Noteworthy is;

  • The relationship between two key aspects, international tax gap and international tax
    fraud, and;
  • The effectiveness of the existing framework of international tax laws and regulations.

The International Center for Tax and Development – ICTD estimates that almost three-
quarters of countries in the world are 80% dependent on their tax revenue, and attributes 85% of the tax gap to tax fraud. International Tax-gap information on offshore and cross-border tax revenue is a little bit murky. However, the ICTD reports that one-third of the tax gap is international today. What is a tax gap? Simply put, its a cultural phenomenon marking the difference between actual tax collected and what ought to have been collected resulting from non-compliance. Noteworthy is the depth of impact of the multifarious issues, culture, processes, rules, law, politics, and statistics involved in international tax fraud, a risky tax area that continues to slew tax authorities and a huge challenge to the global economy.

Tax Fraud is committed against a government (and tax-paying nationals) of any country across the globe. The important adage of tax fraud is a (sometimes intentional) surreptitious violation of a known legal duty to pay taxes. Certainly, every country has some form of laws prohibiting tax fraud and regulating its compliance, and the best possible approach to be used in understanding all about particular tax laws, compliance or fraud is by consulting a local tax expert legal counsel of a given country or jurisdiction for guidance.

Any actions or omissions typically involving concealed information or false claims committed to defraud a government of owed tax money is Tax Fraud. It is also a fundamental element of the informal economy,
call it the grey economy. The Association of Certified Fraud Examiners – ACFE research shows that anyone with sufficient pressure, adequate opportunity, and the ability to rationalize a dishonest act is at risk of committing any kind of fraud.

“A typical tax evaders apparent knowledge about whistleblowing schemes does not deter them from evading tax even with the assurance of anonymity and the likelihood of being caught.”

Tax Evasion is tax fraud and thus illegal. It is any fraudulent intentional action that is committed to avoiding reporting or paying tax but it is not to be confused with tax avoidance or violation of proper tax procedures, which can result in fees and interest penalties.

Tax Avoidance is an actual lawful method of lowering ones tax bill by legitimate deductions, credits, and shelters mainly made possible by structured practices of domestic tax base erosion and profit shifting (BEPS). In global business, it is the multinational enterprises that exploit BEPS, the lapses in tax systems of different countries, and the non-coherent international tax rules, which more often than not, contribute to tax evasion.

Tax evasion is fraudulent in a way characterized by the perpetrators inadequate moral development, however, don’t be mistaken, more often than not the perpetrator possesses measured intellectual development which vastly aids fraudulent schemes to a level of resilience.
No surprise that a well-designed inexpensive whistleblowing scheme put in place to catch organized group tax evaders does not significantly alter their inner cooperation and operations. More so, a typical evaders apparent knowledge about whistleblowing schemes does not deter them from evading tax even with the assurance of anonymity and the likelihood of being caught. Long-standing tax evaders seek legal advice on all loopholes in the law and the tax structural setup before the decision to avoid tax. A night-mare for law enforcement and tax capacity-building pillars for enforcement of tax fraud.

Until recently, with exception of some jurisdictions, the regular determinant of tax evasion was acting with criminal intent, and to determine such intent, the jurisdictions where it works require a willful act or attempt rather than an honest mistake, to constitute tax evasion. The United Kingdom did away with the requirement of proving intent to evade tax and thus turned tax evasion into a strict-liability offense. Strict liability offenses do not require proof of the element of intent.

The International Tax Regulatory Framework works to determine how a country collects and manages tax revenue from the cross-border movement of capital, technology, goods, and services supplemented with Territorial Tax Policy Frameworks that impact international taxation. The Framework includes;

  • Territorial and International Rules that define and determine what income will be taxed by the source country and Rules intended to minimize double taxation, and tax avoidance by multinationals;
  • Over 3900 specific Bilateral and Unilateral Tax Treaties in force worldwide;
  • The prospective evolutionary and revolutionary multilateral BEPS 2.0 (Pillar one & Pillar two) Rules to be implemented in 2023 (Including; the Global anti-base Erosion Rules (GloBE Rules) such as; the IIR Income Inclusion Rule, and the Undertaxed Payment Rule UTPR, and a treaty-based rule termed as Subject to Tax Rule STTR)

Tax laws are concerned more with legalistic aspects of tax rather than taxs financial, economic, or administrative aspects, however, sometimes its hard not to correlate those aspects all together. Here, what is of interest regards how to manage cross-over tax revenue of an individual, organization, or country, involving different national tax systems and international transactions including income from highly intangible assets such as patents and trademarks among others.

