UGANDA’S LOOMING DIGITAL DEBT TRAP

Digital lending in Uganda—fast, frictionless, and seemingly harmless, has become as easy as sending airtime.

But behind the sleek USSD codes and app interfaces lies a new kind of financial pressure cooker: one where convenience masks crippling interest rates, and the cost of borrowing can quietly spiral out of control.

According to a 2023 report released last year by the Uganda Bankers’ Association and Asigma Capital—Digital Lending in Uganda: Series 1 – Unravelling the Demand Side—the demand for digital loans is exploding, especially among youth and informal workers. These loans, offered via mobile apps and codes, promise speed. But the trade-off is steep. Most digital lenders—licensed under the Tier IV Microfinance and Moneylenders Act—charge between 5% and 10% interest per month, with some even higher. That dwarfs the typical 2% monthly rate from traditional bank loans.

The UBA-Asigma report found that most digital borrowers don’t fully understand what they’re signing up for. The repayment terms aren’t always clearly spelled out, and hidden charges lurk behind every screen. For students, market vendors, and gig workers with irregular income, it often feels like they’re borrowing from a system designed for them to fail. And yet, because banks remain inaccessible—slow, rigid, full of forms—they keep coming back. Because when the landlord is calling and the fridge is empty, a fast loan now outweighs any regrets later.

The irony is that digital lending is meant to solve exclusion. But when borrowers are hit with sky-high charges and poor transparency, it becomes a new kind of exclusion—one where access doesn’t equal fairness. The sector is growing, but so is the risk of widespread over-indebtedness, especially in a population where financial literacy remains low.

Kenya’s experience should serve as a lesson. As the birthplace of M-Pesa and a pioneer of mobile money-driven credit, Kenya has seen an explosion in digital lending services over the past decade. At one point, over 120 lending apps were operating in the country, many of them unregulated. The result? Millions of Kenyans blacklisted on credit reference bureaus for defaulting on small digital loans—some as little as KSh 200.

The outcry forced the Kenyan government to step in. In 2021, the Central Bank of Kenya amended its laws to bring digital lenders under its supervision, mandating licensing, consumer protection rules, and interest rate transparency. Kenya’s experience is a cautionary tale: digital credit without strong guardrails can wreak more financial havoc than it prevents.

Meanwhile, traditional banks in Uganda are watching the fintech storm from across their mahogany desks. According to J. Samuel Richards’ Uganda Banking Sector Performance 2024, the sector has grown steadily, reaching UGX 54 trillion in total assets. But the top five banks control more than 55% of those assets and over 66% of profits. It’s a club with few members and a high barrier to entry. What’s more, 11 banks have non-performing loans that exceed 10% of their equity, a sign that not everything is as solid as it seems behind the polished branch counters.

If traditional banks are feeling cornered, it’s because they are. Not just by fintech lenders, but by telecoms—especially mobile money giants like MTN. MTN Mobile Money made UGX 250 billion in after-tax profits in 2024. That’s more than Absa Bank, with far fewer assets. With 13.8 million active users, mobile money has leapfrogged traditional banking, becoming the default financial tool for millions of Ugandans.

That shift is no longer theoretical. It’s real. The financial sector is finally starting to understand that access, not marble floors and leather chairs, is what really matters. The telecoms didn’t just offer products—they offered proximity...

In our rush to digitise credit, we’ve skipped a few crucial steps. Like making sure people understand what they’re borrowing. Like regulating lenders who operate in the digital shadows. Like ensuring that the promise of inclusion doesn’t become a trap wrapped in an app.

So what do we do?

Start with transparency. Borrowers should never have to guess how much they owe. Digital lenders must display interest rates, fees, and penalties in plain language—not buried in terms and conditions that nobody reads. Then there’s pricing. It’s time to move toward risk-based lending. If someone has a clean borrowing record, they deserve better rates. The data exists—use it to reward good behaviour, not punish it.

Financial literacy can’t be an afterthought either. Borrowing money should come with clear, digestible information—delivered in the same channels the loans are offered. If we can sell loans by SMS, we can educate by SMS too.

