In the bustling markets of Uganda, a new generation of traders is leveraging digital tools to expand their businesses. Fruit vendor Richard Katongole, for instance, has harnessed the power of social media platforms like TikTok to reach customers beyond the physical market. He explains, "Social media has helped me grow my business. I now get customers I would never meet physically. I take pictures of everything sold in the market and post them on TikTok, and I receive responses from people ordering bananas, pineapples, and other products." However, beneath this success lies a growing concern: rising mobile money transaction and withdrawal charges that are increasingly burdening small businesses.
Mobile money has indeed revolutionized the way Ugandans transact, offering speed, convenience, and safety in financial exchanges. With transaction volumes hitting an impressive Shs195.5 trillion in 2025, according to MTN Uganda’s full-year results, the platform has become the backbone of daily commerce. Yet, the cost of using it is slowly eroding profits and threatening business sustainability.
For many micro, small, and medium enterprises (MSMEs), mobile money is no longer optional; it is essential. Yet the cost of using it is steadily eating into their margins, making it harder to reinvest and grow their businesses. Namuwaya Janet, who runs a crafts and decoration business largely driven by online orders, echoes this sentiment. She says, "Mobile money is fast and secure, but it’s becoming expensive to rely on it every day. Sometimes I feel like I lose too much just accessing my own money."
The rising costs have forced her to reconsider how she receives payments, despite the risks and inefficiencies of alternative methods. While the government continues to champion digitization as a pathway to economic growth, stakeholders argue that the current cost structure undermines this goal. John Walugembe, Executive Director of the Federation of Small and Medium Enterprises (FSMEs), emphasizes that digitization has already proven its value among Ugandan businesses.
"About 60% of MSMEs that digitize record increased sales, profits, and market reach," Walugembe says. "They use smartphones to market their products, engage customers, manage suppliers, and provide feedback efficiently." However, he warns that the benefits of digitization risk being overshadowed by policy and tax constraints. "Our tax regime sometimes lags behind innovation," he explains. "Taxes on smartphones make them less affordable, and mobile money charges have become a real pain point for businesses trying to go digital."
Walugembe suggests that targeted policy adjustments could unlock further growth in the sector. "A removal of import tariffs on entry-level smartphones would increase access," he proposes. "At the same time, reducing mobile money taxes to around 0.25% or removing them entirely would be a strong incentive for MSMEs to fully embrace digital platforms." For traders like Katongole and Namuwaya, these policy discussions are not abstract—they reflect daily struggles. Each transaction fee and each withdrawal charge directly impacts their bottom line.
Despite the challenges, mobile money remains the preferred mode of transaction for many due to its security and efficiency. However, without intervention, stakeholders warn that high costs could slow the momentum of digital adoption among small businesses. As Uganda continues its push toward a digital economy, MSMEs are calling for a more supportive environment—one where innovation is not penalized by high operational costs. For now, traders can only hope that policymakers will listen and act, ensuring that the tools designed to empower businesses do not instead become a barrier to their growth. Personally, I think that the current cost structure is a significant barrier to the growth of small businesses in Uganda. What makes this particularly fascinating is that the benefits of digitization are clear, yet the high costs of mobile money transactions are threatening to slow the momentum of digital adoption. In my opinion, targeted policy adjustments are crucial to unlocking further growth in the sector. From my perspective, the government should consider reducing mobile money taxes and removing import tariffs on entry-level smartphones to make digital tools more affordable and accessible for small businesses.
