Mobile money overtakes banks as top channel for Uganda remittances

KAMPALA, Uganda — Mobile money has overtaken traditional banks and cash pickups as the primary channel for Ugandans in the diaspora to send money home, according to new data from the Bank of Uganda.

The shift comes as remittances to the country hit a record $2.5 billion last year, a significant increase from $1.5 billion in 2024. Market observers attribute the change to the lower costs and greater convenience offered by digital platforms compared to formal banking institutions.

Data recently updated on the central bank website shows that 73% of all inbound remittances are sent electronically, with mobile money platforms alone accounting for 61%. Cash pickups, which once dominated the market, have declined to 27%.

Ronnie Alinda, a remittance officer at the Bank of Uganda, said the majority of these transactions are small sums intended for immediate household needs.

Inflows are mostly through mobile money, Alinda said. The cleaner the data, the better the results will be for everyone.

The data reveals that 93% of transactions fall between $0 and $499, with an average remittance size of $152. These funds are primarily used for family support, including school fees, medical expenses, and food.

The cost of receiving money via mobile money is significantly lower than bank fees. For a transfer of approximately $200, users pay between 12,000 and 13,000 shillings in withdrawal fees at local telecoms, compared to an estimated 30,000 shillings at a bank.

The United States was the leading source of remittances, contributing $702 million, or 28% of the total. Saudi Arabia followed with $380 million, the United Kingdom with $331 million, the United Arab Emirates with $257 million, and Canada with $110 million.

While inflows are dominated by digital platforms, outbound transfers remain more reliant on traditional banking. Ugandans sent $402 million abroad last year, with 57% of those transactions handled by banks. The top destinations for outbound funds were India, Kenya, and the United States.

Augustus Nuwagaba, deputy governor of the central bank, noted that transaction costs remain a challenge. At an average of 8%, these costs exceed the Sustainable Development Goals target of 3%.

The high cost of sending money sustains informal channels and contributes to misreporting, Nuwagaba said. He added that the bank is working to improve data quality regarding how funds are used and where recipients are located.

The data also highlights demographic trends, showing that men over age 40 dominate outbound transfers, often for business or education investments. In contrast, inbound money is largely received by adults in their 30s and 40s who are managing family responsibilities.

Joseph Lutwama, director of research at Financial Sector Deepening Uganda, said the data presents an opportunity to create financial products tailored to the needs of the diaspora.

Behind each transfer are real economic decisions, Lutwama said. The question is how we can facilitate them so they can earn more and turn this into a deliberate engine of growth.