Deputy BoU Governor, Dr. Michael Atingi-Ego
Financial sector players discussing ways of “reshaping the tax system to support the Financial sector Development Strategy.” The ongoing discussion is taking place at Sheraton Hotel in Kampala.
Giving opening remarks today, the Bank of Uganda Deputy Governor, Dr. Michael Atingi-Ego, said that the World Bank Financial Global Index 2021 put Uganda’s Financial Inclusion rate at 66% compared to 59% in 2017, with mobile money as a key driver.
Quoting the same statistics, Atingi-Ego said Mobile Money increased remittances by 36%. However, he says that the same report shows that 41% of Ugandans could not access financial services. Whereas financial inclusion has progressed, Atingi-Ego says that there are several barriers. These, he says, include the cost of digital transactions.
For instance, he said to send money, it costs between Shs 30 and 1,250 while withdrawing it costs between Shs 330 and Shs 12, 000. Between Shs 160 and Shs 6, 300 goes into payment of utilities including taxes. Ego says interoperability ranges between Shs 330 and Shs 20, 000.
Participants following the discussion.
“The charges are increasing with the vulnerable poor bearing the burden. Financial Inclusion can’t be achieved when transaction costs are high,” Ego says.
This is because 90% of the Mobile Money transactions are below Shs 50, 000, he says.
“There is still a lot of work to be done to bring affordable services close to the people,” Atingi-Ego says.
According to Atingi-Ego, the Central Bank is doing enough to see to it that transaction costs come down. For instance, he notes that the BoU is working to have in place the national payment switch which he says will reduce the structure of the payment services.
“Bank of Uganda is committed to financial sector development and promoting financial inclusion,” Atingi-Ego added.
According to Uganda Revenue Authority – URA – Commissioner General – John Rujoki Musinguzi – reshaping the tax system will level the “playing field”
“It is important to digitize money and the flow of incomes. That way, it leaves a trail and that trail helps the tax administrators to effectively assess and tax those transactions without any guess work,” Musinguzi said.
