The Bank of Uganda (BOU) has started to explore the viability of issuing a central bank digital currency (CBDC) to be used by households and businesses.
While the BOU is reportedly planning to revise the country’s financial laws to enable the adoption of a CBDC, the likelihood of Ugandan’s CBDC issuance will be shaped by local conditions. Regulators fear that its issuance will pose a possible risk to financial inclusion, particularly to the elderly who are unfamiliar with technology and rural communities that have restricted access to the internet. That concern would be relevant if a CBDC displaced cash.
The country already has a relatively high unbanked population with only 28% of Ugandans reported having bank accounts in 2015. As with other African countries such as Kenya, mobile phone payments are prevalent in Uganda, with cash on and offramps enabled by local kiosks rather than banks. According to Bank of Uganda statistics, there are 32 million mobile payments accounts out of a population of 45 million, although only about two thirds of the accounts are active.
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