The Bank of Uganda has accused financial technology companies, and fintechs, of refusing to apply for licenses.
BOU started implementing the regulatory framework for fintechs last year and started implementing the National Payments Systems Act which provides for the regulation of the small financial technology companies under the regulatory sandbox arrangement.
This is aimed at ensuring that the payments or cash transfer players are under a form of regulation to protect the public.
Richard Byarugaba, the Executive Director of finance at BOU says while fintechs have done a lot to boost financial inclusion and deepening, many have not taken safety and security as a matter of importance, focusing only on making money.
Byarugaba says many companies have refused to apply for regulation intentionally, which is an offense, and this is giving room for cybercriminals to operate.
He was speaking on Friday at the Annual General Meeting of the Financial Technology Services Providers Association (FITSPA) in Kampala.
The Minister for Science, Technology and Innovation, Monica Musenero accused the financial industry of avoiding financing of innovations in the country, which, she says is affecting the fourth industrial revolution.
Musenero said the innovation and technology industry in Uganda is young and is being dominated by young innovators, who need, not only technical aid but also financial assistance.
Chapter 14 of the Third National Development Plan 2020-2025 described digital transformation as the ‘fulcrum of development’ while the Uganda Vision 2040 identifies ICT among the key fundamentals as well as an opportunity to spur Uganda’s transformation into a modern and prosperous country.
Musenero told the banking industry representatives at the meeting that neglecting the young innovators means there will be no digital economy to talk of in Uganda when the rest of the world has matured.
The innovation sector in Uganda is largely dependent on goodwill from volunteer financiers and other supporters who connect them to markets, as well as corporate investors like telecoms and banks that sponsor fintechs.
FITSPA’s membership now has 210 businesses registered, up from the five that were on the record in 2017, signaling how fast the sector is growing.
Josephine Alok, the association chairperson is because of the continuous improvement of the infrastructure in Uganda and around the world and in Uganda.
Alok, however, is concerned about the limited access to finances as well as issues of safety and privacy reported constantly around the banking sector, which says, will cost the financial technology industry public confidence.
Olok, the Chairperson of FITSPA, tipped the innovators to do market research before developing an idea so that their efforts are not wasted in an idle or useless innovation.
This will then even make it easier for financiers to take up financing of the innovations.
Olok said there is a lot still needed in the industry as the mobile phone penetration continues to grow, adding that the 30 million mobile money accounts all present an opportunity for them to launch more innovations.
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