Rushed cashless policy risks undermining Uganda's economic leap, warns businessman

A recent policy shift by the Bank of Uganda, aimed at reducing cash dependence and enhancing transaction traceability, is facing criticism for being too rushed and potentially counterproductive. Businessman Sankara Fidel Kulayigye argues that forcing a cashless system without proper sensitisation and accessible alternatives could alienate crucial segments of the population, contradicting President Museveni’s vision for a “qualitative leap” into higher middle-income status.

Kulayigye uses the example of a rural widow selling tomatoes. Without smartphones, internet access, or reliable electricity, she cannot easily adopt digital payments. If cash becomes difficult to use, she might be forced to accept exploitative middlemen or resort to bartering, effectively pushing her further away from the money economy the government aims for.

This hurried approach also threatens government initiatives like the Parish Development Model (PDM) and Emyooga. If citizens distrust the digital flow of funds, they may view their savings as a “trap” and withdraw them, potentially resorting to hoarding cash rather than participating in formal financial systems. This fear-based approach, Kulayigye suggests, is antithetical to fostering an environment of economic participation and transparency.

Furthermore, the policy could harm key sectors like agro-processing, tourism, and minerals. Traders and factory workers need to be willing participants, not suspicious citizens subjected to what they perceive as surveillance. Tourists might be deterred by unreliable payment systems, and artisanal miners could be driven to sell gold across borders for untraceable cash transactions, undermining revenue generation and formalisation efforts.

Kulayigye implores leaders to consult widely and conduct extensive public sensitisation before imposing such significant changes. He advocates for a gradual, educational approach, akin to the President’s emphasis on teaching ‘ekibaro’ (calculating profit), to ensure public buy-in and avoid creating resistance and mistrust. He suggests that a poorly implemented cashless policy could pave the way for more sophisticated forms of corruption, especially as Uganda anticipates oil revenues.

Ultimately, Kulayigye believes that while digitalisation is a worthy goal, it must be achieved by “winning hearts, not killing cash before the village is ready.” The current approach risks creating short-term confusion and long-term public resistance, undoing the very progress the nation aims to achieve.