Financial experts have called for increased digitalization of financial transaction services or enhanced adoption of E-Commerce by financial entities to permit financial inclusion and expansion of the Revenue base.
Financial experts said this can be achieved through the operationalization of the National Payment Policy/ Switch.
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The Deputy Governor Dr. Michael Akidingi – Ego while presiding over the conference on the Reshaping of the Tax System to Support the Financial Sector Development Strategy in Kampala recalled for the need to ensure price stability, an effective and efficient banking system.
“This can be realised through working towards ensuring full financial inclusion in the country, “Dr. Atingi-Ego added.
Reports by the Uganda Revenue Authority on tax collection performance indicated that Financial services contributed a significant portion to the National Gross Product with over shillings 540.11 billion collected during the First Quarter of the financial Year 2022/2023.
Of this, Bank of Uganda contributed to about 28% of the revenue, mobile money transaction remitted over 22% whereas commercial banks contributed 26%, Insurance sector 4% and others contributed about 20%.
In the same line, “URA records indicate that wholesale and trade, motor vehicle and motorcycle repairs contributed about 8.25% of the 2021/22 Gross Domestic Share, Manufacturing Sector, 16.44% whereas Finance and Insurance 2.86%” Mr. John Musinguzi, the commissioner General URA, revealed.
This performance according to financial experts that have presided over the conference on Reshaping of the Tax System to support the Financial Sector strategy in Kampala, are optimistic that the country’s revenue collection would expand if more financial transactions are done digitally given its enormous advantage.
Tax experts add that taxing hard cash is very difficult hence affecting revenue collection.
However, another sector grilling down the domestic revenue collection is the expansive informal sector comprising unregistered financial services providers, agriculturalists alongside high transactional costs for mobile money.
Now experts want the new strategy to live up to its objectives of ensuring financial services to all, markets and growth, as well as digitalizing of the financial sector.