In 2022, Uganda’s fintech sector added over 10,000 new jobs, with projections suggesting this number will exceed 20,000 by 2025. This sector’s rapid growth is transforming the country’s banking landscape by enhancing financial inclusion and reshaping how Ugandans manage their finances.
Data from Financial Sector Deepening Uganda (FSD Uganda) highlights the fintech sector’s significant role in job creation. As of October 2024, Uganda had 184 active fintech companies. These firms contribute 7% to the national GDP by providing digital banking solutions, mobile payment systems, lending services, and wealth management tools for individuals and businesses. Increasingly, Ugandans are relying on these platforms for services traditionally handled by banks.
The adoption of mobile money services has been a key driver of this growth. According to Uganda’s central bank, registered mobile money users rose from 38.5 million in June 2022 to 42.9 million in June 2023—an 11.4% increase. During the same period, the total value of mobile money transactions reached $52 billion, reflecting a 23% rise and underscoring the sector’s expanding influence.
Fintech companies have gained traction by offering affordable and efficient financial services compared to traditional banking. For instance, Chipper Cash charges a flat fee of Ush1,000 (approximately $0.27) for transferring money between users, including international transfers. This cost is significantly lower than fees imposed by banks for similar transactions.
Another example is Zofi Cash, which provides salary advances to employees through partner companies. Using a proprietary credit assessment algorithm, Zofi Cash offers loans of up to 50% of an employee’s monthly salary. Repayments are automatically deducted on the next payday, making the process straightforward and efficient for both employers and employees.
Traditional banks in Uganda are facing growing competition from fintech firms. To remain relevant, they must adapt to this evolving financial landscape. Meanwhile, the USh 1,000 banknote remains one of the most commonly used denominations, especially for small-scale transactions in rural and informal sectors. Despite the rise of digital payments, cash circulation increased by 14% from June 2023 to June 2024, with the total value of banknotes and coins in circulation reaching USh 13.2 trillion ($3.52 billion).
The fintech sector’s continued expansion demonstrates its pivotal role in modernizing Uganda’s financial ecosystem while complementing the country’s preference for cash transactions in certain areas.
