mobile money business plan in uganda

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How to Start Mobile Money Business in Uganda

Vincent Nyoike | Posted in: Uganda

Mobile money was introduced in Uganda in 2009. It is among the fastest-growing industries in Uganda. Most countries are moving towards cashless transactions making mobile money one of the profitable businesses. Some of the money service providers available in Uganda include MTN, Airtel, Uganda Telecom, Africell, Micro-Pay and M-Cash. In this article, we will show you how to start a mobile money business in Uganda.

What is Mobile Money?

Mobile money is the electronic means of sending, storing and receiving money using electronic devices like phones and tablets. You can start a mobile business and work as an agent.

How Do Mobile Money Agents Earn in Uganda?

You can start a mobile money business in Uganda as an agent and earn a commission. Mobile money agents in Uganda earn commission for facilitating transactions such as deposits and withdrawals for their customers, paying airtime and bundles for customers, processing bill payments and registering new mobile money users.

How Profitable is Mobile Money Business in Uganda?

Is mobile money profitable in Uganda? Mobile money business in Uganda is profitable if you follow the right strategies in starting and running the business. The level of profitability will also depend on factors such as the startup capital, location, number and types of transactions in a given day/week/month.

If you haven’t registered your business, find out how to register a company in Uganda .

How Much Money Do You Need to Start Mobile Money Business in Uganda?

The amount of money you need varies based on the mobile money provider and whether you apply directly to the mobile money provider or through master agent/aggregator. The intended size of your business will also be a factor. For instance, will you be working alone or you intend to employ someone or people to work for you? Will be renting a business space or you will use a kiosk or building that you or your family owns?

How to Get a Transaction Line as a Master Agent or Aggregator

You can work as an aggregator or a master agent. An aggregator is authorized to recruit mobile money agents. Master agents purchase and manage e-money from Mobile Network Operators and then sell them to agents.

To become an aggregator or a master agent, you need to fill in an agent Agreement form, exclusivity agreement form and agent application form. In addition, you will need training and branding for your business.

Agents are paid commissions, and the commissions depend on the master agents. Agents have to forego 10% of their income to the Uganda Revenue Authority.

As an aggregator or master money agent, you are responsible for recruiting agents into your territory. You will need to go through the bidding process by presenting an identity card, get a recommendation letter from the local council, and fill in an application form. You will need to make a deposit of Ush 80,000 and have a starting float of at least Ush 2,000,000.

Duties of a Mobile Money Agent

Registering mobile money customers
Depositing money into mobile accounts for the registered mobile money customers
Processing cash withdrawals by registered mobile money customers
Selling airtime to customers
Complying with mobile money regulations
Customer education

How to Start MTN Mobile Money Business in Uganda

To work as MTN mobile money agent in Uganda, you need to meet the following requirements.

Be a registered limited company or sole proprietor and your business must have been in existence for at least one year
Original and copies of identity card or passport for the company directors
Have permanent or semi-permanent physical premises from where to operate
Have a certificate of business incorporation
Letter of introduction for the Local Council 1 (LC1)
Contact details of your company
Have at least three months of business bank accounts
Have a copy of articles of association or memorandum of association
Proposed outlets for inspection by Telecom’s regional representative
Initial startup capital investment of Ush 1,500,000

Get MTN Xtra Float for business continuity This is a service that MTN Mobile Money agents can use to borrow float when their float is depleted and still have customers to save. You can now get MTN Xtra Float worth UGX 50,000, 100,000 and 250,000 at a fee of UGX 300. MTN Xtra Float has to be paid back in 48 hours. There’s a penalty of 3,000shs charged against your commission if you fail to pay. To get MTN Xtra Float, you should Simply dial 165 5# and follow the steps.

How to Start Airtel Mobile Money Business in Uganda

To become an Airtel money agent in Uganda, you need to meet the following requirements.

Proof of residence
Recommendation letter from LC1
Passport size photo of the applicant
Subscriber registration form
Trading licenses
Subagent application and registration forms
Startup capital of Ush 2,000,000

How to Become M-sente Agent in Uganda

Uganda Telecom offer mobile money service called M-sente. Requirements for M-sente agent business are the following.

Certificate of registration or Trading license.
National ID
One passport photo size
Fill and sign the agent contract
A minimum deposit of at least UGX 300,000

What You Need to Start a Mobile Money Business in Uganda

Apart from the requirements that you need to meet to register as a mobile money agent or aggregator, you will also need the following to run your business comfortably.

