cheque payments, with commercial banks being ordered to reduce the maximum amount customers can transact by cheque to US$2,750, from the previous US$5,500. Cheques for amounts above this new limit will not be honoured, the BoU said, adding that the move was aimed at promoting e-payments in the country.
Uganda is a country that is still very cash-dependent. Back in 2018, a study revealed that only 28 per cent of Ugandans had bank accounts. This meant that the rest were entirely dependent on cash and barter. This has made the transition to a digital payment environment much harder. Nevertheless, in 2020, the Ugandan parliament passed the National Payments Systems Act which governs electronic payment services in the country.
The Act, which seeks to safeguard consumers from risks associated with e-payment platforms, requires all providers of electronic payment services to apply for licences and maintain a physical trust account or minimum account balance. It is still too early to determine the effects of this new law on the country’s financial system and the economy as a whole. Data published by the BoU show that by December 2020, commercial banks accounted for 58 per cent of mobile transactions, valued at USh93 trillion (US$26.7 billion), a major growth from zero a decade earlier, and US$12.5 billion (USh43 trillion) in 2016, which indicates a rapid expansion in this segment of the economy.
