Inter operator fees still challenge to digital financial inclusion, says BoU 

Joyce Nabbosa Ssebugwawo (C ), the ICT state minister, poses for a photo with some of the winners of the 2023 Digital Impact Awards Africa. Photo / Justus Lyatuu 

What you need to know:

  • Fees related to digital services, among other obstacles, remain a challenge to full adaptability of digital financial services

For Uganda to go to the next stage of financial development, fees related to inter-operator services must be significantly come down or totally eliminated, according to Bank of Uganda. 

The fees, among other obstacles remain a challenge to full adaptability of digital financial services, Mr Andrew Kawere, the Bank of Uganda National Payment Systems deputy director, said during the Digital and Financial Inclusion Summit in Kampala, noting that barriers resulting from inter operator requirements have marginalized a section of Ugandans from advancing their financial knowledge. 

Such barriers, he said, lead to high transactional fees, which adversely affects digital innovations and banking, citing an example of how at a certain point mobile money companies had been alien to the idea of sharing agents with the view of protecting their business zones. 

“There are several other facets around interoperatory that need to be addressed, a case in point bank to wallet and wallet to bank that require banks to have bilateral arrangements for the payment service provider or e-money user. Considering the 25 non-bank entities that have been licensed and 25 licensed commercial banks, this means that more than 600 bilateral arrangements must be executed if all banks support the bank to wallet payments,” he said. 

This, Mr Kawere said, breed inefficiency and affects transaction pricing thereby impacting usage of financial services and innovation. 

The 2023 Digital and Financial Inclusion Summit, which also coincided with the 10th edition of the Digital Impact Awards Africa, sought to create a platform for the promotion of cyber security, financial inclusion, digital inclusion and showcase companies that have excelled in digital innovations. 

Mr Kawere also indicated that Bank of Uganda had begun working on the national payments switch- National Payment Act 2020, which will help in regulating and supervising other financial market infrastructure as well as unify fees and charges in digital payments. 

Since commencement 14 years ago, mobile money has continued to grow significantly with the value of transactions increasing by 22.6 percent from Shs156 trillion in June 2022 to Shs191.3 in June 2023.

Data from banks also indicate that wallet to bank transfers have increased by 21.8 percent from 4.76 billion transactions in 2022 to 5.8 billion with approximately Shs19 trillion. 

Mr Innocent Kawooya, the HiPiPo chief executive officer, said, Fintechs remain key in eliminating barriers that limit Ugandans from accessing financial services especially in rural areas, among which include smallholder farmers. 

Financial inclusion, he said, is essential in eradicating poverty, which is central in meeting social development goals, thus making it necessary to eliminate challenges faced due to inter operator requirements. 

“We are hopeful that the national payment switch will increase financial inclusion,” he said.