Each cross-border transaction attracts a certain tax and triggers one or more international tax rules as cross-border tax rules are understood to exist not only for purposes of limiting gaps that multinational corporations use to minimize their cross-border tax obligation but also to regulate tax crime.

“The rules must be aligned with what makes the most sense from a tax perspective because they impact the behavior and reaction of multinational corporations to tax compliance.”

Under the American 2017 Tax Cuts and Jobs Act – TCJA, it is mandatory that the taxable income of goods manufactured partly within, and partly out of the USA, be apportioned and allocated in both or all countries involved in the manufacturing activities.

Estonia has some proven and authentic tax perspectives. Arguably, today Estonia has the best territorial tax system around the world attributed to its least compliance burden, zero property transfer tax, an allowance to reinvest corporate profits tax-free, almost zero tax on foreign profits earned by a resident or domestic corporation, and low marginal tax rates in other aspects, encouraging investment and business with high returns after-tax.

Despite the extensive network of tax treaties existing the world over, and largely whose intention is to prevent tax cheating by closing tax loopholes, treaty abuse has risen by way of treaty-shopping.

Tax treaty-shopping is classic treaty abuse that happens when one taps the benefits of a tax treaty while being neither an intended beneficiary by design nor a member of the tax treaty, and as a result it;

  • Abuses the first bite at the apple rule in international taxation regarding primacy in taxation by member countries;
  • Brings about the unquantifiable political damage issue;
  • Deprives intended treaty members of their negotiated tax revenue supremacy;
  • Alters the agreed balance of concessions among members;
  • Causes inadequate taxation or no taxation at all; and
  • Exacerbates resident members loss of incentive to remain a party to the treaty.

To that end, the OECD BEPS Action 6 Review Reports suggest some recommendations for reforms and establishing minimum standard measures to curb tax treaty abuses and in the end, facilitate the effort against tax evasion.

Tax evasion more often than not transcends national boundaries mostly due to investigative and jurisdictional limits of a countrys revenue authority. The main types of such jurisdictional limits are; secrecy jurisdictions, tax shelters, and tax havens.

“Tax Shelters are designed to yield benefits to multinational investors and result in tax write-offs, deductions, and conversion of taxable income to capital gains taxed at minimal rates.”



In this article, I discuss the relationship between the current steps taken by different countries in not only embracing the era of virtual currencies (crypto-currency) but also steps taken to regulate the same and what that means for Uganda and other developing economies.

The writer will briefly discuss the evolution of the Ugandan currency UGX and the inception of Crypto-currencies, the major salient features of crypto currencies and their operative mechanisms. The writer will then examine the need for embracing, harnessing and nurturing this rather young player in the financial market to ensure that both the governments and their people benefit from technology. In the same spirit, the writer will throw light on the reasons why Crypto-currencies need to be regulated.

The writer will finally discuss the advantages of adopting Crypto-currencies especially for under-developed countries trying to further their goals of financial inclusion for all and building their economies.


From using Barter trade to Cowrie shells, to the Indian rupees in the 1800s, to the East African currency, the Ugandan economy has taken a slow but surely formidable turn in the evolution of its currency. Right from the time Uganda attained her independence in the early 1960s, the then newly issued Uganda Shillings Currency (UGX) could only give one a glance at what would come in the future with the newly created Bank of Uganda its custodian.

With almost all political regimes that the country has experienced, majority if not all regimes have adopted a modus operandi that has seen the Uganda shillings go through a robust series of evolution depending on what that specific regime desires until the year 2013 when the 1987 series ceased to be legal tender.

The most salient feature about the Ugandan currency is the fact that it is centralized and
what this means is that it can only be issued, controlled, and regulated by the state, through its organs and in this case being the Bank of Uganda which is Ugandas central bank.

However, aside from the various services that traditional banks offer including but not limited to digital transactions, the 2008 global economic crisis gave birth to many but a million challenges and opportunities that came along with the 4 th industrial revolution. And among these was the creation of the Blockchain technology that allows and runsnthe operation of crypto currencies in the fall of 2009.

The creation of the Block chain technology has taken a more robust shift in as far as economic evolution is concerned. It is estimated that over 1583 crypto currencies have since the inception of the Block chain technology come up and are being used in daily transactions albeit lacking any regulatory framework. 1 These include Bitcoin, Lite coin, Ethereum, Tether, BNB, Dodge Coin to name but a few. It is equally estimated that over 300 million people have to date been involved in crypto-currency transactions.

