Remittances in Uganda

This case study by FSD Africa examines the remittance landscape in Uganda, identifying it as a net recipient of remittances with significant inflows from the UK, South Sudan, and Rwanda. While the market is advanced, it faces high costs, significant informality, and regulatory hurdles, particularly regarding mobile money and KYC requirements.

• Uganda is a major net recipient of remittances, ranking as the sixth-highest recipient in Africa with over USD1 billion in inflows in 2016. These inflows added approximately 4% to the Ugandan GDP in 2016, with the UK being the largest source of remittances at around USD275 million.
• Formal remittance channels are costly, with a USD200 transfer from the UK averaging 7.3% in cost, exceeding the SDG target limit of 3-5%. Informal channels are generally cheaper, and the introduction of a mobile money tax in July 2018 (initially 1%, later reduced to 0.5% for cash withdrawals) has further widened the cost gap between formal and informal mechanisms.
• The mobile money market is characterized by an oligopoly dominated by two major operators, which has stifled competition and limited interoperability. This dominance is reinforced by network effects and a history of de facto agent exclusivity, where agents often prefer dominant providers to maximize commissions.
• KYC requirements act as a barrier to financial inclusion, potentially excluding over 3.2 million adults who lack official identification. Financial service providers often overcomply with stringent requirements due to a lack of national data on money laundering and terrorist financing risks, which prevents the implementation of a risk-based approach (RBA).
• Regulatory uncertainty persists because mobile money is governed by non-binding guidelines from 2013 rather than formal legislation, leading to overlapping jurisdictions between the Bank of Uganda (BoU) and the Uganda Communications Commission (UCC). Additionally, the prohibition of electronic signatures increases operational costs by requiring all registrations to be in writing.
• Infrastructure deficits in rural areas, including poor road networks and low electrification (only 18% in rural areas), hinder the expansion of formal remittance services. This forces mobile network operators to use expensive diesel generators to maintain tower uptime and complicates liquidity management for agents.
• There is a persistent consumer preference for cash, with 75% to 85% of retail transactions handled in cash. This is driven by a lack of digital use cases beyond personal transfers and airtime, as well as low literacy levels and a lack of trust in digital recourse mechanisms.

APA

Cooper, B., Esser, A., Tuyeni, R., Shazeaa, P., & Mohamod, L. (2018). Remittances in Uganda. FSD Africa. https://fsdafrica.org/wp-content/uploads/2025/05/Volume-3_Barriers-to-remittances-in-Uganda_FSDA_October-2018.pdf

Chicago

Cooper, Barry, Antonia Esser, Rose Tuyeni, Peter Shazeaa, and Lal Mohamod. Remittances in Uganda. FSD Africa, 2018. https://fsdafrica.org/wp-content/uploads/2025/05/Volume-3_Barriers-to-remittances-in-Uganda_FSDA_October-2018.pdf.

Wikipedia

{{cite report |last1=Cooper |first1=Barry |last2=Esser |first2=Antonia |last3=Tuyeni |first3=Rose |last4=Shazeaa |first4=Peter |last5=Mohamod |first5=Lal |title=Remittances in Uganda |publisher=FSD Africa |date=October 2018 |url=https://fsdafrica.org/wp-content/uploads/2025/05/Volume-3_Barriers-to-remittances-in-Uganda_FSDA_October-2018.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cooper2018remittances, author = {Cooper, Barry and Esser, Antonia and Tuyeni, Rose and Shazeaa, Peter and Mohamod, Lal}, title = {{Remittances in Uganda}}, institution = {FSD Africa}, year = {2018}, month = oct, url = {https://fsdafrica.org/wp-content/uploads/2025/05/Volume-3_Barriers-to-remittances-in-Uganda_FSDA_October-2018.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }