More Africa NewsUganda has reduced the amount of check payments to boost e-payment

January 20, 2022by myles0

In July 2018, the Ugandan government introduced a 0.5% tax on financial transactions through Mobile Money. The population that threatened to turn away from the service ultimately did not do so with Covid-19. A boon for the State, decided to take advantage of it.

As of Saturday January 15, Ugandans can no longer make payments of more than 10 million Ugandan shillings (2,750 USD) or the equivalent in foreign currency by cheque. The Central Bank justified this measure by the concern to strengthen electronic monetary transactions in the country. The previous limit amount was 20 million shillings.

Emmanuel Tumusiime-Mutebile, the Governor of the Bank, said that among the electronic alternatives that exist in Uganda are, among others, the real-time gross settlement system (RTGS), electronic funds transfer solutions, Mobile Money .

However, he clarified that the new financial limits, decided by the Central Bank of Uganda, “do not apply to checks for over-the-counter withdrawals, nor to payments by check made within the same bank, i.e. say when the issuer of the check and the recipient hold an account with the same commercial bank”.

As for Mobile Money, the segment still recorded growth last year. 3.08 billion financial transactions for an amount of 97,138 billion shillings exchanged from January to September. In 2020, over the same period, 66,447 billion shillings had already passed through Mobile Money. Over the twelve months, the total value of financial transactions reached 93.728 billion shillings. Between the twelve months of 2020 and the nine months of 2021, the value of financial transactions by Mobile Money increased by almost 4%.

The dynamism recorded in the Mobile Money segment can be explained by the change in consumer habits induced by the coronavirus pandemic. The social restrictions imposed by the government have indeed pushed people to adopt dematerialized solutions to access services, especially with regard to payments. The 0.5% tax, which came into force on July 1, 2018, has not slowed down the development of the segment, which suggests significant tax revenues for the State.

Source: Agence Ecofin

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