It is important to note that this being a completely new spectrum of economics, there has not been much regulatory measures taken by governments to regulate how best this realm operates, recent years have seen a number of countries embracing the era of digital currencies and taken steps towards regulating the same.

With countries like Canada, Singapore, Malta, Nigeria, South Africa, Kenya, USA among others taken steps to embrace this new wave of digital transactions, what does this mean for Uganda and how can Uganda interest herself in the rapidly growing Crypto eco-system.

What is Crypto-Currency?

For many, this won’t probably be the first time to hear about it but to hear about and understand are two different things. With this article, the writer will help you navigate through the basic principles for your understanding and guide you to appreciate more about what this new development in technology means for East Africa and Uganda in particular.

Crypto-currencies or Virtual Currencies as many referred to them have been defined as a digital representation of value that functions as a medium of exchange or a store of value. The European Banking Authority defines Virtual Currencies as a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily attached to a [fiat currency]. 3
Just like the cash me and you use at the mall, or your favorite local store to buy groceries, Virtual currencies or digital currencies are accepted by natural or legal persons as a means of payment for goods and services and can be transferred, stored or traded electronically.

One of the main salient features of crypto currency is that the system is decentralized or in other words, the system is not centrally controlled by any one individual, bank, institution, or government.
The transactions are made by account holders and the interaction is strictly peer to peer with no intermediaries. The accounts are anonymous and although the transactions are transparent in that account holders can see the transactions on the ledger, one cannot know who they?re transacting with at the other end.

As noted earlier, there are a number of crypto currencies that are in operation and these include Bitcoin, Ethereum, Lite coin, Ether, Dodge Coin, Z-cash, Stellar Lumen to mention but a few. This has seen a number of multi-million companies and investments add Crypto-currencies as one of the main payment mechanisms. For example, companies such as Rakuten, Twitch, AMC, Microsoft, PayPal among others have since added a medium through which one can pay for their services using Crypto-currencies.

As such, the current crypto landscape and ecosystem must be considered to be more than just an evolution of an electronic payment system but a major economic player that has the potential of changing the world of transactions. The fact that it has diversified from the initial intended function of transferring coins between peers. Crypto and blockchain technology is now becoming a major disruptor of how our economy and our society functions and indeed given us a glance and what the future holds.

How do Virtual Currencies Crypto-Currencies operate?

The government of Uganda through its ministry of Finance released a press statement in 2016 commenting on the emergency of Crypto-currencies in the Ugandan market.
The government while acknowledging that Crypto-currencies are digital assets that are designed to effect electronic payments without the participation of a central authority or intermediary such as a Central Bank or licensed financial institution, notified Ugandans that these are not a legal tender. 5

The government of Uganda (GOU) like many other governments feared that the volatile nature of the Crypto-currencies and their other features would be a dangerous risk for Ugandans to partake in.

In a circular dated April 29, 2022, the Bank of Uganda noted that it was concerned that advertising agents have been marketing mobile money for crypto transactions and vice versa, an illegal business in the country.

In the statement, the GOU warned that unlike other owners of financial assets who are protected by Government regulation, holders of crypto-currencies in Uganda do not enjoy any consumer protection should they lose the value assigned to their holdings of crypto-currencies, or should organization facilitating the use, holding or trading of crypto-currencies fail for whatever reason to deliver the services or value they have promised.

As noted earlier, the high volatility rates of the Crypto rates mean that the currencies are not stable and their prices change with the change of different situations. For example, the prices of Dodge Coin doubled up in 2021 when Elon Musk announced that he would invest in it. Another situation will happen and the prices will drastically fall.

Whereas it is true that the Crypto-ecosystem clothes itself with the utmost uncertainty of how secure your investments are due to the lack of regulation, we cannot ignore the fact that as a medium of payment and property, people across the world are using it and it is rapidly impacting the operation of global economic markets.
Thus, is it therefore pertinent for the Ugandan government and other developing governments to invest in studying how best they can regulate the Crypto-arena, harness and incorporate it into their economic and financial systems.

What are some of the Key features Crypto-currency?