And regulators need to step up, fast. The Uganda Microfinance Regulatory Authority and Bank of Uganda must enforce rules that protect borrowers without stifling innovation. Sandboxes are one option—safe spaces for fintechs to test products under oversight. But more than tools, regulators need urgency. Because the digital debt clock is ticking.

Uganda is riding a digital finance wave that’s reshaping everything—from how we buy chapati to how we pay school fees. But if we don’t steer the ship, we may end up drifting into a financial storm. The revolution has arrived, but without fairness, transparency, and education, we risk replacing one set of barriers with another.

Yes, access matters. But access to a trap is not progress. Uganda’s digital lending boom must work for the many—not just the few who built the platforms. The money may come fast. But if we’re not careful, so will the regret.

UGANDA’S BANKING INDUSTRY: FAT PROFITS, THIN MARGINS AND A FORK IN THE ROAD

Uganda’s banks are in rude health—or so it seems at first glance.

According to a recent report by JSR Consulting, total commercial banking assets stood at UGX54 trillion at the close of 2024, having grown at an annual average of 11% since 2018. The numbers track closely with GDP growth over the same period, suggesting the sector has been floating comfortably on the tide of overall economic expansion. But scratch beneath the surface and the picture becomes more nuanced—part triumph, part trouble, and a whole lot of transformation on the horizon.

First, the good news. Profits are booming. The JSR report shows that net profits across the banking sector more than doubled between 2018 and 2024, rising from UGX751 billion to UGX1.63 trillion. Interest income, fees, commissions—all up. Bank shareholders have reason to smile.

But the spoils aren’t exactly evenly shared. As JSR points out, five banks—Stanbic, Centenary, Absa, Equity and DFCU—account for a staggering 66% of the industry’s profits and control 55% of total assets. Stanbic alone accounted for nearly 30% of profits. It’s clear: in Uganda’s banking sector, scale pays. The big are getting bigger. The rest are fighting for scraps.

That inequality extends to cost structures. JSR’s analysis reveals that the average cost-to-income ratio in the industry stands at 60%, with only a handful of institutions managing to keep it under 50%. Most

banks are groaning under the weight of high overheads—costs of legacy systems, bloated staffing, and real estate.

In an era when customers are increasingly digital-first, this reliance on brick-and-mortar infrastructure is quickly becoming an expensive burden.

Return on equity also tells the story of an uneven playing field. The larger banks—again, Stanbic, Centenary, Absa—enjoy ROEs north of 20%, while many smaller banks languish in single digits or worse. As the JSR report rightly notes, size matters.

It’s not just profitability and scale where disparities emerge. Asset quality is increasingly a concern. The JSR report highlights that the average non-performing loans to equity ratio is 11%, but individual bank figures range wildly—from 0% to a worrisome 51%. Even with high capital buffers, which the report confirms are well above the regulatory minimum of 12.5%, such levels of risk could eat into future profits if not managed carefully.

In the face of this uncertainty, banks have continued to flock to government securities. Loans and advances, which once made up 45% of bank assets, have now dropped to 41%, while investments in treasury instruments have risen to 28%. Government paper has been the safe harbour. But that harbour may no longer be as lucrative. JSR warns that as yields on government securities continue to slide, banks will have little choice but to pivot back to private sector lending.

That pivot, however, comes with its own challenges. Lending to the real economy—especially SMEs and the informal sector—is messy, costly, and risky. But it’s also where the growth is. To thrive, banks will need to invest in better risk models, credit analytics, and digital channels that can reach the customer segments traditionally left behind.

The JSR report is particularly clear-eyed about the biggest looming disruptor: fintech. Telecom-led financial services, mobile wallets, and agent banking have already eaten into the banks’ turf. Digital-first customers are increasingly bypassing traditional banks for faster, cheaper, and more convenient alternatives. JSR flags this as a key threat—and rightly so. The banks that still see fintech as a threat rather than a partner may not be around to learn the lesson a second time.

What’s more, the report foresees continued consolidation. With 25 licensed commercial banks, many of them small and inefficient, the logic for mergers and acquisitions is growing stronger. Regulatory pressure could accelerate the trend, especially if some institutions fail to keep up with capital or compliance requirements.

And then there’s inclusion. The JSR data shows that banks offering microfinance products—typically targeting the unbanked or underbanked—recorded significantly higher net interest margins, some as high as 35%. But these products are still a sideshow for many large banks. There’s a massive opportunity here: mobile-based lending, simplified KYC processes, and credit scoring based on alternative data could bring millions more into the financial fold.

So what lies ahead?

The report projects continued growth in banking assets, potentially crossing UGX100 trillion by 2030. But future success won’t be about balance sheet size alone. It will depend on a bank’s ability to adapt to a new model—leaner, digital-first, customer-centric. The winners will be those that embrace partnerships with fintechs, open banking frameworks, and embedded finance models. Even environmental, social, and governance (ESG) considerations will come to define lending policies and capital access.

Regulation, too, is expected to evolve. JSR anticipates tighter oversight on cybersecurity, digital transactions, and cross-border flows. Capital adequacy rules may become more stringent for systemically important banks. There is even scope for innovation-friendly policy to support green financing, sandbox experimentation, and broader digital integration.

Ultimately, Uganda’s banking sector is at a crossroads.

The model that delivered growth and stability over the past decade—one rooted in risk-free government lending, branch-led customer acquisition, and fee-based income—is fast becoming obsolete. The new model will demand technological agility, credit risk innovation, and meaningful financial inclusion.

The JSR report offers both a diagnosis and a roadmap. Whether banks heed its message could determine not just who wins in the market, but whether banking in Uganda remains relevant at all. Because in the financial game of the future, it’s not the biggest or oldest players that win—it’s the most adaptable.

NICK KOTCH: TRIBUTE TO A GREAT MENTOR AND AN EVEN GREATER MAN

NICK KOTCH recruited signed off on my recruoitment into Reuters those many years ago. A young business journalist, he was asking to be an all round correspondent for Reurters in Uganda. 

I am embarassed to say I turned down an initail offer to join Reuters, because I could not be bothered writing about politics and society. Thank God he never gave up on me. I will be forever be grateful for the opportunity it gave me to broaden my perspectives and see the bigger picture.

I admired his commentary and try -- badly to emulate his thought process.

RIP  Nick Kotch

BODAS A TEST FOR MARKET ECONOMICS

Last week I had reason to drive down Bombo road, onto Kampala road before turning off onto Entebbe Road.

I cannot remember the last time I did this. I do not think I will be doing it ever again.

Driving on our capital main thoroughfare, is a nightmare of  hundreds (and I fear I understate this) of boda bodas criss crossing, weaving, ducking and generally causing hypertension on that dual lane carriageway.

Add to that the trucks loading or offloading this or that merchandise, taxis starting and stopping without warning, pedestrians jaywalking all over the place and you really have to wonder. The horror.

Those were my initial thoughts, but when I sat down and tried to make sense of it calmly, I could not help but marvel at how the market works.

First off the boda bodas are responding to a need, a need for transportation, in a city without mass transportation services. They are responding to a need for quick and inexpensive movement in a city clogged with cars...

The urgent need for their regulation is understandable, not least because they have become a power onto themselves, see Wandegeya and Jinja road intersections. But we have to be careful not to throw out the baby with the bathwater.

When I looked in my archives I found a pre-covid article about a Safe Boda end of year party. Hundreds of riders had congregated at Lugogo Cricket oval for day long reveling with family and friends. I remember being in awe at how the company had aggregated all these numbers under one roof – it was rumoured at the time there were about 10,000 SafeBoda Riders, and in doing so providing employment, safer transport and financial inclusion.

But only last week I read another article about Mogo, which has carved out a niche for itself in financing the purchase of motorbikes for boda riders. According to the story, in the last two years they have financed 30,000 bike purchases but since their inception towards the tail end of the Covid, they have helped finance the purchase of  half a million bikes around the country.

For those of us looking from the outside, this number seems like a stretch, but not so much so when you factor in the hundreds, maybe thousands of boda bodas Uganda police has impounded, with little effect on the overall industry.

I remember before Covid thinking, the boda boda industry was a bubble waiting to burst, going by the number of riders I saw not having a fare. I guestimated that at least a third of bodas had a rider only, no passenger. My thinking at the time was that the industry was gearing up for a major correction, as more and more people bought bodas but the market was getting saturated and would prove less viable for entrepreneurs.

