Kampala traders call for fee reductions to boost cashless economy

Business
Kampala traders call for fee reductions to boost cashless economy
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In a bid to embrace the digital revolution sweeping through Uganda's business landscape, traders in downtown Kampala are advocating for a reduction in withdrawal and transaction charges associated with digital financial transactions.

This plea comes amidst the growing momentum towards a cashless economy, hailed as a potential catalyst for transforming Uganda's economic landscape.

The Central Bank has taken strides in licensing over 20 financial technology companies to facilitate the transition towards digital transactions, aiming to enhance financial inclusion and streamline financial operations for businesses.

However, despite the push towards a cashless future, traders in downtown Kampala cite several barriers hindering widespread adoption.

Chief among these concerns are the prevalence of fraudsters exploiting digital payment systems and the perceived high transaction costs relative to the low value of transactions typically conducted by traders.

"These fraudsters always come saying they don’t have cash, but then they reverse the transaction after reaching their destination," lamented one trader.

Additionally, limited digital literacy, coupled with the high cost of gadgets and the risk of data loss, pose further obstacles to the widespread adoption of digital financial solutions, according to senior economist John Walugembe.

"While the number of bank accounts in Uganda has grown significantly, many Ugandans still prefer digital transactions over in-person banking visits," Walugembe remarked.

With over 24 million bank accounts and widespread uptake of mobile money, Uganda stands poised to leverage fintech advancements to enhance financial accessibility and efficiency.

However, addressing the barriers to entry, including reducing transaction costs and enhancing digital literacy, will be crucial in realizing the full potential of the cashless economy.

As businesses and policymakers grapple with these challenges, the call for collaborative efforts to promote financial inclusivity and reduce barriers to digital transactions grows louder, paving the way for a more inclusive and digitally empowered economy.

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