The most salient of features of Crypto-currency are what actually double up as the causes of fear amongst different governments when it comes to the adoption of Crypto- currency. These include; –

  1. Decentralization.
    As noted earlier on, there is no individual, government, bank, institution or organ that
    governs or regulates crypto currencies. The transactions and interactions are strictly
    peer to peer and there is no intermediary in between. This means that one does not
    have to go to the bank to be able to withdraw money or deposit money, transactions can
    happen at any place and moment as long as one has an internet connection. The
    transactions are kept in one main ledger that contains the transactions that have ever
    taken place on Blockchain. Different from banks which keep individual ledgers for their
  2. Anonymity of transactions.
    The transactions that take place on Block chain can not be imputed on any specific individual. The system works in an algorithmic form and does not display who one is dealing with, but rather displays that a certain transaction has taken place between two different people. There are although fears that this specific feature may further the commission of crimes since individuals can be able to move money to facilitate crime without being traced. Also, money laundering has been a major fear among a number of states.
  1. The Crypto-currencies prices are volatile.
    As noted hereinabove, crypto-currencies unlike the conventional bills of exchange have
    no real value. Their prices can be determined by anything that happens be it war,
    political climate or social factors. For example, Bitcoin, the world’s oldest and most
    popular cryptocurrency, rose to all-time highs since the beginning of 2021, before
    plummeting and losing a huge amount of its value thereafter in the same year.

Why Uganda and other East African countries need to embrace FinTech in this case Crypto-currency and nurture it through establishing a workable legal and policy framework?

The introduction and potential proliferation of private virtual currencies might, in one view, threaten to erode the demand for central bank money and the transmission mechanism of monetary policy. A Central Bank Digital Currency (CBDC) may forestall such private virtual currencies or relegate them to a secondary role in the payments system. This threat is not imminent given the current transactions domain and limitations of existing private virtual currencies and their likely medium-term growth. Stability and safety considerations connected to this proliferation may, however, be relevant in the medium run but
could presumably be dealt with by other measures.

The inception into the market of Crypto-currencies should not at all be viewed only as a threat but also an opportunity which ought to be exploited by the governments. Once well regulated, Crypto-currencies offer one of the most efficient ways of carrying out electronic transactions.

Considering the fact that most areas except urban areas in East Africa are still unbanked or underbanked, crypto-currencies offer a medium where the unbanked or underbanked can access financial services including, trading online (i.e. investing in stock), buying and selling properties, payment services among others. In the long run, this would increase the number of people who are financially included and thus
achieving the SDG goal of financial inclusion for all.

In regulating the Crypto-currencies, the governments will focus on structuring them as either currencies, properties (capable of being taxed), bill of exchange or promissory notes whichever they zero down to lest we risk having more and more unregulated transactions happening behind our backs while living in the shadows of ignorance.
There are other reasons why governments need to embrace, intervene and regulate these transactions. These include; –

i. To protect investors

Since we’ve already seen that the market and the prices of Crypto-currencies are volatile, there is need to have certainty in the rates and or prices so that investors feel more secure to invest their money. 7 Once investors are secure, then its sure common knowledge that they will be willing to invest even more money in the Crypto-arena. This will also protect investors from the bursts in the prices that have seen many lose
millions of dollars over time.

ii. Determine which Crypto-currencies to allow

Currently, there are over 1586 crypto-currencies out there that people transact with. The governments need to identify which ones work well for their people. The lack of information about all these crypto-currencies mean that people are likely to lose money wile transacting with a less credible crypto-currency.

iii. Online fraud and cyber security risks

Online risks such as cyber-attacks, fraud and hacking are major risks or threats for any online transactions that happen worldwide. One cyber-attack could result in losses for investors who have put their savings in cryptocurrencies. Through regulations, governments can implement measures to help cryptocurrency investors protect their assets.

iv. Money Laundering

As mentioned before, the fact that the transactions that take place on Blockchain remain anonymous means that criminal activities such as money laundering could take place and remain unnoticed. Through regulation, governments would put in measures to counter this vice.


We have seen that in as much as governments have distanced themselves from the operations of Crypto-currencies, their existence and later impact in the global economic and financial systems can not be ignored. The challenge that many African countries is facing is failure to adopt newer technology and merely see it as a threat to what is already existing.
The new-normal that has been ushered in by the Covid-19 pandemic dictates that we ought to evolve in the way we did things before and adopt a more technological lifestyle.
Who knew one would sit in their bed and still attend a work meeting via zoom? Similarly, a time is coming when one will not need to go to bank to access financial services, to buy a house in LA, to invest in stock and later reap benefits by just using a phone and internet connection.
The fact is that once these Crypto-currencies are regulated they will offer a more of decentralized banking system but still over seen by the central bank. This would then foster the increase in the number of people who are financially included.
If left unregulated, Crypto-currencies will remain a smooth medium through which illegal activities such as money laundering take place and this will in the end have dire consequences on the economy. If left unregulated, the Crypto-currencies will also expose Ugandans to a market where once the balloon bursts and people lose all their investments or savings, the consequences will be rather heartfelt.

