Why Uganda and Kenya’s Mobile-Money Rails Beat Cards—and Many Crypto Dreams

There is a quiet revolution humming from Kampala kiosks to Kajiado market stalls. Here, people move money instantly, cheaply, and safely—often on basic phones, without bank accounts, point-of-sale terminals, or speculative tokens. While the West argues about central bank digital currencies (CBDCs) and the promise of crypto, East Africa has already engineered a working blueprint for inclusive, real-time digital cash.

The Lesson: Law Before Code

Kenya set the tone when M-Pesa launched in 2007. Its runaway success was brought under the National Payment System Act (2011) and the NPS Regulations (2014), making mobile money a first-class payment rail supervised by the Central Bank of Kenya (CBK).

Uganda followed with the National Payment Systems Act (2020) and its 2021 regulations, which license payment service providers (PSPs), require that customer funds be held in trust, enforce safety and efficiency, and—crucially—mandate interoperability. The Bank of Uganda also required telecom operators to create separate, licensed mobile-money subsidiaries (e.g., MTN Mobile Money Uganda Ltd; Airtel Mobile Commerce Uganda Ltd), ensuring tighter prudential oversight.

Put simply: these rails scaled because the law made them safe.

How It Works—And Why It Scales

USSD and SIM-toolkit menus ride on top of vast agent networks that serve as micro-branches for cash-in/out, bill payments, peer-to-peer transfers, and merchant transactions. Because the stored value is fiat e-money held in segregated trust accounts, settlement is instant, balances are stable, and consumer protection is enforceable. This is bank-grade plumbing—without requiring every user to have a bank account.

Evidence, Not Hype

Kenya’s mobile-money system is now systemic: peer-reviewed research in Science (2016) found that M-Pesa access lifted about 2% of Kenyan households out of extreme poverty and expanded women’s occupational mobility. Few card networks—or crypto pilots—have documented comparable socio-economic impact.

Uganda’s system is macro-relevant: the value of mobile-money transactions equalled roughly 94% of GDP in 2021 (IMF), and climbed to UGX 253.7 trillion in the year to June 2024 (Bank of Uganda)—volumes that dwarf domestic card transactions.

Why This Outruns Cards

Cards depend on bank accounts, POS hardware, and interchange economics that make low-value, high-frequency payments expensive and slow (T+1 or T+2 settlement). East Africa’s mobile-money rails run on any phone, settle instantly, and are priced for the last mile.

The CBK’s National Payments Strategy 2022–2025 explicitly targets a 24/7 digital economy, including extending real-time gross settlement (RTGS) hours to reinforce true end-to-end instant payments.

Why It Often Beats Today’s Crypto/CBDC Narratives

Mobile money wins on the fundamentals:

Stable unit of account: Kenyan and Ugandan shillings—no volatility tax.

Accessible UX: No seed phrases; USSD works without constant internet.

Low energy footprint: No mining or proof-of-work overhead.

Accountability: Licensed issuers under central-bank law, with enforceable consumer protections.

IMF research confirms that in Uganda, mobile money is actively reshaping cash preferences at the scale of the entire economy—behavioural change most CBDCs have yet to achieve.

Interoperability—Powerful, but Regulate with Care

Interoperability can amplify network effects, lower fees, and expand usage. GSMA studies and EAC policy documents show the upside. But aggressive mandates can also compress provider margins and slow rural infrastructure roll-out if agent economics are ignored.

The right answer is sequenced, incentivised interoperability that keeps last-mile distribution viable while extending reach.

What the World Should Copy—Now

1. Legislate payments as infrastructure—Kenya’s 2011 and Uganda’s 2020 statutes show that clear licensing, trust safeguards, and systemic-risk controls unlock scale.

2. Mandate or catalyse interoperability at critical mass, with safeguards for agent viability.

3. Enshrine USSD parity so digital cash serves every handset, not just smartphones.

4. Open supervised APIs to let fintechs innovate on top of secure, regulated rails.

5. Align government payments—tax refunds, social transfers, fees—to these systems to cement reliability and adoption.

Risks—and the Existing Fixes

Fraud and AML/CFT risks are managed through tiered KYC, transaction caps, sanctions, and audit trails under the NPS laws. Market-power risks are mitigated by structural separation (Uganda) and direct PSP licensing (both countries). This is prudential infrastructure with teeth, not laissez-faire fintech.

Bottom Line

If the world wants universal digital cash that actually works, it should study Kampala and Nairobi—not Silicon Valley pitch decks. Regulate e-money as core infrastructure; optimise for agents + USSD + interoperability; keep it fiat, instant, and affordable; and make inclusion a design requirement, not a press-release boast.

This model already moves nation-scale GDP every year—reliably. The future of money is not theoretical. It is already transacting in shillings.

By. Isaac Christopher Lubogo

Legal Scholar | Consultant, SuiGeneris Legal Think Tank

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