Have two transition lines. You should have MTN and Airtel lines because they have a large market share.
Have a mobile phone with dual features to operate two lines.
Rent a stall or a room. You need a secure place where you can operate your business. Ensure that it is visible by foot traffic.
Have a transaction book
A secure and lockable desk to keep your money

Some of challenges to expect in mobile money business in Uganda include competition from well-financed competitors, theft, fake money, network problems in some areas of the country, conmen, dishonest workers, etc.

How to Start a Profitable Mobile Money Business in Uganda

To start a mobile money business in Uganda, you need to understand how mobile money works and how you can succeed in this business. This section will provide you with useful tips you need to venture into the business.

Draft a Mobile Money Business Plan

The success of any business depends on how well it is planned. You need to do market research and find out the money services in high demand and those you can provide. Consider the security of the area you intend to operate your business, the market share, competition, availability of customers, cashflow projections, risks and strengths of the business. To know how to about writing a successful mobile money business plan in Uganda, read our previous article on what a business plan should include. Alternatively, you can hire a professional to help you.

Choose a Good business Location.

Mobile money business works well in areas with high influx of people like in towns, near institutions like colleges and hospitals. Such an area will maximize your profits. The more customers you serve, the higher your commissions.

Get Business Permits and Licenses

You need to secure business licenses to operate a legal mobile money business in Uganda. You need to get a certificate from the Uganda Revenue Authority for tax purposes. You may also need a business trading license from authorities.

Get Started and Advertise Your Mobile Money Business

Once you have secured the necessary business permits and licenses, you can launch your business. Provide quality customer service, and your customers will keep on coming back and refer more customers to your business. You can advertise the business using posters and business cards.

Final Word on How to Become a Mobile Money Agent in Uganda

The mobile money business is a profitable business in Uganda. Besides, you can provide other income-generating services like selling sim cards, airtime, soft drinks, and sim card registration. With the growing demand for mobile banking, this is a business you are unlikely to make losses with a suitable business location.

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Everything you need to know to start a mobile money agent business in Uganda

mobile money agent business uganda - ugtechmag.com

Mobile Money is an electronic mobile service that allows users to send, receive or save/keep money on their mobile phones. It is the fastest-growing convenient alternative to traditional bank accounts. It is becoming increasingly hard to walk around outside without seeing yellow signs with MTN Mobile Money or red signs with Airtel Money. These services are being accessed on any mobile device with both smartphones and button phones inclusive of both individual users and a mobile money agent business.

Today, we are sharing with you everything you need to know so as to start a mobile money agent business in Uganda, stick with us.

Requirements to kick-start a Mobile Money Agent Business In Uganda

One is required to have at least two transactions lines. MTN and Airtel are highly recommended. This is because of their dominant market share in Uganda. Most of the transactions carried out involve MTN and Airtel compared to other lines.
Secondly, a Mobile phone is needed to carry out the transactions. A Dual sim phone(having two lines in the same phone) is better suited.
Thirdly, one needs a retail space ie a room. If you can not afford rental fees of a room, you could always rent a verandah.
Fourthly, furniture like a chair where you will be sitting and a display table with drawers where you can keep your tools of trade are needed. For your own convenience.
Then, one needs transaction books to keep records of the transactions
Also, it helps if one is situated at a busy location with enough customers
And lastly, a trusted employee/operator if you can not run the business yourself or are too busy doing other things.

Read: MTN and Airtel Mobile money agent commission in Uganda

How To Get Started with a Mobile Money Agent Business

After fulfilling the above requirements, here are 3 approaches you can follow to get started

Hire mobile money transactions lines or;
Get a transaction lines through a master agent or aggregator or;
Register for mobile money transaction lines directly from Mobile Network Operators (MNOs).

#1. Hiring A Transaction Line

With this, you do not need to go through the hectic procedure of getting a transaction line from an MNO. Here you simply hire an already registered line from someone or a company. However, when you hire someone’s line, you will be required to give up a certain percentage of your commission as rental fees. Most people charge between UGX 50-100k as rental fees.