I suspect it is not as lucrative as it may have been 20 years ago for the first movers. But like Malthus, the 18^th century economist who warned that the world was doomed as population grew to stretch known resources, I did not factor in innovation, ingenuity and sheer grit of the industry operators.

With Covid came the explosion of the delivery business, which bodas have cornered for themselves. Everyone has his go to boda guy. Especially women. You cannot be a woman worth the varnish on your nails, if you do not have at least have three bodas on speed dial.

One Sunday afternoon I was out to one of our leading restaurants and could not help but notice the number of boda guys waiting to take delivery of orders. On asking the duty manager how much of their business is in deliveries, without blinking an eye, he said 60 percent. And this, when seating space in his restaurant was already at a premium.

So I was wrong those many years ago, that the boda bubble was about to burst. Thankfully so.

That being said, government has to recognize that what was originally a stop gap measure, a plaster, for an inadequate transport system, is growing in to a monster that needs to be regulated.

These boda guys are not stupid. They are aware of the potential threats to their livelihoods that could come with a more organized system. They will organize, if they already haven’t done so and resist any attempts to regularize the system.

We should not forget how one UTODA used to run riot all over the city, their taxis a power to themselves and their business model not unlike a criminal organization.

As is usual, the market is often ahead of the regulators. And thank God for that. Government needs to recognize the importance of the bpda industry, but take a long term view about how to integrate mass transport, taxis and the bodas into a coherent transport industry. The industry or market can very well do this by themselves, but the problem with the market is that it tends to concentrate resources or power in a few hands, and leave the rest exploited and trampled upon.

UGANDA'S ECONOMIC FUTURE: BETWEEN HOPE AND THE GHOST OF AMIN

“We’ve been here before, haven’t we?”

Uganda’s economy is at an inflection point. Again. The familiar script is unfolding—high growth projections, glittering infrastructure projects, oil riches promised just over the horizon. But scratch beneath the glossy headlines, and the cracks are all too visible. Public debt is ballooning. Youth unemployment festers. And the political system remains firmly stuck in an old gear.

It’s an old Ugandan story, one that has played out in different shades since the British lowered their flag in 1962. But are we condemned to rerun history—or can we finally write a new chapter?

Flashback: Amin’s Economic Vandalism

Ask anyone old enough to remember, and they will tell you the 1970s were Uganda’s lost decade. When Idi Amin seized power in 1971, the economy nosedived with frightening speed. His decision in 1972 to expel Uganda’s Asian community—who dominated trade, industry, and finance—was economic suicide.

Overnight, factories stopped. Shops shuttered. Uganda’s once-vibrant industrial belt from Jinja to Mbale turned into a graveyard of rusting machinery. Inflation surged past 100%. Coffee smuggling to neighboring Kenya became more lucrative than legitimate export. Kampala became a ghost town by dusk.

Amin's economic vandalism left scars that have never quite healed. To this day, Uganda’s business class remains wary of state intervention. Cash is king, and the distrust of formal systems is woven into our economic culture.

The Museveni Years: Reform, Boom, and Complacency?

When the NRM marched into Kampala in 1986, they found a country in ruins. But to their credit, they rolled up their sleeves. The economy liberalized. The private sector was revived. Inflation was tamed. GDP growth ticked steadily upwards through the 1990s and early 2000s.

Those were heady days. Banks opened, supermarkets returned, mobile phones became commonplace. Uganda became the IMF’s poster child for post-conflict economic reform.

But as the years rolled on, the glow faded. Corruption scandals multiplied. Infrastructure projects became overpriced boondoggles. Domestic arrears—government bills unpaid to suppliers—ballooned, straining the private sector. By the late 2010s, the private sector was grumbling about the same things: late payments, tax harassment, and a government that had become a poor listener.

As Shillings & Cents has long argued, Uganda’s biggest challenge is no longer external shocks. It is our own fiscal indiscipline and complacency.

“Government arrears to suppliers are not just a cash flow problem—they are a symptom of a state losing control of its finances. Left unchecked, this will choke off the very private sector Museveni’s reforms nurtured.”

The Oil Dream: Promise or Peril?

Now enter oil. Uganda’s 6 billion barrels of oil have been called the ticket to middle-income status. And the numbers do look mouthwatering. The East African Crude Oil Pipeline (EACOP) is expected to drive GDP growth into double digits by 2025-2026.

But we’ve seen this movie before. Nigeria. Angola. Equatorial Guinea. Oil has often been more curse than cure.

Already the warning signs are there. Environmental protests are growing. Western financiers are pulling out. Questions about how revenues will be managed remain. And our governance systems—well, let’s just say they were not designed to handle billions of dollars sloshing around.

Uganda must confront this reality head-on. Oil revenues need to be invested in diversifying the economy, not in flashy projects or patronage politics. Otherwise, oil will leave us with little more than polluted wetlands and a shattered macroeconomy.

The People Question: A Young Nation on Edge

Uganda’s population is young. Very young. With a median age of just 16, our youth should be our biggest asset. But the hard truth is they are becoming our biggest challenge.

Every year, hundreds of thousands of graduates join a labor market that simply can’t absorb them. The boda-boda economy is now an employment strategy for graduates. This is unsustainable.

Without urgent reforms in education, skills training, and job creation, we risk creating a generation that feels cheated—and whose frustrations could spill over onto the streets.

Agriculture: Still Our Golden Goose?

Despite the oil hype, agriculture remains Uganda’s economic bedrock. Over 70% of Ugandans depend on it. Yet, productivity remains low, post-harvest losses are staggering, and value addition is minimal.

There are bright spots—like Bayaaya Specialty Coffee in Sironko, where women are driving high-quality exports to Europe. But such initiatives remain isolated islands of excellence.

Uganda must modernize its agriculture. That means investing in irrigation, storage, agro-processing, and market access. Without this, the sector will continue to underperform—and Uganda will remain stuck as a raw commodity exporter.

“Forget the oil for a moment. The fastest route to inclusive, job-creating growth is through agriculture. If we get that wrong, everything else is noise.”

Infrastructure: Debt and Glory?

Uganda’s skyline is changing. Expressways, dams, airports—they are all symbols of ambition. But they come at a steep price. Uganda’s debt has swelled to over $24 billion. Debt servicing now gobbles up over 40% of domestic revenues.

Infrastructure must make economic sense, not just political sense. Roads to nowhere and dams without industries to feed will haunt Uganda’s balance sheet for decades.

Regional Integration: Our Neighbors, Our Lifeline

Uganda’s economy does not exist in a vacuum. Our links to the East African Community (EAC) are critical. But tensions with Rwanda and Kenya over the years have shown how fragile these ties can be.

Uganda must play a smarter regional game—positioning itself as the logistics and services hub of the Great Lakes region. That requires diplomacy, trade facilitation, and resolving the perennial non-tariff barriers that stifle regional commerce.

Climate Change: The Storm We Are Ignoring

Uganda’s planners are obsessed with oil and infrastructure. But the biggest threat to the economy is quietly creeping through our fields and rivers—climate change.

Droughts are becoming more frequent. Floods are washing away crops and homes. Agriculture is under siege.

Uganda’s future will depend on how quickly we pivot to climate-smart agriculture, renewable energy, and water conservation. Ignoring this will be catastrophic.

The Governance Question: The Big Unknown

Finally, the elephant in the room—politics. Uganda’s economy, like its politics, is dominated by a single man who has been in power for nearly 40 years. Whether Uganda can transition peacefully into a post-Museveni era will be the ultimate test of its economic resilience.

Investors need predictability. Businesses need rule of law. Uganda’s prosperity hinges on building strong institutions, ensuring peaceful succession, and cleaning up governance.

 Will This Time Be Different?

Uganda stands on the brink. It has the resources, the people, and the geography to become an East African powerhouse. But the weight of history is heavy.

Will oil transform Uganda—or will it become our curse? Will the youthful population become an engine of innovation—or a force of unrest? Will we fix our fiscal house—or mortgage our future?

These are not academic questions. They will define whether Uganda’s next 20 years will be a golden age—or a tragic rerun of old mistakes.

History is not destiny. But only if we choose to learn from it.