A Review of the National Payments Systems Bill in Uganda.

Government has finalized consultations and the drafting of the Uganda National Payments Systems Bill (Bill) which will regulate all electronic payments in Uganda. This update is to explore the Bills highlights, put forward recommendations and make a case for wider consultations with existing small market operators.

Uganda is a cash economy, Electronic payments account for only 20% as compared to cash, which is 80%. However, Uganda has recorded unprecedented growth in electronic payments, which has led to a sharp fall in use of paper payment instruments like cheques and others.

Some of the existing electronic Payment operators and systems include:

Bank of Uganda (BOU);

  • Uganda National Interbank Settlement System (UNIS) – It is an RTGS for interbank fund transfers.
  • Electronic Clearing System (ECS) – this is used by BOU to clear paper based instruments, electronic credit
  • transfers and direct debits.
  • Central Securities Depository (CSD) – this system is used to register ownership and transfer of government
  • securities.

Commercial Banks;

  • Funds Transfers These are used by bank customers to transfer money from one account to another.
  • Automated Teller machines (ATMs) These enable bank customers to withdraw from their bank accounts using readable plastic cards from convenient places.
  • Internet banking – it enables customers to undertake financial transactions on their bank accounts through web based technology.
  • Mobile financial services -these are banking services accessed by customers through a telecom company as an intermediary, services may include lending like Mokash, Wewole, Mobile Money and more.
  • Cards – These are payment instruments issued to bank customers like debit and credit cards.
  • Point of Sale (POS) – These are automated machines that allow bank customers to purchase goods using their cards at retail stalls, restaurants, Bars etc.

Private Sector Payment services (Use of Third Parties);

  • Inter switch (Retail payments switch) – This enables card transactions to be routed between participants. Examples include VISA, MasterCard, American Express and others. They enable a person to transact without the need to directly use the service of a bank from which they hold an account.
  • Automated Transfer System Depository (ATSD) – Uganda Securities Exchange uses it for sale and transfer of listed equities and securities.
  • Mobile network operators & mobile payment services ? these are offered by telecommunications companies with support from their Bankers. Here mobile telecoms act as intermediaries to perform transactions on behalf of financial institutions thence providing a more convenient Point of sale using GSM technology.
  • Stored value Cards- these are prepaid cards like fuel cards, gift cards etc.
  • Aggregators- these are service providers through which banks, non-financial institutions, telecoms and other Companies process payment transactions.
  • Remitters- these are service providers that transfer funds on behalf of a client from one jurisdiction to another.

All payments system operators will require a license from BOU.
This brings us to the Question.

Who is required to obtain a license?

  • The Bill permits financial institutions to operate payment systems without a license. This is because financial institutions are primarily licensed to provide payment services. Apart from financial institutions, all other operators must obtain a license, these may include the following;
  • Telecommunication Companies operating mobile money platforms like MTN, Airtel and Africell.
  • Stock exchanges operating independent payment systems.
  • Money remittances, though regulated by BOU, the Bill does not expressly exempt them from licensing.
  • Card operators like MasterCard, VISA, America Express, and Union Pay etc.
  • Companies issuing pre-paid cards including fuel cards, gift cards.
  • Retail outlets operating inter switch machines like Supermarkets, Restaurants and Bars etc.
  • Aggregators or payment gateways.

How to apply for a license.

Only Companies are permitted to apply for a license subject to submission of the following;

  • Rules of the payment system.
  • Incorporation information.
  • List of fit and proper persons to act as directors.
  • Financial position and repute of the shareholders.
  • A clear organizational structure and capital of the entity.

The Bill also requires operators to have a prescribed minimum capital, which will be set by BOU in subsequent regulations.

In addition to the above:

An Applicant for a license must have specific objectives in its memorandum and Articles of Association, as follows;

  • To clear payment instructions between banks and other institutions.
  • To transfer funds from one account to another using electronic devices.
  • To provide technological services that facilitate switching, routing, clearing etc.
  • To transmit and order payment instructions etc.

Companies in Uganda are permitted to engage in any lawful trade with sanction of its directors. It is not a legal requirement for a Company to have specific objectives. We therefore question the applicability of a clause in the Bill that contradicts the Companies Act (primary Act).


The National Payments Systems Council:

It is suggested as the policy making body for electronic payments. It will be composed of representatives from Ministry of finance, Capital Markets Authority, National Information Technology Authority, Uganda
Communications Commission, financial institutions, Uganda Bankers Association, Telecommunication companies etc.