#2. Getting A Transaction Line Through A Master Agent Or Aggregator

An aggregator or a master agent is an individual or company that is authorized by the Mobile Network Operators (MNO) to control their specific territory of operation. Master agents who distribute e-money to ordinary agents are also responsible for licensing Mobile Money agents and issuing them with MM transaction lines. Earnings are based on commissions and depending on the aggregator, you are required to give up a percentage on your commissions of up to 10%. Below is what one needs to be licensed as an agent through a master agent or aggregator:

Original National ID or Passport
Introduction letter from LC1
A deposit of UGX 80,000/-
Fill an application
Have a starting float of at least UGX 2M.

Advantages Of Aggregated Mobile Money Lines

Higher commissions. Hired lines attract a commission split.
Direct payment of commission by MNO
No delays in remittance of commissions
Faster conflict resolutions
Aggregated lines have a float management features ie you can get cash from super agents by exchanging excess e-float and vice-versa.

#3. Register For Mobile Money Transaction Lines Directly From Mobile Network Operators (MNOs)

If you do not want to hire a transaction line from someone or get one through an aggregator, you can directly register as an agent from the Mobile Network Operator (MNO) e.g MTN or Airtel. Requirements to register as an agent directly with an MNO differ. Below I discuss the requirements needed for one to directly register as an agent with MTN MoMo and Airtel Money .

Requirements to become an MTN Mobile Money Agent in Uganda

You must have startup capital of UGX 1,500,000/- or UGX 1,000,000 if registering through a master agent or aggregator.
Be registered as a limited company or sole proprietorship for period not less than one month.
Have a photocopy of Certificate of Incorporation or sole proprietorship registration documentation and certificate of registration if the name on the trading license is a business name.
Have physical or semi-permanent premises from where you can operate the business
Photocopy of Certified Memorandum and Articles of Association
One month Company Bank Statement/Bank statement
Photocopy of valid ID(s) of company director(s)
Letter of introduction from LC1
Map and Photos of the Agent Premises
Existing Business Turnover of at least UGX 5 Million per Month.
Registered Board Resolution to start Mobile Money Agency Business
Letter of Introduction of appointed handlers from the Directors
Your official contacts and email address
Proposed outlets to be inspected by the Telecom’s regional representative.

Requirements to become an Airtel Money Agent in Uganda

Valid national ID or passport for foreigners
Proof of residence
Completed agent sub-agent application and registration forms
Recommendation letter from LC1
Passport photo of an applicant
Certificate of Registration of Business Name
Trading license [receipt]
Filled Subscriber Registration Form
UGX 2,000,000/- startup capital

Related: How to become a mobile money agent in Uganda

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How To Start a Mobile Money Business in Uganda

By afrisetupconsultants
Uncategorized

What To Keep in Mind before you Start a Mobile Money Business in Uganda.

Steps to help you start a mobile money business in uganda.

Requirements to start a Mobile Money Business in Uganda

Benefits of starting a mobile money business in Uganda

If you are looking to start a mobile money business in Uganda and don’t have an idea how to, worry no more. At Afrisetup , we have helped entrepreneurs like you register companies in Uganda and start operating their mobile money business in Uganda hassle-free. Contact us today and begin your journey to success.
Market Research and Business Plan: Conduct thorough market research to understand the demand for mobile money services in Uganda. Identify your target market and potential competitors. Develop a comprehensive business plan outlining your objectives, strategies, and financial projections.
Company Registration: Register your business in Uganda as a legal entity, such as a limited liability company in Uganda, with the Uganda Registration Services Bureau (URSB). You will need to choose a business name, register your business, and obtain the necessary licenses and permits.
Capital Requirements: Determine the capital requirements for your mobile money business, including the initial investment in technology, infrastructure, and working capital. Ensure you meet the minimum capital requirements set by the Bank of Uganda .
License Application: Mobile money services in Uganda are regulated by the Bank of Uganda. You need to apply for an Mobile Money Service Provider License. To obtain this license, you will need to meet specific criteria, including capital adequacy, governance, and technical requirements.
Technology and Infrastructure: Invest in the necessary technology and infrastructure to facilitate mobile money transactions. This includes setting up a secure and reliable mobile money platform, partnering with telecommunication providers, and establishing a network of agents.
Agent Network Setup: Build a network of mobile money agents who will provide services to customers. Agents can include retail shops, kiosks, and other businesses. Ensure that agents are trained on mobile money operations and comply with regulatory requirements.
Regulatory Compliance: Comply with all regulatory requirements set by the Bank of Uganda, including anti-money laundering (AML) and customer due diligence (CDD) measures. Implement robust security and fraud prevention measures.
Marketing and Customer Acquisition: Develop a marketing strategy to promote your mobile money services and attract customers. Offer competitive fees, promotions, and incentives to encourage adoption.
Customer Support: Establish a customer support system to address customer inquiries, complaints, and issues promptly. Ensure that your customer support team is well-trained and knowledgeable about mobile money services.
Financial Partnerships: Establish financial partnerships with banks, microfinance institutions, and other financial service providers to enable cash-in and cash-out services for your customers.
Risk Management and Compliance: Implement robust risk management policies and ensure ongoing compliance with regulatory requirements. Regularly monitor and report transactions as required.
Launch and Operations: Launch your mobile money service, and continuously monitor and optimize your operations. Consider expanding your service offerings and geographic reach over time. Additionally, working closely with the Bank of Uganda and other relevant authorities is essential for a successful mobile money business in Uganda.

