Mobile Money Transactions Hit All-Time High In December
Mobile money transactions hit an all-time high across the board in 2020, including deposits and withdrawals, realizing Shs10 trillion in value of monthly transactions in December.
Data from the Bank of Uganda indicates that the value of mobile money transactions grew by 28.2 percent in 2020 compared to 2019, while the number of transactions increased by 25 percent during the same period.
According to the Central Bank, mobile money operators between January and December 2019 recorded 2.8 billion transactions than 3.5 billion during the same period in 2020.
The value of transactions also rose to Sh93.7 trillion in 2020 compared to Shs73 trillion in 2019.
2020 also marked the year transactions grew to double digits month-on-month, having recorded Shs10.3 trillion in December's value of transactions.
Deposits and withdrawals equally grew to Shs2.5 trillion month-on-month from an average of Shs1.5 trillion in 2019.
The growth could be partly explained by the increase in subscriber numbers, which grew from 23.5 million to 30.5 million users in December 2020.
Mobile money agents, who are the service facilitators, also increased their account balances growing their capacity to handle various transactions effectively.
The balance on agent accounts increased from Shs2.2 trillion in 2019 to Shs3.2 trillion in 2020, a monthly average of Shs170b in 2019 compared to Shs250b in 2020.
The growth in mobile money could represent a recovery in the economy following the lifting of the Covid-19-related lockdown in June last year.
Data from the Bank of Uganda indicates that in 2020, mobile money faced the worst declines in April, the month in which the government implemented the lockdown, which had been announced in March. Value and number of deposits and withdrawals both dropped in April but slowly recovered in May.
The growth comes despite the 0.5 percent mobile money levy government imposed on the service in 2018. The levy had in June 2018 caused a lot of declines, with experts worrying about the progress of one of the fastest-growing sectors of the economy. The 0.5 percent, according to Mr. Ronald Amega, the Ernst &Young senior manager tax advisory, has not had a lot of negative impact on mobile money because the service is driven by the informal sector that often passes the additional costs onto the sender of the money.
However, if introduced on cash withdrawals in the banking sector, the tax will negatively affect the economy.
Written by Daily Monitor