The Government has been asked to recognise electronic value (e-value) as money and thus accept it across its ministries, departments and agencies, so as to boost public confidence in using the same.

This, according to Financial Technology companies (Fintechs), players will facilitate the shift from cash to a cashless economy.

It is estimated that over 80% of transactions in Uganda are cash, partly because people do not trust electronic money as many have been defrauded through these platforms.

The Pegasus managing director, Ronald Azairwe, said there is no law that allows the Government to recognise e-value as money and that MDAs do not accept it as a form of payment, which in turn discourages the public.

“You cannot say you are paying a government institution using e-money and they accept. It will have to first go to a bank account somewhere before it is recognised,” Azairwe, who was speaking during the ongoing second edition of the 40-day 40-Fintechs Initiative, said.

He added: “We need to see digital payments done to government in real-time recognised as value and government can re-use that e-value collected to make onward payments. Once that is done, it will go a long way in closing the loop.”

A source in Bank of Uganda who asked for anonymity because they are not allowed to speak on behalf of the institution said e-money is a new space and that they are starting with regulating players and that other things will be considered in future.

Azairwe, however, commended the government for passing the National Payments Systems Act mid last year to regulate electronic money service providers and for the recent payment of COVID-19 relief funds through mobile money. He said this is a step towards building public confidence to use e-money and support the shift from cash to electronic money usage.

Nielsimms Sangho, the Flutterwave Uganda country lead, also said there is need to build trust to encourage usage.

Tradelace sales and marketing analyst, Nelson Mandela Ewolu, also echoed similar views, saying while the industry is growing with the number of transactions increasing, the public is still sceptical about using digital platforms.

“We still have a lot to do to instil faith. I believe in the next five years, it will be booming,” he said.

Allan Rwakatungu, the Xente Tech chief executive officer, however, said being regulated brings interesting challenges to Fintechs, but also opportunities for customers who will now have confidence in the safety of their funds.

Some players, however, said the law threatens to pose monopolistic tendencies, given the stringent requirements for an operating licence.