Cryptocurrency Compliance Issues in Uganda: A Growing Concern for Refugees
The National Identification System Backlash
Uganda’s National Identification System, launched nearly a decade ago, aimed to provide legal identity to its citizens and meet United Nations’ sustainable development goals. However, the system has backfired, leaving millions of refugees without access to basic services like banking and mobile phone SIMs.
Refugees Without Identification Cards
Refugees in Uganda lack identification cards, making it impossible for them to open bank accounts or obtain other essential services. To circumvent this issue, some have turned to cryptocurrency, specifically bitcoin, as a means of transaction.
Bitcoin Innovation Hub’s Role
The Bitcoin Innovation Hub, located in Kampala, has been teaching refugees practical skills and how to earn, buy, and spend bitcoin. The program’s CEO, Noble Nyangoma, explains that bitcoin provides an alternative to traditional banking systems, which require identification cards.
- “Refugees in Uganda lack identification – a national ID – so they have no way of opening up bank accounts,” said Nyangoma at the Oslo Freedom Forum this year.
- “Why bitcoin? With bitcoin, no one is going to ask you ‘Where is your national ID?’”
Challenges in Acquiring National IDs
Acquiring and replacing national IDs in Uganda can be a daunting task, often described as akin to finding a kidney donor. The process is lengthy and requires a significant amount of documentation.
- Edith Mpumwire, a community leader for Bitcoin Dada, describes the experience as “an act of segregation and human rights violation” for those without identification cards.
- Refugee IDs, which grant limited access to banking services, are often issued in Kampala and difficult to obtain in rural areas. Banks also prefer not to serve refugees due to trust issues and require extensive documentation.
Potential Solution: Mass Bitcoin Adoption
Mpumwire believes that encouraging the use of bitcoin in refugee camps could have a significant impact on mass adoption. “If we are looking at mass bitcoin adoption, these refugee camps would be an ideal place to start,” she said. “It would ease access to money.”
- However, Mpumwire acknowledges that it is not enough for refugees to only use bitcoin among themselves. Merchants and service providers must also begin accepting the cryptocurrency.
Conclusion
As Uganda continues to grapple with its national identification system, the use of cryptocurrency may provide a solution for refugees excluded from traditional banking services. Nevertheless, addressing the underlying issues of access and trust remains crucial for widespread adoption.