As Uganda’s economy continues to digitize and diversify, the financial sector has seen an impressive transformation, particularly within the forex bureau and money remittance subsector.
According to the Bank of Uganda (BoU), this subsector processed over Shs17.82 trillion in foreign currency sales and handled money remittance inflows and outflows worth USD 921.76 million and USD 214.45 million, respectively, as of December 31, 2024. Those are no small numbers. In fact, they point to a sector that’s not just alive but also thriving.
Yet, behind these eye-popping figures lies a regulatory gap that’s now drawing attention from the top echelons of Uganda’s financial watchdog.
At a recent workshop hosted by the Bank of Uganda’s Non-Bank Financial Institutions Department, Mr. Mackay Aomu, Director of the Department, raised the red flag saying, “Despite the growth, there are gaps in statutory reporting.” This may be the moment for a hard pause and reflection.
A Growing Sector That’s Still Under the Radar?
The forex and remittance sector is composed of 292 licensed operators: 192 licensees offering only forex bureau services, 90 of these offering both forex and money remittance, and just 10 focused solely on money remittance.
Many Ugandans consider these services more accessible than traditional banking, particularly for rural populations, low-income earners, and migrant workers sending money home. But with such large sums being transacted, the oversight mechanisms in place are beginning to look worryingly porous.
Why Reporting Matters
The Bank of Uganda’s workshop honed in on three vital issues:
The relationship between licensees and external auditors, Compliance with the Foreign Exchange Act Cap. 167, and the quality and consistency of statutory reporting. These are not bureaucratic footnotes; they are the backbone of a transparent, trustworthy financial system.
Weak statutory reporting creates blind spots in policy decisions, impedes financial intelligence efforts, and exposes the system to risks such as money laundering, tax evasion, and even funding of illicit activities.
Where Do We Go From Here?
This is not just a compliance issue. It’s a national development issue. To fix these cracks, perhaps Uganda must now consider: Stricter enforcement frameworks that penalize persistent reporting failures. Capacity-building initiatives to train operators, especially smaller bureaus, on how to comply effectively. A modernized digital reporting infrastructure, integrated with the BoU, to streamline compliance.
In an era where digital remittances, cryptocurrency, and cross-border payments are reshaping the money movement landscape, Uganda cannot afford to regulate on autopilot.