New law to facilitate trade and digital payment systems
Kampala, Uganda | JULIUS BUSINGE | Fintech offers enormous opportunities such as improving service delivery, provision of employment opportunities and boosting financial inclusion for the unbanked to the developing economies.
It is therefore important that the innovations are appreciated, according to the Permanent Secretary for the Ministry of ICT and National Guidance, Vincent Bagiire.
Financial technology which is at times shortened to Fintech involves companies using technology and innovation to compete with traditional financial systems in the delivery of financial products.
Bagiire, who opened the two-day 2019 Annual Fintech Festival held at Serena Hotel on Nov.05 said that there is a very big opportunity that the Fintech ecosystem is providing in Uganda and the African continent.
He cites more than one million people that he claims are employed in the mobile services as well boosting financial inclusion.
He also said Africa has a large pool of talented professionals like lawyers, ICT professionals, economists and more and that the focus for players should be on helping Fintechs to deal with problems related to finance, digital literacy and the cost of devices.
According to the organisers of the festival – Fintech Association of Uganda (FITSPA Uganda), the Africa Fintech Network (AFN) and Financial Sector Deepening Uganda (FSD Uganda) – Fintechs are important because key sectors of the economy, including everything from agriculture to industry are riding on technology for their growth.
“Fintechs are developing innovative products and business models to meet varied needs like the provision of credit, insurance and wealth management solutions,” they said in a notice.
They added that for Uganda, the different initiatives, and their progressive nature, demonstrate Fintech’s role in supporting the achievement congruent objective of greater financial inclusion.
Rashmi Pillai, the executive director of Financial Sector Deepening Uganda said supporting FinTechs is a must because they are easing the cost of doing business.
She, for instance, said the internet connected devices have also helped insurance companies to lower their insurance premiums by as much as 25%.
Beyond this, over $350million was raised by Fintech players on the continent in 2018, according to Forbes. Experts say the number has been surpassed and is on course to be almost doubled this year.
Bagiire, however, said stakeholders need to give priority to the issues of cyber security and data protection. He said that government has so far put in place various measures such as e-transactions act, 2011, the data protection and privacy act, 2019, the ICT infrastructure to support the sector growth.
In his speech, Finance Minister Matia Kasaija said, in Uganda, financial technology especially mobile telephony has accelerated financial inclusion over the past decade.
As at the end of 2018, he said about 24.5million mobile money accounts had been registered and reached about 56% of Uganda’s adult population.
He said financial technology innovations have positively disrupted traditional financial services and substantially impacted lending in Uganda.
From 2017 to 2018, the number of borrowers in tier 1, 2 and 3 financial institutions more than doubled from 879, 233 to 1.7million mainly driven by the uptake of digital credit.
Kasaija said financial technology can transform consumer protection, close the gap of small and medium finance, and reduce cross-border remittance transaction costs, foster inclusion of the agriculture sector and pension coverage and foster new investment avenues.
He said the government is in advanced stages of formulating the National Payments System Law. The bill to that effect, he said has been gazetted for submission to Parliament. The law, he said will facilitate payment systems and protect all players involved in this trade.
Kasaija said that government’s support for the FinTech ecosystem are articulated in the National Financial Inclusion Strategy and draft Financial Sector Development Strategy which among other things looks at creation of incentives for financial sector actors to innovate and promote digital payments through migration of government payments to digital platforms.
The tech festival attracted more than 250 delegates from different African countries.