The COVID‑19 pandemic triggered a seismic shift in Uganda’s banking sector—accelerating digital transformation, reshaping customer experience, and testing institutional resilience. While the health crisis brought challenges, it also fast-tracked innovation. This article explores how Uganda’s banking landscape transformed during and after the pandemic.

1. A Sudden Shock to Banking Dynamics

• The pandemic caused an uptick in public debt—from $12.55 billion (35.3% of GDP) in 2018/19 to $15.27 billion (41%) in 2019/20—as revenues dipped and emergency spending rose.([turn0search5])
• Banks faced liquidity stress as households and businesses struggled to service loans. Research suggests that without a three-month loan repayment holiday, over half of Uganda’s commercial banks could have collapsed.([turn0search4])

2. Institutional Resilience: Policy Interventions

To stabilize the sector, the Bank of Uganda (BoU) implemented:

• An accommodative monetary policy stance
• Emergency liquidity assistance to support banks
• Loan repayment relief and moratoriums, covering 40% of total loans (~UGX 7.6 trillion), easing pressure on borrowers and lenders.([turn0search4], [turn0search11])

3. Digital Banking: From Convenience to Essential

Surge in Digital Adoption

• Mobile banking usage soared by 135.2%, while internet banking rose by 30.2%, and mobile money grew 28.2% compared to pre-pandemic levels.([turn0search3])
• In-person services like agent banking declined—transaction volumes dropped by 27% and value by 28% during lockdowns.([turn0search8])

Strengthened Digital Infrastructure

• BoU fast-tracked the National Payments Systems Act of 2020, pushing for interoperable, secure digital payments.([turn0search0])
• Stress testing and contingency plans were launched to counter system disruptions such as the January 2021 internet shutdown, ensuring core services remained operational.([turn0search3])

4. Long-Term Trends and Sector Recovery

Rebounding Sector Health

• Despite initial challenges, banking sector assets rose 8.4% (UGX 4.2 trillion) to UGX 53.9 trillion by mid-2024.([turn0search2])
• NPLs (non-performing loans) continued to improve—hovering around 5.2%—as credit relief schemes took effect.([turn0search11])

Digital Deepening and Inclusion

• Digital finance capabilities expanded rapidly. By 2023, the number of formal bank accounts rose from under 7 million in 2016 to over 23 million—a staggering 70% growth.([turn0search6])
• Nearly one-third (approximately 1 in 3 banks) in Africa reported accelerated internal and consumer-facing digital transformations as a direct result of the pandemic.([turn0search20])

5. Forward-Looking Perspectives

Area	Transformation Catalyst
Digital Banking	Remote onboarding, mobile-first services
Infrastructure Resilience	Redundancy planning, stress testing
Lending Strategy	Loan holidays, liquidity support
Financial Inclusion	Expanded access via mobile and digital agents
Regulatory Reform	Faster rollout of payments legislation

6. Final Thoughts on COVID‑19’s Legacy in Banking

COVID‑19 was more than a disruption—it was an accelerant for change. The Ugandan banking sector emerged stronger, more digital, and more customer-centric. Thanks to proactive policy, infrastructure upgrades, and widespread digital adoption, Uganda is well-positioned for continued inclusive, resilient financial growth.