Cashless economies – where transactions are done using digital payments instead of cash – are gaining momentum across the world. This has been supported by enormous investments in digital payment infrastructure such as mobile money platforms, making it convenient for people and businesses to buy and sell products and services digitally.
Indeed, Uganda has witnessed a faster growth in mobile money transfers surpassing account holders in commercial banks. Latest data from the industry regulator, Uganda Communications Commission, indicates that the total number of registered mobile money accounts stands at slightly above 37.3 million since MTN Uganda first rolled out the service more than a decade ago.
In contrast, the number of bank accounts stands at a paltry 20.7 million as of June 30, 2022. This is less than 50% of the country’s population estimated at 45.5 million. This underscores the power of fintech’s especially mobile money in driving financial inclusion, especially among the unbanked population.
However, the population’s transition towards cashless payment with great innovations such as mobile money has remained low. This is the reason MTN Mobile Money Uganda Ltd is carrying out a campaign dubbed “Pay with MoMo,” to encourage customers and merchants to pay and accept products and services including transferring money, paying bills, and performing various mobile phone transactions using digital money.
Fintech, particularly mobile money, emerges as a transformative force that can bridge the gap and empower the unbanked population. One of the foremost advantages of transitioning towards a cashless economy is the enhanced security it offers. With digital transactions, the risks associated with physical cash, such as theft, counterfeit currency, and loss, are dramatically reduced.
The transparency of electronic payments creates a traceable record of transactions, facilitating the detection and prevention of fraudulent activities. This heightened level of security not only safeguards the assets of individuals but also bolsters confidence in the financial system.
Furthermore, a cashless economy brings undeniable efficiency and convenience to both businesses and individuals. Digital transactions are processed swiftly, eliminating the time-consuming burden of handling physical cash. The ability to make payments and access funds through mobile phones or electronic devices at any time and from anywhere enhances financial inclusivity and empowers individuals to participate more actively in economic activities.
Cost savings and economic growth are two other compelling reasons for countries like Uganda to embrace mobile money and reduce reliance on cash. The expenses related to the management of physical cash, including security, transportation, and storage costs, can be significantly minimized.
These savings can then be redirected towards critical sectors of the economy, promoting sustainable growth and development. Furthermore, a cashless economy facilitates faster and more efficient transactions, which can stimulate economic activities and drive overall prosperity.
However, the transition to a cashless economy in Uganda is not without its challenges. Limited infrastructure and connectivity in far remote areas pose significant obstacles. Addressing this issue requires concerted efforts from telecom companies like MTN to expand network coverage and enhance connectivity in underserved regions. Additionally, educating and training individuals in these areas on how to effectively use mobile money services is crucial to ensure that the benefits of a cashless economy reach everyone.
Building trust and increasing awareness about the security and advantages of digital transactions are also paramount. Initiatives like MTN MoMo’s educational campaigns and community partnerships are playing a big role in overcoming these concerns. By fostering financial literacy and awareness, these efforts are gradually breaking down barriers and making people more comfortable with embracing mobile money as a means of financial empowerment.
As such, the transition towards a cashless economy, driven by mobile money transfers, holds immense significance for Uganda. It not only enhances security, efficiency, and convenience but also offers cost savings and the potential for economic growth.
While challenges exist, the concerted efforts of both public and private sectors, as exemplified by MTN MoMo’s initiatives, are paving the way for a more inclusive and prosperous financial landscape. As the mobile money ecosystem continues to evolve, Uganda is on the path to unlocking the full potential of a cashless economy, bringing financial access and empowerment to its people.