Africa going into an era of Digital Cash: Uganda Tightens Cash Rules to Accelerate Digital Payments

The Bank of Uganda (BoU) has unveiled sweeping reforms to its payment system, introducing over‑the‑counter (OTC) cash withdrawal limits and halving interbank cheque thresholds across five currencies.

Effective 1^st January 2027, the measures mark the most aggressive tightening of Uganda’s cash rules in years and signal a decisive shift towards digital finance.

For the first time, system‑wide OTC withdrawal caps will apply.

Individual accounts face daily limits of UGX 50 million (US$13,245) and weekly ceilings of UGX 250 million, while corporate accounts are capped at UGX 500 million per day and UGX 2.5 billion per week.

The rules exempt RTGS, EFTs and mobile money, reinforcing Uganda’s push toward electronic channels.

Interbank cheque thresholds have been cut by 50%: Uganda shilling cheques drop from UGX 10m to UGX 5m, while Dollar, Euro, Pound and Kenya shilling limits are similarly halved.

"Uganda's transition from encouraging digital payments to mandating them through withdrawal caps and reduced check thresholds marks a clear change in approach. The data supports the move: electronic money transactions grew 28.6% in the year to June 2025, and active mobile money users have reached 36.7 million. The infrastructure is there. What the policy also exposes is the contradiction running through many African digital finance transitions: the Government's refusal to reduce the mobile money excise duty from 0.5% keeps digital transactions more expensive than cash for small-value users, undermining the very adoption the Central Bank is trying to accelerate. That kind of policy friction shapes retail financial behavior and determines how quickly informal economy participants move onto formal digital rails." - Van Ha Trinh, Financial Markets Strategist at Exness.

The directives close out Uganda’s National E‑Payments Strategy 2021–2026, moving from facilitation to compulsion. BoU data shows electronic money transaction values surged 28.6% to UGX 326.3 trillion in the year to June 2025, with volumes up 20.6% to 8.4 billion transactions.

Active mobile money users hit 36.7 million in Q1 2026, supported by over one million licensed agents nationwide.

Cash remains entrenched in agriculture, artisanal mining and the informal economy.

BoU acknowledged this, allowing supervised institutions to apply for waivers under strict due diligence.

Still, MTN Uganda and Airtel Uganda stand to benefit as high‑volume cash users migrate to mobile money rails.

However, the Government’s rejection of a proposal to reduce the mobile money excise duty from 0.5% to 0.25% has left digital transaction costs higher than cash for small‑value users.

Civil society groups caution that this levy risks undermining Uganda’s digital agenda by pushing low‑income citizens back towards cash, directly contradicting the Central Bank’s new limits designed to accelerate adoption of mobile money and electronic payments.

A six‑month public awareness campaign will precede the January 2027 rollout, underscoring Uganda’s determination to entrench digital payments.