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Where does use of USSD technology leave Uganda?

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USSD has been the behind-the-scenes hero in financial transactions for many Ugandans. PHOTO | JUSTIN D. EMEDOT

Ever dialled * and # to send money or pay bills? That’s Unstructured Supplementary Service Data (USSD) at work—quick, no fuss, and familiar. Whether it’s mobile money, school fees, or utilities, USSD has been the behind-the-scenes hero in financial transactions.

But with smartphones and the Internet booming, USSD is starting to show its age. It’s prone to interruptions, limited in features, and not as secure or sleek as apps or QR codes.

Its magic is its simplicity. Dial a code, get what you need. No apps, no queues. Just efficiency. Today, it powers more than 65 percent of Uganda’s financial traffic, data from Bank of Uganda (BoU) shows. That’s a lot of trust in a code. Yet, the world is moving faster, and USSD is struggling to keep up.

Past its sell-by date?

In a country where smartphones aren’t everywhere, USSD is a lifeline. For the unconnected, it’s the go-to method for financial services. It’s like the "one-eyed man in a world of blind spots."

Even banks and fintechs are using it to power mobile banking. But can it keep the pace with newer tech? That’s the real question. “I’ll answer with a definite yes,” says Alex Wekoye, the chief commercial officer at MTN Mobile Money (MOMO), a fintech. "We need to move on. Why? Because Gen Z, born after 2000, grew up with smartphones. By the time they hit primary school, they’re already experts at swiping and tapping. USSD? That’s history to them.”

He continues, “USSD has served us well, no doubt. But its days are numbered. Eventually, it'll fade, becoming just a tool for troubleshooting in telecoms or banking. For user experience? That's a whole different story. And we've already started seeing that shift.”

Clinging to USSD is like driving a horse-drawn cart on a highway—it works, but the world is speeding past and yet financial inclusion should mean keeping up, not holding back. Relying on old tech risks locking millions out of global opportunities where seamless, modern solutions are the standard.

Mobile phone penetration has soared to 72 percent in 2023, up from 52 percent in 2018, and here’s the kicker: nearly half of those are smartphones, BoU and Finance ministry data shows.

"In two years, expect a 10 percent jump," says Mr Wekoye. "USSD is being edged out by sleek tech like QR codes, app-based payments, and NFTs. As Uganda goes digital, USSD’s grip will fade, overtaken by app-savvy younger crowds.”

So what does all of this mean?

Now, imagine this: Grandma no longer struggles with remembering 165 and a maze of numbers just to send money. Instead, she taps her mobile money app, spots a flying-cash icon, and uses her fingerprint or face to send cash. Effortless, intuitive, and no hassle. We’re not at the “switch-off USSD” stage yet, but it’s clear where the future lies. Remember when mobile money launched in 2008 and everyone was sceptical? It’s now ubiquitous. 

“Our kids? They’re already navigating smartphones better than we can. Soon, we’ll be chasing them to keep up. As smartphone penetration grows, so will the need for simpler, smarter solutions. The future’s coming—let’s get ready for it,” says Andrew Kasujja, the intervention manager, rural agricultural finance with FSD Uganda, a non-profit focused on financial inclusion in Uganda.

What’s the biggest roadblock to embracing the latest financial tech?

Internet penetration—or the lack thereof. It's a hurdle that even the boldest innovators hesitate to leap over when designing new products. BoU’s new data shows that internet access in the country was at 26 percent in 2023, a leap from 10 percent in 2018.

A plethora of studies reveal a curious twist: those controlling the purse strings are often the older generation in rural areas, loyal to USSD like it’s an old bicycle that still gets them to market. No internet? No problem. But here’s the kicker—our dependence on this “bicycle” raises a tough question. If we ditch USSD for flashy app-based systems, are we speeding ahead only to leave the most vulnerable stuck in the mud? Progress is great, but not if it runs over the very people we’re trying to uplift.

"It's the age-old chicken-and-egg dilemma: which comes first, the internet or the migration? But just because one is a limitation now doesn’t mean we hit pause. You wouldn’t stop yourself from buying a car just because the roads are bad. You buy the car and demand the
government fix the roads. That’s what we’re doing here—we’re pushing forward, even if the road’s a little bumpy," says Mr Kasujja.

Is a shift underway?