Electronic Money Issuances and Transfer:

The Bill defines electronic money as a monetary value stored
electronically. This definition is wide enough to include a data message, crypto currency etc. Electronic money issuers must obtain a license before operating in Uganda. These include mobile money companies, crypto-currency houses etc.

Entities intending to issue electronic money are required to establish a subsidiary Company for the purpose of applying for a license. However, the Bill is not clear on whether the subsidiary entity must be locally incorporated as earlier asserted by some legal practitioners.

Statutory Accounts

Electronic money issuers are required to open different types of bank accounts with licensed financial institutions.
These include;

  • Trust Accounts;
  • They hold customer funds and such funds are only applied for their benefit.
  • Approved trustees who become a body corporate with approval from BOU manage the Account.
  • Cash balances on the account must be equal to the electronic money issued.
  • Special accounts; these are to be opened only by financial institutions intending to issue electronic money with approval from BOU.
  • Dormant accounts; these are accounts that have not registered a transaction for more than 12 months. The Bill proposes closure of such accounts subject to notification of the account holders; it also allows recovery and investment of funds on such accounts.

Permissible transactions and prohibited Activities.

Under the Bill, electronic money can only be used for the following purposes;

  • Domestic payments and transfers,
  • Bulk transactions like salary payments such as benefits and pensions,
  • Over the counter and cash in / out transactions,
  • International remittances,
  • Credit products& saving products in partnership with financial institutions.

The Bill further prohibits electronic money insurers from receiving and taking deposits within the meaning of a financial Institutions Act.
The use of airtime as electronic money is also prohibited.

Insolvency & Collateral Arrangements of Licensees.

Under the Bill, Insolvency proceedings against a service provider or licensee only apply prospectively not
retrospectively; this nullifies the relation back principle akin to insolvency theory.

The Bill also requires operators to have adequate liquidity to facilitate settlement of a payment instruction.

  • Collateral Arrangements.

These are agreements between licensees (collateral takers) and other entities (collateral givers) that undertake to underwrite the risk of insolvency of a licensee. The Bill proposes that a prescribed amount of
money or moneys worth be set aside by the collateral giver to act as security for an insolvent licensee.
The security so pledged ceases to be property of the collateral taker.


Ad valorem pricing:
This occurs when a payment operator charges a random commission not based on cost of processing an order.
Skimming of Payments:
This happens where a service provider illegally retains a certain portion of money transferred.
Payment systems in Uganda are arguably not inter linked to enable quick settlement of payment orders.
Poor dispute resolution module:
Market participants lack capacity to investigate and resolve disputes in a just and timely manner
Lack of a licensing criteria.
Liquidity challenges:
Several Companies participating in the sector are start-ups; thus, finance is a constant threat and eminent danger to operations.


Yes, the Bill solves some of the key challenges of the sector.


Licensees need to be categorized to ease regulation: the Bill should classify licenses as follows;

  • Class A – For electronic money issuers and transferors.
  • Class B – Retail payments handlers.
  • Class C – Aggregators and remitters.

Each class with its unique capital requirements, license and fees payable.

  • The Bill should exempt or set lower minimum capital requirements for market participants that have been in operation for more than 3 years before enactment of the law.
  • The Bill should expressly prohibit anti-competition practices.
  • National payments system council is not necessary; its mandate is a duplication of the ministry of finance and BOUs role, it should be deleted.
  • Requiring Applicants to have specific objects is not legally tenable, as thus, it should fall.
  • The Bill should allow electronic money issuers to take deposits and offer saving services to their customers. This will enable mobile customers to save money on their accounts by either fixing it for a particular period of time or otherwise. This will improve the savings culture and broaden the savings pool in Uganda.
  • A special financial service tribunal should be created to entertain payments, Capital Markets, Telecommunications, Banking and other financial related matters. This will ease dispute resolution and reduce case backlog in mainstream Courts.
  • The Central Securities Depository and other payment systems must be linked with mobile money platforms to ease purchase of capital markets products. This will improve our investment culture, capitalize Government and local Companies.


The bill needs to be more consulted rather than rushed, if not, it risks creating monopolies thus subduing its many benefits.


The mandate to regulate is a creature of statue and cannot be implied or assumed by executive orders or pronouncements. Crypto currencies are a known asset class for both individual and institutional investors in the securities market. Several exchanges in the world have been granted licenses to trade crypto assets these include Binance, ProShares on the New York Stock Exchange among others.

