FintechPolicy & GovernanceFintech Regulatory Landscape in Uganda

Kennnedy MuturiFebruary 4, 202345010 min

In Uganda, there are now roughly 70 FinTech companies. While this is a tiny number by global standards, it is expected to increase significantly, evaluating the average yearly growth rate of Ugandan FinTechs has been over 35 percent over the last two years. With a volume of UGX 17.6 trillion (USD 4.7 billion) in 2016, payments are Uganda’s most important FinTech sector. Banking facilities, investment and savings, lending, and markets are Uganda’s main FinTech industries. In 2017, Uganda’s entire market volume for FinTech enterprises was at USD16 million according by digest Africa. Approximately 60% of the FinTechs operating in Uganda are native to the country, 21% are more generally focused on Sub-Saharan Africa, and the balance is global FinTechs having operations in Uganda.


The dual obstacles of developing an enabling regulatory climate to enable the benefits of FinTech while also balancing the rising hazards that it offers must be carefully evaluated in Uganda. While Uganda’s FinTech sector is small by global standards, the very rapid nature of technological advancements and consumer acceptance necessitates Ugandan authorities carefully weighing the dangers to their regulatory objectives, as well as the effective reaction, at an early stage. This is especially significant considering that policy and regulation change at a considerably slower pace than the sector. • While the FinTech sector in Uganda is currently relatively tiny, Uganda’s regulatory bodies may expand the number of best practices.

The adoption of a comprehensive and consistent consumer protection policy in Uganda would aid both the advancement of the FinTech sector and the mitigation of some of the risks that may arise as it expands. Customer protection legislation can assist in addressing how digital financial service providers communicate with clients and ensure fair pricing and other product and service terms and conditions disclosure.

This might also include confidentiality regulations, which would boost trust in financial services and stimulate the development and use of innovative financial services.


In Uganda, volumes in potentially systemically essential FinTech industries such as computerized credit and alternative financing channels are low. However, given the sector’s strong growth in other parts of the world, this may not be the case for much longer. Given the possible systemic risks posed by FinTech, the Ugandan government should consider developing a proactive risk mitigation approach.

FinTech represents an excellent opportunity to improve innovation in Uganda’s financial sector.  Thereby increasing financial inclusion and furthering innovation. Simultaneously, new technology-enabled financial institutions will emphasize existing legislation while emphasizing competition policy and law.

Implementing a comprehensive strategy to promoting competition in financial services would aid in the development of FinTech in Uganda while also assisting in the mitigation of market power risks. This would also be highly beneficial to the draft Competition Bill and the National Financial Inclusion Strategy.

Policymakers must react and move rapidly to comprehend FinTech; only then will suitable regulatory solutions arise. However, policymakers and regulators in Uganda currently have a poor level of awareness and comprehension of FinTech. Given the regulatory knowledge deficit in Uganda regarding FinTech, upskilling regulators on the issue will be critical for establishing an acceptable regulatory framework and responsible industry development.

The current regulatory approach to FinTech in Uganda is vague and ambiguous, resulting in increased legal barriers to entry and innovation in the sector and gaps in consumer protection. Clarifying the regulatory approach to the business would aid Uganda’s responsible development of technology-enabled financial services. There are several options that would help to assist this.

Given the variety of entities responsible for financial services regulation in Uganda, particularly in the case of FinTech, stronger regulatory cooperation would provide greater clarity and confidence in the sector’s regulatory framework.

Companies that supply microfinance through new channels, like technology, may be regulated differently, if at all, due to institutional- or product-based regulatory frameworks. These extra firms offer these things or services via more “conventional” methods, such as a branch or an agent.

Controlling financial service providers based on the operation or “function” that the provider performs rather than the “type” of an institution that supplies the product or service is one strategy to ensuring consistent, predictable, and precise regulation.

The existing regulatory structure in Uganda is primarily rule-based, with legislation specifying how providers must comply with the regulation. This provides little room for financial services firms to be flexible and innovative in how they adhere to the rule. A method based on concepts may improve consumer safety while allowing banks of all types to innovate. Principles are also more technology-neutral, which ensures flexibility for companies with a variety of products, services, and business strategies.

FinTech-specific regulatory efforts provide a vehicle for regulators to build the regulatory system while minimizing regulatory uncertainty for digital financial service providers.

More on Fintech in Africa:

The Fintech Landscape in Rwanda

Fintech in Africa

Kennnedy Muturi

Ken is a Quantitative Trader with experience in investments, quantitative finance, financial modelling and algorithmic trading in Global Investable Markets (GIM). He enjoys using Bayesian Statistics, Time Series and Machine Learning in developing Robust consistent Alphas in Equities Market, FX, ETPs and Derivatives instruments. He enjoys deep dives in understanding High Frequency Trading infrastructures and improving how the African financial markets work. He holds a Bachelor's in Actuarial Science from Strathmore Institute of Mathematical Sciences : An Executive Program in Algorithmic Trading (EPAT) certificate in Algo Trading from QuantInsti : A current MSc student in Financial Engineering at World Quant University.

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