At least six in every 10 Ugandans now own a mobile phone, according to a report by Summit Consulting.
The report, which reviews banking and the impact of the communication sector on the financial sector, indicates that mobile phone penetration has reached 60 percent, supporting rapid growth of both digital businesses and transactions.
According to UCC, Uganda currently has at least 28.01 million mobile connections.
The rapid growth in mobile phone ownership has presented the banking sector with a channel through which to innovate into mobile banking supplements supported by the growth in mobile money and related channels.
Whereas mobile money continues to be a game changer in the financial sector , it has presented banks with a number of challenges some of which have resulted into loss of customers.
At least more than 98 percent of mobile phone users are registered users of mobile money.
The report indicates that as of June 2021, banks have prioritised reduction in branch locations in favour of digital and agency banking that are not only cost efficient but have a high penetration rate.
During the period, the report noted, banks had experienced a number of challenges thus seeking new channels through which they can deliver services while cutting back on cost.
Mr Mustapha B. Mugisa, the lead author of the report, indicated that whereas banks had registered new milestones during Covid-19, they have on the other hand experienced deterioration in asset quality, which threatens to lead to an increase of non-performing loans.
“Covid-19’s impact was more severe compared to the financial crisis of 2007-2009 that led to the collapse of the global financial system and had a ripple effect on Uganda’s economy for several financial institutions,” he said.
During the period, according to the report, there was an increase in deposits but negatively impacted return on equity for financiers.
Fluctuations in the exchange rate regime, the report noted, wiped out between 5 per cent and 16 per cent of return on equity, owing to adverse movements, which saw an increase in investment in low-risk annual fixed income instruments.
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Publish date : 2021-11-25 08:02:48