KAMPALA, Uganda — The annual value of mobile money transactions in Uganda is now approximately five times greater than the entire commercial banking sector’s balance sheet, underscoring a fundamental shift in the nation’s financial ecosystem, according to new data from the Bank of Uganda.
Mobile money transactions soared to 253.7 trillion shillings in the year ending June 2024, representing a growth of more than 31 percent from 192.9 trillion shillings recorded the previous year. Over the same period, commercial bank assets grew at a steady but slower rate to about 53 trillion shillings.
This localized trend mirrors global growth in financial technology, or fintech, where the market is projected to expand annually by 15 percent to 25 percent, well ahead of the traditional financial services industry. Africa leads this transformation, with mobile money services on the continent handling an estimated $1.1 trillion in annual transactions.
The striking disparity in financial magnitude highlights the distinct roles that fintechs and banks now occupy.
Commercial banks remain essential for holding large deposits, extending medium- and long-term credit and financing major corporate and government projects. Banks are financially stable, maintaining sector-wide assets of about 53 trillion shillings and posting record profits of roughly 1.6 trillion shillings in 2024.
Fintechs, by contrast, specialize in high-volume, low-value transactions, efficiently moving huge sums daily. Their structural advantage allows for rapid scalability through mobile apps and basic Unstructured Supplementary Service Data codes, enabling them to serve millions of customers, including those who live far from bank branches or lack the documentation required for formal accounts.
Bank of Uganda officials emphasize that the relationship between the two sectors is largely one of complementarity.
“Payment service providers rely on the banking system for settlement, custody of funds, and other core infrastructures, while banks benefit from the increased transaction volumes, deeper customer engagement, and expanded digital rails,” said Kenneth Egesa, the Bank of Uganda director of communication.
The financial system is evolving toward a model where the 54 licensed payment service providers offer speed, accessibility and innovation at the “front end,” while commercial banks supply the capital strength and regulatory backbone at the “back end.”
This emerging collaboration is bolstered by regulation. The National Payment Systems Act and its licensing framework have formalized the fintech sector, placing payment service providers, electronic money issuers and switching operators under the central bank’s supervision to protect consumers and ensure investor confidence.
Vincent Tumwijukye, chairman of the Financial Technologies Service Providers Association, said this effective partnership has helped propel the economy by removing bottlenecks that once slowed the flow of finance.
