Uganda Central Bank Caps Daily Cash Withdrawals to Drive Digital Economy

The Bank of Uganda (BoU) is steering the nation towards a digital future with a new directive capping daily cash withdrawals. Effective immediately, individuals will be limited to withdrawing Shs50 million per day, while businesses face a daily cap of Shs500 million. Weekly limits are set at Shs250 million for individuals and Shs2.5 billion for corporate accounts.

Wilbrod Owor, Executive Director of the Uganda Bankers’ Association (UBA), revealed that the central bank has already begun reducing the volume of physical cash distributed to commercial banks. He explained that this move is crucial due to the inherent risks associated with physical cash, including hygiene concerns, difficulties in traceability, and the ever-increasing sophistication of fraudsters.

The phased implementation of these new limits is intended to provide a critical window for financial institutions to educate the public on the transition. Banks are tasked with sensitizing consumers about the shift to digital transactions and, concurrently, preparing for a potential surge in cybercrime as more activity moves online.

Experts highlight that this transition will significantly test Uganda’s cybersecurity infrastructure. Emmanuel Chagara, CEO of Milima Cyber Security, noted that cyber threats have rapidly ascended to become a top-three risk for local businesses. The 2024 Police Crime Report indicated a alarming 93% increase in cybercrime cases in Uganda, rising to 474 from 256 the previous year.

Chagara emphasized that Uganda is looking to regional peers like Kenya, Tanzania, and Zambia, which have already made substantial progress in their cashless transitions. He pointed out that the cost of merely moving physical cash consumes approximately 2% of Uganda’s GDP, highlighting the economic inefficiency of the existing system.

Despite the escalating digital risks, Chagara expressed optimism about Uganda’s preparedness, citing robust government strategies to counter cyber threats. The digital shift is already being embraced at the grassroots, with Savings and Credit Cooperative Organizations (SACCOs) actively adopting mobile and internet banking solutions.

As commercial banks adjust to the new cash limits, the financial sector faces mounting pressure to strengthen its digital defenses and safeguard consumers against evolving cyber threats. The Ministry of ICT and National Guidance commended indigenous firms like Milima Cyber Security for their role in bolstering local companies’ defenses and developing the nation’s digital talent pool.

Source: Daily Monitor (Uganda)