Despite the popularity of cheque payments in Kenya, Uganda lowers bank cheque limits to boost e-transactions.

Despite the popularity of cheque payments in Kenya, Uganda lowers bank cheque limits to boost e-transactions.

Cheque payments are still popular in a few African nations, such as Kenya, where payments made by check climbed 8.2 percent in the first half of 2021.

Uganda is attempting to shore up electronic and mobile money transactions by moving away from cheque payments for sums beyond the equivalent of around $2,800 in local and foreign currencies beginning Jan. 15.

“The Bank of Uganda has decreased limitations on the value of check payments to boost e-payments.

The public is asked to adopt alternative electronic payment alternatives such as electronic funds transfer and mobile money, among others, the governor of the Bank of Uganda, Emmanuel Tumusiime-Mutebile, stated in the Jan.10 announcement.

A recent study reveals that the value of the country’s mobile money industry, with roughly 27 million registered accounts, has exceeded $46 billion and is predicted to rise at a compounded annual average growth rate of 26.6 percent over the next five years.

It is against this background that the Bank of Uganda is aiming to drum up the increased adoption of electronic and digital payments instead of cheque payments for both local currency and foreign currency transactions.

More African nations are shifting towards electronic and digital payments
By restricting check payments, Uganda joins a select club of African nations that have fully outlawed the usage of bank cheques.

These include South Africa which barred off usage of cheques in 2020 and Lesotho whose banks ceased processing these monetary instruments in 2021.

Mobile money and electronic payments are swiftly growing in Uganda and elsewhere in Africa, a continent that according to GSMA—the worldwide union of mobile network operators—saw the value of mobile wallet payments climb 23 percent to $495 billion by the end of 2020.

The implementation of COVID-19 and associated travel restrictions has led to a huge boost in electronic payments throughout Africa, and the trend is anticipated to continue.

Some regional banks have been eliminating physical bank branches while others are launching virtual and digital only banking operations.

This is disrupting check payments that usually require one to visit actual bank locations. The desire for speedier payments settlements is also operating against check payments which take considerable durations to process and settle.

This is despite Kenya’s tremendous success with mobile money and digital payments over the years, placing it ahead throughout most of the continent and likely a consequence of the larger daily transaction limitations that cheques allow for compared to mobile money.

Increased usage of mobile money and electronic payments platforms will also play to the advantage of President Yoweri Museveni’s government as it currently levies a 0.5 percent tax on these digital and mobile payments, joining an increasingly growing list of other continental countries that have similar statutory fees, with Cameroon being the latest to impose such a levy.