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Cashless payments in the informal sector surge in Uganda


The informal sector is playing a key role in driving the surge in cashless payments in Uganda, accounting for an estimated 80% of all mobile money transactions. This trend is being fueled by several factors, including the increasing availability of mobile phones and mobile money services, the growing popularity of e-commerce, and the convenience of cashless payments.

There are several factors driving the surge of cashless payments in Uganda’s informal sector. The first factor is the penetration of mobile phone. The widespread availability of mobile phones in Uganda has made it easy for people to access mobile money services. According to the Uganda Communications Commission, there were over 33 million mobile phone subscriptions in Uganda in 2022, representing a penetration rate of over 75%.

The second factor is the accessibility of mobile money. Mobile money services are widely available in Uganda, with both telecom operators and banks offering these services. This has made it easy for people to send and receive money without having to use cash.

The third factor is the growth of e-commerce in Uganda. E-commerce is growing rapidly in Uganda, and this is leading to more people using cashless payments to make online purchases. Uganda's economy is growing steadily, and disposable incomes are rising. This means that Ugandans have more money to spend, and they are increasingly spending it online. And Uganda's middle class is growing, and this is a key driver of e-commerce growth. Middle-class Ugandans are more likely to have access to the internet and mobile phones, and they are more likely to shop online.

The fourth factor is the convenience of chasless payments. Cashless payments are convenient and easy to use, and this is appealing to many people in Uganda. Cashless payments can be made quickly and easily, and there is no need to carry around large amounts of cash.

The cashless payment surge is having a positive impact on the informal sector in Uganda. By making it easier to send and receive money, cashless payments are helping to increase financial inclusion and economic activity in the informal sector, as well as reducing transaction costs. Additionally, cashless payments are helping to reduce fraud and theft, which can be a major problem for businesses in the informal sector.

The surge in cashless payments is on the path to creating an optimal outcome in resource allocation for the Ugandan economy. Cashless payments are processed electronically, resulting in faster and more efficient transactions. This efficiency translates into quicker checkout times for consumers, reduced processing delays for businesses, and overall time savings that can be allocated to more productive activities. As societies transition towards a more digital economy, cashless payments will continue to be a driving force for development and prosperity.

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