Uganda's central bank adopts a complete transformation of the payments system

Written by Ziad Abdel Fattah:

Uganda’s central bank has launched a new package of strict regulatory measures aimed at accelerating the transition to a digital economy, by tightening the rules of the national payment system and reducing reliance on cash and traditional checks, in a move scheduled to come into full effect from January 1, 2027.

The new guidelines include reducing the maximum limit for interbank checks by 50%, along with imposing stricter restrictions on some cash transactions, as part of a strategy aimed at expanding the use of electronic payment methods and enhancing financial transparency.

The Ugandan central bank set a daily withdrawal limit of 50 million Ugandan shillings from individual accounts and 250 million Ugandan shillings from corporate accounts.

The data indicates that payments have undergone a digital transformation, with electronic credit transfers being the primary method of payment, and digital payments continue to grow in both volume and value, demonstrating consumer confidence and efficiency.

Given the heavy reliance of some sectors on cash, financial institutions will be able to request exemptions for certain transactions or sectors. The full statement is below.

Uganda's central bank mandates the implementation of electronic payments.

The decision represents the final stage of the National Electronic Payments Strategy for the period 2021-2026, as the Central Bank moves from the role of supporting digital transformation to the role of the regulatory body obligated to implement it across various financial and economic institutions.

According to the new directives, the maximum limit for interbank checks in Ugandan shillings has been reduced from 10 million shillings to 5 million shillings, and limits for foreign currency transactions have also been reduced, with the ceiling for checks in US dollars decreasing from $2,750 to $1,375, and in euros from €2,250 to €1,125.

The measures also included reducing the maximum limit for Kenyan shilling checks from 300,000 Kenyan shillings to 150,000 Kenyan shillings, which could affect cross-border trade within the East African region.

The Central Bank aims through these measures to encourage companies and individuals to use Real-Time Gross Settlement (RTGS) systems and traceable electronic transfers, thereby enhancing financial oversight, reducing illicit financial flows, and expanding the formal tax base.

Despite these steps, economic experts point to a major challenge: the continued imposition of a tax on mobile money transactions at a rate of 0.5%, after the Ugandan parliament rejected a government proposal to reduce it to 0.25% within the 2026/2027 budget bill.

Observers believe that maintaining this tax may limit the pace of digital transformation, especially for low-income users who rely on mobile money services for their daily transactions.

Uganda’s financial sector data reflects the accelerating growth of the digital economy, with the value of electronic money transactions increasing by 28.6% during the year ending June 2025, reaching 326.3 trillion Ugandan shillings, through approximately 36.7 million active users of mobile money services.

Telecommunications companies and electronic payment service providers are expected to benefit from these transformations in the coming years, as the Bank of Uganda continues to implement its plan to reduce reliance on cash and promote financial inclusion and economic digitalization.