Financial Crime World

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Uganda’s Financial Inclusion Reaches New Heights, But Know-Your-Customer Process Remains a Major Hurdle

In recent years, Uganda has experienced a significant surge in financial inclusion, largely driven by the rapid adoption of mobile money services. According to Financial Inclusion Insights Uganda 2016, nearly 4 out of every 10 Ugandan adults now have access to financial services, with 35% owning a mobile money account and 11% having a full-service bank account.

The Complex Issue of Digital Financial Services

Despite this progress, financial inclusion remains a complex issue, particularly when it comes to digital financial services (DFS). The ability of consumers, traders, merchants, agents, and aggregators to be fully registered and compliant with Know-Your-Customer (KYC) requirements by regulators is crucial for access to DFS.

Challenges Faced in Uganda

Industry insiders in Uganda will tell you that the topic of KYC is a hot button issue. Common complaints include:

  • A need for greater clarity around KYC requirements for different types of DFS users
  • Discrepancies in how these requirements are interpreted
  • Challenges faced by agents, merchants, and refugees due to strict KYC requirements, which can result in exclusion from using DFS services

UNCDF-MM4P Research

To better understand the complexities surrounding KYC in Uganda, UNCDF-MM4P conducted research into the specific requirements for DFS players in the country. The study aimed to:

  • Clarify KYC requirements for opening and operating DFS accounts
  • Examine how financial service providers are interpreting and implementing these requirements
  • Assess the impact of interpretation on DFS adoption
  • Offer recommendations for addressing challenges

Key Findings

The findings of this research provide valuable insights for regulators, banks, mobile network operators, and other financial service providers that operate DFS in Uganda.

Recommendations

In response to these findings, UNCDF-MM4P is engaging with stakeholders to address some of the issues highlighted in the report, ultimately seeking to foster greater DFS growth and uptake in the country.