Requirements to start a Mobile Money Business in Uganda

Register your business as a legal entity in Uganda. This typically involves registering as a company or limited liability company (LLC) with the Uganda Registration Services Bureau (URSB).
Ensure you have the required minimum capital as specified by the Bank of Uganda. Capital requirements may vary depending on the type of mobile money service you intend to offer.
Apply for a Mobile Money Service Provider License from the Bank of Uganda. This license is necessary to legally operate a mobile money service. The application process involves submitting detailed information about your business, financial statements, and other relevant documentation.
Invest in the necessary technical infrastructure to support your mobile money platform. This includes building or partnering with a secure and reliable mobile money platform, establishing connections with telecommunication providers, and ensuring data security.
Set up a network of authorized agents who will facilitate transactions on behalf of your mobile money service. Agents can include retail shops, kiosks, and other businesses. Ensure they are properly trained and equipped to provide mobile money services.
Comply with the regulatory requirements set by the Bank of Uganda, including those related to anti-money laundering (AML) and customer due diligence (CDD). Implement strong security and fraud prevention measures.
A minimum of two transaction lines, with MTN and Airtel, recommended due to their dominant market share processing 99% of mobile money transactions.
Utilize a mobile phone with dual SIM capability for efficient operations.
Secure a retail space, such as a room or veranda if rental costs are a concern.
Furnish the space with essential items like a chair and a display table with drawers for tools of trade.
Maintain transaction books for record-keeping purposes.
Choose a busy location to maximize customer visibility and accessibility.
Consider hiring a trustworthy employee/operator if personal management is not feasible.

Services Offered by Mobile Money business in Uganda.

Money Transfer: Users can send and receive money to and from family, friends, and business associates, even in remote areas.
Payments: Mobile money facilitates bill payments, school fees, utility payments, and online shopping, reducing the reliance on cash transactions.
Airtime Top-Up: Users can purchase mobile airtime and data directly from their mobile money accounts.
Savings and Microloans: Some providers offer savings accounts and microloan products to encourage financial inclusion among the unbanked population. e.t.c
Financial Inclusion: Uganda has a significant unbanked population. By offering mobile money services, you can contribute to financial inclusion by providing a convenient and accessible way for individuals who may not have access to traditional banking services to manage their finances.
Increased Access to Financial Services: Mobile money services can extend basic financial services to remote areas where traditional banking infrastructure may be lacking. This can empower individuals and businesses to engage in financial transactions, savings, and investments.
Convenience and Efficiency: Mobile money provides a convenient and efficient way for people to transfer money, pay bills, and make purchases without the need for physical cash. This saves time and reduce the risks associated with carrying large amounts of money.
Cost-Effective Transactions: Mobile money transactions are often more cost-effective compared to traditional banking methods, especially for small-value transactions. This can make your services attractive to a wide range of customers, including those in lower-income brackets.
Business Opportunities: As a mobile money service provider, you can explore various business opportunities such as partnering with merchants for mobile payments, offering microloans, or integrating with other financial services to create a comprehensive ecosystem.
Government Support: The Ugandan government has shown support for mobile money services as part of its financial inclusion agenda. This support can manifest through policies and regulations that facilitate the growth of the mobile money sector.
How Much Money Do You Need to Start Mobile Money Business in Uganda? It’s challenging to provide an exact figure without specific details about the scale and features of the mobile money business you intend to start in Uganda. However, it’s advisable to conduct a detailed business plan and financial analysis to estimate the required capital more accurately.
Who regulates mobile money in Uganda? Mobile money services in Uganda are primarily regulated by the Bank of Uganda, which is the central bank of the country. The Bank of Uganda plays a crucial role in overseeing and regulating financial institutions and services, including mobile money operators and providers. The regulatory framework for mobile money services in Uganda includes guidelines, regulations, and licensing requirements set by the Bank of Uganda. These regulations are designed to ensure the safety, stability, and integrity of the financial system, protect consumers, and prevent illicit financial activities. Mobile money operators are required to comply with these regulations to obtain and maintain their licenses to operate in Uganda.
What are some of the key regulatory areas overseen by the Bank of Uganda with regard to mobile money services?
Licensing and Authorization. The Bank of Uganda issues licenses to mobile money service providers, setting out the terms and conditions under which they can offer mobile money services.
Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT). Regulations are in place to prevent money laundering and the financing of terrorism through mobile money services. Mobile money providers are required to implement AML and CFT measures and report suspicious transactions.
Customer Due Diligence (CDD). Mobile money operators must implement customer due diligence procedures, such as Know Your Customer (KYC) requirements, to verify the identity of their customers.
Risk Management. The Bank of Uganda sets standards for risk management in the mobile money sector, covering areas like liquidity risk, operational risk, and security.
Consumer Protection. Regulations are in place to protect the rights and interests of mobile money customers, including disclosure of fees, dispute resolution mechanisms, and fraud prevention.
Reporting and Compliance. Mobile money operators are required to report transactions and financial information to the Bank of Uganda in accordance with regulatory requirements.