In the bid to protect the interests of investors; proactive capital market regulators have moved in to regulate crypto currencies companies as issuers of securities. A case in point is, the Capital Markets Authority (Kenya), FINMA (Switzerland), Securities Exchange Commission (USA), Financial Conduct Authority (UK), Autorit des marchs financiers (France) etc.

The safest regulatory approach to crypto currencies includes; approving of entities that issue and trade crypto assets and mandatory registration of virtual asset service providers under the Anti Money laundering laws.  Many crypto currencies service providers have been registered as virtual asset service providers under the Financial Intelligence Authority in compliance with Anti Money Laundering Act.

Crypto currencies are securities which fall under the mandate and regulation of Capital Markets Authority in accordance with section 1 of the CMA Act. The decision of Bank of Uganda, to admit crypto currency entities in its payment systems regulatory sandbox is not legally tenable because the appropriate regulatory body is the Capital Markets Authority.

According to Nakamotos white paper (2008), crypto currencies were created to achieve a decentralized electronic cash system managed peer to peer without intervention of a regulator. It was wrong to assume that that you can have such an impact on the financial sector without government regulation. 

According to World Bank, in 2018 Seventeen Million Bitcoins had been created with an aggregated value of USD 138,000,000. To-date, market capitalization for crypto assets stands at $ 1 trillion. In May this year, JP Morgan published a report to the effect that Bitcoin was undervalued by 28% and recommended it as an asset class.

With all those positive developments, why is Uganda reluctant to adopt the now known regulatory approach to crypto currencies?

Part of the problem is strategy in the Nakamoto’s white paper. The idea that you can part take in the financial sector without regulation is and was moot. This is because of the intricate nature of the financial sector where all matters must be scrutinized, monitored and vetted for better economic planning or taxation.

On 1st October 2019, Ministry of Finance Planning and Economic Development issued a public notice confirming that crypto currencies are digital assets but were not regulated in Uganda.

This year, the central bank issued a statement stopping all licensees under the National Payment Systems Act from facilitating trade in crypto currencies. After a few months, the same entity changed goal posts and instead advised crypto currencies entities to join its regulatory sandbox.

Therefore, BOU & the Ministry of Finances agenda on crypto currencies is contradicting and inconsistent. The two alpha financial controllers are on a trial-and-error strategy which is a self-destruction mission.

In times of uncertainty, subjectivity and grave inconsistences between individuals and government entities, the law has been trusted to always provide the golden standard.

Any person who desires to participate in the financial sector must submit to regulation. Fortunately, Crypto-assets service providers through the Blockchian Association of Uganda have, on several occasions, expressed interest in being regulated.

Unfortunately, government agencies including Bank of Uganda, Capital Markets Authority have maintained that there is no law to support such regulation. This illegal, unconstitutional and unfair to the crypto-asset service providers.

The governments approach to crypto-currency violates the right to development and its role to develop this country. Under objective IX of the constitution, government is mandated to encourage private initiatives in order to achieve equitable development. It is also the role of government under objective XI of the Constitution to regulate acquisition of all kinds of property in order to achieve social justice.

The definition of securities under section 1 of the CMA act is wide enough to include financial instruments, options, futures, and investment contracts provided they are managed collectively on behalf of the 3rd parties for profit or interest.

In Wiseman Talent Ventures Vs Capital Markets Authority of Kenya (2019) eKalr, Justice M.W. Muigai, while faced with a critical issue on whether crypto currencies were regulated in Kenya had this to say:

On the other hand I agree with the Respondent that the absence of a specific regime does not ouster jurisdiction of the general regime of law as exemplified by the cited provisions of Capital Markets Act and the application of the Howey test outlined above. The interpretation of cryptocurrency as a security is because it is a scheme that involves an investment of money in a common enterprise with profits to come solely from efforts of others as illustrated by Howey test.

He added that: …therefore, cryptocurrency is either outlawed or regulated in some form in various countries. The Defendant has residual jurisdiction as per Section 2 & 11 of Capital Markets Act to regulate crypto currencies as securities.

Admission of crypto-currency service providers under the BOU regulatory sandbox is not legally tenable because the proper entity to regulate them is the Capital Markets Authority. CMA and other regulatory entities should exercise their mandate under the law in order to enhance development.

I, therefore call upon CMA to establish a regulatory sandbox to entertain these innovations rather than avoiding them.

What the commencement of the Uganda Retirements Benefits Regulatory Authority (Assignment of Retirements Benefits for Mortgages and Loans, 2022 Regulations means for Ugandans.


