts for every 1,000 adult Ugandan grew from 1067.69 in 2017 to 1,569.75, which is an indication that at least more than 50 percent of adult Ugandans have two or more mobile money accounts.
The report also indicates that there is sufficient supply of mobile money agents with at least 2,391.71 agents located within a radius of every 1,000 kilometres.
Kenya leads EAC
At regional level, the IMF report indicates that Kenyans have more access to banking service than their East African peers, with the country having more ATMs and commercial bank branches as a share of the population than Uganda, Tanzania and Rwanda.
For instance, for every 100,000 Kenyans there were 6.85 ATMs and 4.39 bank branches in 2022 compared to Tanzania’s 5.61 and 2.35 ATMs and bank branches, respectively.
Kenya also leads in terms of mobile money with the report showing that there are 2,176 registered mobile money accounts for every 1,000 adults.