How to register a Company Limited by Guarantee in Uganda

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How To Start A Successful Mobile Money Business in Uganda

As years go by, the mobile money business continues to grow really fast, and more and more people are turning to it. In this article, we will learn how to start a mobile money business in Uganda.

In Uganda, there are mobile services that help one transact money, some of which include;

2. EzeeMoney

3. Micro pay

4. Africell

7. Uganda Telecom

Mobile money generally deals with the transfer of money electronically to pay for goods and services via a mobile device. For one to become start a mobile money business, one has to become an agent. Some of the requirements of becoming an agent are as below;

Requirements of becoming an agent

1. One must have been registered as a limited company that has existed for one year or more.

2. Three months of Company Bank Statement is also needed.

3. A copy of the business certificate of Incorporation

4. An existing Business turnover of around 5 million Ugandan shillings per month.

5. A letter from the Local Council

6. Maps and photos of the agent premises.

Steps to start a mobile money business in Uganda

To start a successful business in Uganda, one has to do things and necessary permits one has to acquire. Some of the steps are as below;

The first step is to know the type of business you want to start and acquire a unique business name.
The next step is to register your company with the Register Company and later be issued with the certificate of registration. Register your mobile money business with the local authorities in your area. This makes potential clients trust the business and also helps the business run smoothly. After registration, you will obtain a trading license from the URSB- Uganda Registration Services Burial. When registering your business, you will be required to;

a) Search for a unique name for your boutique

b) Register the business and get a certificate of incorporation

c) Getting a taxpayer identification number

d) Acquiring a trading license

Acquire all the necessary licenses from the Ministry of Health and Fire Department. This ensures the safety of your employees and yours and the consumer’s safety, especially businesses that deal with food.
Register with the local authorities to get a trading license or operating permits.
For Tax, purposes register with the Uganda Revenue Authority. Once you register your mobile money business in Uganda, you will be given a Tax Identification Number that will be like your account number.

Tips to start a mobile money business in Uganda

Have a business plan that you will follow to the latter. It will help you manage your finances and not overspend.
Advertise your business using posters and even on social media platforms. Tell your friends to tell other friends so that your business can grow.
Study the strengths and weaknesses of other businesses in the same field as yours and get to know how they work with them.
Look for a location with the target market. Urban places, near town centers, and shopping malls are some of the best places to start almost any business.
Stock your business with the necessary equipment such as;

a) A dual sim card phone

b) Display table

c) Sim cards

d) Transaction books

This simple and easy article Was Last Updated on December 6, 2022 by Editorial Team

Please you wish to visit this post “https://thebusinessalert.com/how-to-start-a-successful-mobile-money-business-in-uganda/” ocassionally for changes and updates that we will make to this article.

