Bank of Uganda Caps Cash Withdrawals — Banks Push Back

The Bank of Uganda has imposed a ceiling on cash withdrawals, a move designed to accelerate the shift toward mobile money and digital transactions across the country. Under the new rules, individuals can withdraw up to 500,000 Uganda shillings — roughly $135 — per day from banks and agents, while businesses face even tighter restrictions of 1 million shillings weekly.

The policy took effect immediately after the central bank announced it on Monday, catching many Ugandans by surprise. Banking industry leaders say the transition period is far too short. "We need at least six months to properly educate our customers," said Robert Achola, executive director of the Uganda Bankers Association, speaking at a press conference in Kampala.

Why the Rush Toward Digital?

Uganda's cash-heavy economy has long frustrated policymakers. Roughly 35 percent of the adult population — about 2.5 million people — remains outside the formal banking system, relying on cash transactions that are harder to track, tax, and regulate. The central bank argues that reducing cash circulation will improve transparency, curb tax evasion, and make monetary policy more effective.

Mobile money has already become a dominant platform in Uganda. Over 12 million Ugandans use Mobile Money accounts, and the service processes transactions worth more than $40 billion annually. The central bank wants to push more of that activity through regulated digital channels rather than physical currency.

Who Bears the Brunt

The policy lands hardest on rural communities, where mobile network coverage remains patchy and bank branches are scarce. Farmers, market vendors, and informal traders — who deal primarily in cash — face the most disruption. In the northern district of Gulu, traders told local media they had not received any guidance from banks or mobile operators about how to adapt.

Small businesses are also struggling. A informal survey by the Private Sector Foundation Uganda found that 60 percent of its members were unaware of the new limits before they took effect. "This was dropped on us without warning," said Miriam Nakato, who runs a food stall in the eastern town of Jinja. "How am I supposed to pay my suppliers now?"

Industry Pushback Grows

Commercial banks have formally requested an extension to the implementation timeline. In a letter to the Bank of Uganda seen by reporters, the lenders' consortium warned that existing point-of-sale infrastructure is insufficient to handle a sudden surge in digital transactions. They also raised concerns about cybersecurity risks if the migration happens too quickly without adequate safeguards.

The central bank has so far declined to soften its position. Deputy Governor Michael Mukula told journalists in Entebbe that the limits are non-negotiable, though the regulator opened a two-week window for public feedback on implementation guidelines. That feedback period closes on October 15.

Comparisons Across the Region

Uganda is not the first East African nation to restrict cash. Kenya, which pioneered mobile money through M-Pesa, set withdrawal caps years ago that initially caused public outcry before becoming widely accepted. Tanzania introduced similar measures in 2021 and reported a 23 percent increase in mobile wallet adoption within 18 months. Rwanda has pursued a more gradual approach, incentivizing digital payments without hard withdrawal ceilings.

What makes Uganda's approach different is the speed. Development economists say the strategy could work if accompanied by financial literacy campaigns and expanded agent networks in underserved areas. Without that, the policy risks excluding the very people it aims to bring into the formal financial system.

What Comes Next

Ugandans have until the end of this month to adjust before enforcement begins in earnest. The central bank plans to publish a list of approved digital payment channels and may introduce temporary subsidies for merchants who adopt point-of-sale terminals. Parliament's Finance Committee has scheduled hearings for November to review the policy's early impact.

International lenders are watching closely. The World Bank has indicated it could tie future financing conditions to progress on financial inclusion targets in Uganda — a signal that the success or failure of this digital push will have consequences beyond Kampala's banking sector.