OF CREDIT, COLLATERAL AND COURAGE: WHAT THE GROW LOAN IS TEACHING US

When the GROW Loan started rolling out its billions last year, I was sceptical. Not because the idea was bad—on paper, it sounded like the kind of thing development wonks dream up over coffee in climate-controlled boardrooms. But because I’ve seen this movie before: government-backed loan schemes that arrive with fanfare, fizzle quietly, and leave little more than PowerPoint decks and donor reports in their wake.

This one, it seems is different.

To be fair, the GROW Loan—part of the larger GROW Financing Facility (GFF)—isn’t just about chucking money at a problem and hoping it sticks. It’s about deliberately targeting women entrepreneurs, including refugee women and those in host districts, and giving them a financial ladder to climb out of informality and survival-mode hustling.

"By April this year, over UGX 50 billion had been disbursed through six commercial banks—Centenary, DFCU, Equity, PostBank, Finance Trust and Stanbic. There are three lending levels based on loan size (UGX 4m to UGX 200m), and performance grants to sweeten the deal—5% for women, 8% for refugees, and 10% if you tick both boxes.

The average loan for Level 1 (the smallest category)? Around UGX 10 million. That’s your classic salon, poultry project or boda spare parts shop. But here’s the kicker: 28% of borrowers had never touched formal credit before. That’s not just a number; it’s a quiet revolution in how women engage with money and formal finance.

And yet, not everyone is toasting champagne.

The demand is undeniable, with more women being turned away than qualify for the facility. The eligibility hurdles are real. Many women assumed “GROW” meant “free money” or “soft cash.” But when they turned up at bank counters, they were asked for cash flow statements, business records, and—brace yourself—collateral.

Even though PFIs accepted everything from land sale agreements to livestock and even Bibanja land, the reality is that many women—especially younger or unmarried ones—don’t own property or control assets in their names.

So what happened?

Well, the women who made it through the vetting process did something quietly transformative. They converted informal networks into formal credit behaviour. Some roped in their spouses as guarantors. Others leveraged group savings schemes to back their applications. And quite a few went back to the drawing board—pulling together the paperwork, the proof of business, the receipts.

This tells us something profound: women aren’t credit risks. They’re system survivors.

Still, if we zoom out, some uncomfortable patterns emerge. For one, Greater Kampala alone took 45% of the loans. Meanwhile, refugee-hosting districts got a measly 3%. That’s a far cry from the equity narrative being spun in the project’s mission statements.

Then there’s the age gap: just 4.2% of borrowers were under 30. It seems the banks still don’t trust our young women—or maybe they haven’t figured out how to speak their language yet. Because trust me, Uganda’s young women aren’t short of hustle. What they’re short of is formal documentation and someone willing to take a chance on them.

To be fair to the project managers, they’re not blind to these gaps. Plans are already underway to onboard SACCOs and MFIs—especially in underbanked areas—to push GROW Loans deeper into the grassroots. They’re also investing in post-loan business development support, so these women don’t just get a cheque and a prayer.

But what really gives me hope is this: they’re listening. Not just to disbursement figures but to borrower voices. Field visits, testimonial videos, even those brutally honest borrower engagement sessions—they all point to a project that understands that money alone doesn’t change lives. Trust does.

And that’s the real story here.

"The GROW Loan isn’t just about expanding access to credit. It’s about rewriting the terms on which women interact with Uganda’s financial system. It’s about seeing Bibanja land not as a bureaucratic headache but as real-world collateral. It’s about understanding that a boda-stage matron with no paperwork could still be running one of the most consistent cashflow businesses in her parish.

It’s about credit with empathy.

The next few months will tell us a lot. If the PFIs can crack inclusion in refugee districts, if SACCOs can step up, and if the system starts trusting youth a bit more, then GROW could end up being more than just another acronym in Uganda’s development alphabet soup.

It could become the blueprint for inclusive finance.

 

MOBILE MONEY FORCING A RETHINK IN THE FINANCIAL SECTOR

About a fortnight ago MTN mobile money and absa bank published their 2024 results, on the same day in the newspapers.

Absa formerly Barclays, has been in Uganda since before independence while MTN mobile money will make 15 years this year. But the banking services MoKash will make only nine years, later this year.

