In this Uganda Banking Guide we give you some useful information to help you save on bank charges while attaining the flexibility you require to meet your personal and business payment obligations during your business trip to Uganda:
You will find information about:
You money transactions while in Uganda should become hassel free once you've gone through our notes.It can become very embarassing to enter a Uganda Korean restaurant with no cash at hand, make an order worth USD50,only to read a notice on the wall...Dear Customer, We do not accept Credit Cards Please. Sorry for the inconvinience. Management!...
I have listed below some of the common means of payment used in Uganda for your review.
The order in which they appear should not really have much meaning, however, I use the first 3 almost daily, the next 2 at least once in a month and the rest of the options rarely.
Cash payments: You will use this options for most of your daily transuctions on the street, restaurant, coffee shop, and buying news papers
Mobile Money Transuctions: You will normaly use this payment option to purchase Uganda newspapers online, pay water bills, pay school fees while avoidng the long que in the Bank, pay a vendor for a bulk purchase, orpay someone in a remote Uganda district when you do not want to risk carrying cash.
ATM: Uganda now has a good network of these ATM machines in most of the important business towns which are also VISA electron Enabled and thus you can withdraw cash for your use locally. You can use this option to pay some utility bills and also buy airtime for your mobile phone.
Bank Check: Commonly used in business transaction including salaries when you do not want a lot of cash handling by your employees, also when you have cash flow related concerns and you have to issue post dated checks.
International Telegraphic Transfer TT: I normally use this options when making online purchases for equipment and some software. I have also instructed my clients from abroad to make my payments by TT as it goes directly onto my account.
International Debit Card
International Prepaid Credit Card
Western Union: A way of sending money abroad. Google now uses this option to pay some of its clients to reduce clearing costs for Bank checks and also save on valuable business time.
Money Gram: Another way of sending money from abroad, it is a direct competitor with western union
Letters of Credit
Pay Pal: I've never used this option because Pay Pal does not work with local bank accounts in Uganda to make payments. You can however send money by pay pal to Uganda. Therefore, if you actively use Pay Pal to make your financial transuctions, be sure to retain your foreign account when you're planning your business accounts in Uganda.
One of your most important question you will be face with is to decide whether you will keep your home Bank account or you will open a new bank account in Uganda.
In Uganda you could find a sister bank to your home bank where you can take out funds without fees.
The Africa Uganda Banking Guide advises that you should plan to keep two accounts, your home account and a Uganda bank account.
This would help you to take full advantage of services offered by the two Banks you're using, your Home Bank and a the Uganda Bank.
If you are not planning to stay in Uganda permanently, it is essential that you keep ties with your home bank.
It will help make a smooth transition to your new life abroad, before being able to open an account in Uganda.
You may also have to keep meeting some expenses back home like loans, payments, taxes, bills, and also collect income like wages and rent.
Don’t forget to list the revenues and expenditures that will continue to go through your home account.
You might need to set up the necessary automatic withdrawals and transfers before you leave for Uganda or use online banking.
Once you get to know your new address in Uganda, your bank can usually redirect your statements at no extra charge, or you can choose to view them online.
It may be important to consider whether you need to transfer money from your home country to Uganda on a regular basis.
While there many types of financial institutions in Uganda classfied as Tier 1 , 2 ,3 and Tier 4 , you will normally use a commercial bank which is classified among Tier 1 financial institutions for your basic Personl and Business Banking needs.
Uganda commercial banks are Classified as Tier 1 Financial Institutions.
In these Banks you will be able to hold checking, savings and time-deposit accounts for yourself and your Uganda Business in local as well as International currencies.
Commercial banks in Uganda are also authorized to buy and sell foreign exchange, issue letters of credit and make loans to depositors and non-depositors.
These Banks are supervised by the Central Bank of Uganda.
Below is the list of licensed Uganda commercial Banks you will choose from:
The Uganda Credit and Finance Banks are classified under Tier II Financial Institutions. These Uganda Banks you will be able to make deposits and also establish savings accounts.These Banks are also authorized to make collateralized and non-collateralized loans to savings and non-savings customers.You will not be able to establish a checking account or buy foreign currency from Uganda Credit and Finance Banks. They are authorized to take in customer deposits and to establish savings accounts.
These Banks are supervised by the Central Bank of Uganda.
Below is the list of Uganda Credit and Finance Banks you will choose from:
Microfinance institutions are classified under Tier III Financial Institutions. In these Uganda Banks you will be able to keep a savings account where you can make deposits. Members of this class of institutions are also known as Microfinance Deposit-taking Institutions or MDIs. You will not be able to establish a checking account or buy foreign currency in a Uganda Microfinance Bank.
These Banks are supervised by the Central Bank of Uganda.
Below is the list of Uganda Microfinance institutions you could choose from:
Tier IV Institutions
These institutions are not regulated by the Bank of Uganda. They are not authorized to take in deposits from the public. However, you can take a collateralized or non-collateralized loan these Tier IV Institutions. In 2008, it was estimated that there were over 1,000 such institutions in Uganda.
This is the list of investment banks and stock brokerage firms in Uganda.They are regulated by the Capital Markets Authority (CMA) and by the Uganda Securities Exchange.
There are over 25 insurance companies in Uganda.
Foreign exchange bureaus
Here you will be able to buy and sell your forex. These are regulated by Bank of Uganda and include 123 licensed foreign exchange bureaus, of which 92 percent are located in Kampala, the capital city and only 8 percent are located outside of Kampala.
Just like Banks abroad, in most Uganda Banks you will find two basic options of Bank accounts to keep, the Savings Account, and the Current Account.
Each bank however tweeks these accounts for branding purposes and to meet specific client needs, therefore, after you have chosen an appropriete bank for your business ask your bank for the full range of bank accounts they offer so that you can make your choice, paying close attention to the underlying bank charges for each type of account.
If you're planning to start a Business in the Uganda financial sector, opportunities for investment exist for international multinational banking groupsparticularly promoting new or innovative financial products like Mortgage finance, venture capital, merchant banking and leasing finance. Business opportunities still exist for micro finance saving institutions, which propose to operate in rural areas. Insurance, in particular, is still a relatively young sector and with this subsector you have several opportunities for investment.
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Answers to Frequently Asked Questions About Uganda Banking and Money Transactions
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