The Uganda Retirements Benefits Regulatory Authority (Assignment of Retirements Benefits for Mortgages and Loans, 2022 Regulations that were passed by Parliament on the 25th February 2022 finally came into force on the 10th May 2022. The much-awaited regulations were passed with the main talking points being the leeway it grants to savers in different schemes to use their accrued benefits for purposes of financing mortgages and housing loans. This article will discuss what this means for Ugandans and shed light on what is required of each beneficiary in case of the need to enjoy their benefits.


The Uganda Retirements Benefits Regulatory Authority Act enacted in September 2011 established the Uganda Retirements Benefits Regulatory Authority. The main functions of the Authority are among others to regulate and supervise the establishment, management, and operation of retirement benefits schemes in Uganda, in both the public and private sectors.

The Act in Section 68(2) provided that a proportion of the benefits shall be used by a member of a scheme to secure a mortgage or a loan for purchasing a residential house from any institution and on such terms as may be prescribed in regulations made under the Act. The Act further gives the Minister power to make regulations generally for giving effect to the provisions of this Act and for its due administration.

Consequently, the Minister of Finance and Economic Development in consultation with the Uganda Retirement Benefits Regulatory Authority board came up with the Uganda Retirements Benefits Regulatory Authority (Assignment of Retirements Benefits for Mortgages and Loans, 2022 Regulations that are meant to operationalize Sections 68(2) (a) and 91(1), (2)(j) by providing for procedures that a member shall follow to use a proportion of his or her benefits to secure a mortgage or a loan for purchasing a residential house. Passed into law on the 22nd day of February 2022, these Regulations came into force on the 10th of 2022.

What does this mean for Ugandans?

Regulation 6 of the Regulations is to the effect that a member may enter into an agreement with an institution to use his or her accrued benefits as security for a mortgage or a loan for purchasing a residential house. That such a member may assign (a) a maximum of 50% of his or her accrued benefits under the retirement benefits scheme at the time of the application for the facility; or (b) a portion of his or her accrued benefits equivalent to the market value of the residential house, whichever is less.

Further, a member who, prior to the commencement of these Regulations has a mortgage or a loan for purchasing a residential house, may upon application to the trustees in the manner prescribed in the scheme rules, assign his or her accrued benefits to an institution as security for the mortgage or loan

The coming into force of these Regulations was much welcomed by a majority of Ugandans who had been waiting in anticipation. What this development means is that members in schemes who have saved for at least 10 years shall be able to apply for and if eligible obtain 50% of their savings for purposes of securing a mortgage or buying a residential house.

It is important to note that this law is clear and specific that while making Applications of this nature, the purposes for which the money is being sought should be limited to either securing a mortgage or a loan for purchasing a residential house.

For that reason, regulation 6(4) mandates the trustees to review the mortgage or a loan facility offer for purchasing a residential house, referred to in the application before either granting or rejecting the same.

How does one access their savings?

The law requires that a member shall, upon obtaining a letter of offer for a facility, apply to the trustees to assign a proportion of his or her accrued benefits as security for a mortgage or a loan for purchasing a residential house. It is important to note that prior to making an Application for the accrued benefits, the member will prove by an offer letter that he or she has applied for a mortgage or loan facility from a financial institution.

Upon application by a member, the trustees shall within 7 days from the date of the Application carry out a review into the eligibility of such an Applicant member to determine whether he or she meets the requirements. Whereafter, the trustees shall either reject or allow the Application.

While carrying out the review, the trustees shall ensure the following;

  • that the application submitted is for purposes of enabling a member to use a proportion of his or her accrued benefits as security and shall not result in a reduction of his or her retirement benefits;
  • the facility applied for does not exceed 50% of the accrued benefits of the member;
  • the member applying for assignment of his or her accrued benefits has executed a written commitment to pay the facility in accordance with the agreed terms and conditions of the facility;
  • the member is gainfully employed or has sufficient income which can be used to pay for the facility
  • the purpose of the mortgage or loan applied for by the member is solely for securing a mortgage or loan facility to purchase a residential house

After conducting the review, the trustees shall notify the Applicant in writing of their decision. If satisfied that the Applicant has met all the requirements of the Application, the trustees shall witness the deed of assignment executed between the member and the institution.


These developments follow the recent amendment of the National Social Security Fund Act that paved the way for members to access half their savings provided they have saved for a minimum of 10 years. This will go further in aiding Ugandans especially in improving their social lives during this post-Covid-19 pandemic era.