The interesting thing about the numbers is that MTN Momo, last year with after tax profits of sh250b was more profitable than absa – sh177b. A trend that we obviously missed, because in the previous year MTN Momo was already more profitable than absa with net profits of sh202b as compared to the bank’s sh146b...

Even more interesting is that MTN momo did this with a smaller asset base of sh1.6trillion versus sh5.4trillion for absa. While absa’s return for its share holders, about 21 percent beats that of the mobile money provider – 15 percent how long before even this number is flipped the other way?

When the history of Uganda is written this overhauling of the banking sector by fintech will be an interesting one to study.

But the effect is not only on the banks, the whole economy is being reconfigured around the relentless march of the fintechs, led MTN and Airtel’s mobile money platforms.

From 2005 to 2015, the telecom sector laid the groundwork for digital inclusion, predominantly through mobile voice services. But the real transformation began in the next decade, from 2015 to 2025, when mobile data and fintech services surged to the forefront, redefining Uganda’s digital landscape.

Between 2005 and 2015, Uganda’s telecom sector was at a turning point. The mobile phone revolution was in full swing, and mobile voice services were rapidly growing, with the subscriber base expanding from just a few hundred thousand to over 10 million by 2010.

This surge was driven by the affordability of handsets, falling tariffs, and increased competition between mobile operators.

By 2015, the number of mobile subscriptions had reached an estimated 17 million, a clear indicator that Uganda was becoming a mobile-first society.

But while voice services dominated the telecom scene in the first decade, mobile data and mobile money were still in their infancy. Data services were beginning to gain traction, thanks to the advent of 3G networks and the proliferation of affordable smartphones. By the end of 2015, mobile internet subscriptions were still relatively low compared to voice services. Only about 5 million Ugandans were using mobile internet, a far cry from the mobile voice subscriber base. The usage was mainly confined to the urban centers, with rural areas lagging behind in terms of internet penetration.

Mobile financial services, began to make their mark starting around 2010, with MTN Mobile Money and Airtel Money leading the charge. While still in the early stages, these services offered basic mobile money transfer capabilities, allowing users to send and receive money via their phones. By 2015, mobile money services had registered around 10 million users, signaling a growing appetite for financial inclusion among the unbanked. However, profitability from mobile money remained limited, with many telecom companies still focused on expanding their user bases and network coverage.

Fast forward to the period from 2015 to 2025, and telecom services in Uganda have gone through a seismic shift. While mobile voice services continued to grow, the pace slowed as the market became increasingly saturated. By 2020, Uganda’s mobile subscriber base had crossed the 23 million mark. But voice services are no longer the golden goose they once were. Instead, the real growth story is in mobile data and mobile money.

Mobile data, in particular, saw explosive growth with the introduction of 4G networks, allowing Ugandans to enjoy faster internet speeds and access data-driven services. This year mobile data subscriptions are expected to exceed 15 million, a huge leap from the 5 million recorded in 2015. With more Ugandans relying on mobile devices for everything from entertainment to education to work, data has become a critical enabler of economic activity.

Mobile money subscriptions are projected to exceed 20 million – MTN mobile money reported 13.8 million active users, outstripping traditional banking services by a significant margin.

The profitability of mobile money services has grown exponentially in lockstep with rising subscribers. Industry players expect that mobile money could account for up to 40% of revenue for major telecom operators in Uganda, a sharp increase from the minimal contributions seen in the earlier period.

The mobile money revolution has been such that, more than before 2015, telecom services have become central to Uganda’s economic engine. The sector has become a major driver of financial inclusion, spurring economic activity, enabling access to digital services, and providing new opportunities for business growth as handsets have gone from being luxury items to indispensable tools of everyday life.

In 2005–2015, mobile voice was the star, with data and mobile money services just beginning to take off. By 2015–2025, the narrative had shifted dramatically, with mobile data and mobile money leading the charge in terms of growth and profitability. MTN reported in 2022 that for the first time revenues from voice had fallen below 50 percent of total revenues.

The banks have not been left behind with all beefing up their online presence, but clearly the momentum from mobile money and the fintechs is irresistible and forcing a rethink in the financial sector.