Mobile money apps are making their mark, coexisting with USSD. The money people say it’s not an on-off switch but a journey. In villages, smartphones often double as status symbols rather than functional tools. This presents an opportunity that policymakers, tech innovators, investors, and donors can tap into to push adoption of new  technologies. Once that momentum builds, the next challenge becomes clear: extending infrastructure to the bottom of the pyramid.

“We’ve seen innovations—maybe not high-tech, but community hotspots where people can access services. From there, the traffic will grow, and bigger investments will follow. But it has to start somewhere,” Mr Kasujja says, adding that for now, we still need USSD at least to some extent—but it’s time to start thinking about alternatives. The idea is that USSD likes the first step on the digital journey. Think of it like primary school: it’s a foundation and if everyone’s accustomed to it, then it’d be easy to move to better technologies. But to get there, Mr Wekoye notes, we need more than just basic steps but a ready environment for the full shift to digital.

"We need fibre optics, spectrum licenses from the government, and more connectivity solutions like E1 and satellite. In fact, Elon Musk’s Starlink is already coming to the region. Once they land in Uganda, we’re talking highspeed satellite internet, disrupting industries across the board. If we’re not ready for that, we’ll be left behind. Imagine trying to buy a football ticket at a service centre when you could just use NFC (Near Field Communication) technology from your phone right at the stadium," he says.

"But that said, we have alternatives now. The mobile app is one key channel—users can access their KYC details, verify them with a one-time password, and add or withdraw money to their digital wallet. Then there’s QR codes: simply scan at the supermarket and pay. No long lists or steps—just a quick scan and you’re done.”

What it looks like elsewhere In South Africa, for instance, NFC is everywhere. At a supermarket or jewellery store there, you just tap your phone against the payment terminal, enter your PIN, and you’re good to go. USSD is almost obsolete in places like that. And across Africa, USSD is dying out and cash is nearly dead in big cities.

In Uganda, we are already seeing alternatives. For bank customers, there are Visa or MasterCard chips—the ones you swipe at ATMs or point-of-sale machines. Then there’s internet banking, both web and mobile, where you can schedule payments, pay bills, and manage your finances with ease. Apps like Jumia also let you deposit into a wallet and shop, while SafeBoda has its own wallet for a seamless ride and pay experience.

These are all great for the affluent, but when we talk about the bottom of the pyramid, it’s a whole other ball game, requiring serious infrastructure work.

“The telecoms are the foundation for much of the digital financial services, and as they evolve, so will the innovations. Take WhatsApp Pay, for example, it’s about to shake up the payment game because, well, it’s already in everyone’s hands. Then there's Interactive
Voice Response (IVR)—it’s not the most glamorous tech, but for those at the bottom of the pyramid, it’s a lifeline. Imagine calling 165 and just pressing a few numbers, no need for fancy apps or internet access. It’s simple, it works,” says Mr Kasujja.

“But there’s another USSD snag: menus are still in English, which leaves out those who can’t read it. The telcos know this, but let’s be honest—they’re not about to pour resources into translations for a dying service. It’s a dilemma that’s been discussed in several rooms, with little movement," he adds.

Meanwhile, the real shift is happening with app-based alternatives, something that could even fuel apps getting translations before USSD does—because that manipulation is far easier on an app, according to Mr Kasujja.

“So, the call to action is clear: Regulators and policymakers need to create an environment where innovation can flourish. Once the foundational ‘rails’ are in place—especially for internet-based applications—private players will have the space and incentives to innovate and capture the opportunities that lie ahead. It's all about enabling the ecosystem to thrive,” Mr Kasujja says.

What does the future look like?

The fintech people already see that there is more opportunity for money when we engrave serious technology in the financial inclusion game. Mr Wekoye says a customer using a digital platform typically brings in more revenue than a USSD customer. This is due to a concept known as average revenue per user (ARPU).
 
The way he explains it is that digital platform users tend to interact more frequently with the system, building confidence and trust along the way. As a result, they spend more time and resources on the platform, which boosts profitability.

“From a business perspective, it makes sense to shift the customer base towards digital platforms, as these ‘digital natives’ are generally more profitable compared to those on the more basic USSD service," he notes.

From the user’s point of view, digital platforms are a game changer. They’re quicker, slicker, and often easier to navigate—because who wants to deal with endless codes when you can just tap a screen? For the government, going digital isn’t just a nice-to-have; it’s a must. It unlocks financial inclusion, drives economic growth, and reduces corruption risks with better transparency. Plus, it’s a chance to modernise and stay ahead in the global digital race.