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In the year 2022, we bring you the best of banking and money transfer experience. Just stay tuned for more articles.

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What do the new developments in the mobile money business mean for the industry

According to statistics, mobile money has been a tremendous contributor and one of the biggest drivers of financial inclusion in Uganda.

By the second quarter of 2021, Uganda Communications Commission ( UCC ) the telecom sector regulator revealed that mobile money agents had grown by 49,488 within a short span of only 24 months.

The UCC report also disclosed that between the second and third quarters of 2020, at least 8,500 new agents were added to the network.

This was in addition to over 227,736 mobile money agents who operate across different networks like Airtel Money, MTN Mobile Money and others.

There are several players in the mobile money industry in Uganda and East Africa.

As of 2021, there were seven mobile money schemes in Uganda, including MTN, Airtel, Uganda Telecom, Africell, M-cash, PayWay and Eeezy Money. But new players like Wave have joined the industry and others like SafeBoda are diversifying their product offering to include this service in their list.

But regardless of this increment in mobile money schemes, many mobile money agents have voiced complaints of reduced benefits from this line of trade,

Some agents say that their commissions have significantly been slashed by telecom companies for whom they work.

What agents refer to as Commission is the money that they are paid by the telecom company from every transaction made by a mobile money agent.

A case in point is, that if a customer goes to a mobile money shop and sends Ush100,000, the agent is entitled to earn a commission of about Ush1,000 off that transaction, which is paid periodically.

New entrants join the industry

In July 2022, SafeBoda launched a new update that allows money transfers to bank and mobile wallets.

This new development allows Safeboda’s customers to transfer money from their SafeBoda wallets to a preferred bank account or to a mobile money wallet like any of the existing ones.

According to pctechmag, the ride-hailing firm in July 2022 announced a new update to its app that will now allow its customers to transfer money from their SafeBoda wallet to the bank or to a mobile money wallet.

SafeBoda-Founders L-R Ricky Rapa Thomson, Maxime Dieudonne and Alastair Sussock at the launch in Kololo

The update comes four months after the e-transport company officially made its mobile money payment service available to the general public —joining a space dominated by telecoms.

“We believe that by making it cheaper and more convenient for our customers to move money between their SafeBoda wallets and other mobile money wallets & bank accounts, we will drive adoption and acceptance of cashless payments by informal economies such as mobility and informal merchants,” said Christian Wamambe Mayeku, Head of Financial Innovations at SafeBoda, in a recent media interview.

How agents are rewarded and taxation’s impact on their businesses

Mobile money agents earn commission from making deposits, helping clients to withdraw funds, buying airtime and paying bills for their customers.

In 2021, agents said their commissions reduced significantly after the introduction of the one percent tax on mobile money withdrawals in July of 2018.

George William Nyombi, the chairperson of the Association of East African Mobile Money Traders Limited, says that although the mobile money tax was later reduced to 0.5%, this had already discouraged some agents who opted to abandon the business over reduced customer transactions which subsequently impacted their commissions in a negative way.

The union’s chairperson, Mr Nyombi noted that members of his association were unhappy with the commission paid by telecom companies, saying the telecoms ought to support mobile agent associations, “the same way the government supports sports associations.”

According to a Uganda Communications Commission (UCC) 2021 Quarter 3 report, the number of active mobile financial service agents grew by 11% from 285,371 in June 2021 to 315,895 by the end of September 2021.

This positive trend in the industry reflects a sustained increase in business activity that is gradually positioning the mobile phone as a financial tool.

“Compared to 2020, the agent footprint across Uganda has grown by 39% and over 88,000 mobile money agents have been added to the distributed file system ecosystem over the last 12 months,” states the UCC report.

Ms Susan Akello, an agent operating in Gayaza, admits that mobile money is no longer as profitable as it once was.

“These days you cannot rely on mobile money alone because of the very low commissions,” she narrates her ordeal.

According to her, in order to make ends meet, one has to operate the business alongside selling other items to supplement your income.

Statistics from the Bank of Uganda indicate that between June 2016 and June 2017, the total value of mobile money transactions increased from Ush36 trillion to Ush60 trillion.

But on the flip side, in the years that followed, the total value of mobile money transactions reduced from Ush73 trillion to Ush66 trillion between July 2018 and June 2019.

A ray of hope on the horizon

Mr Alex Kikomeko, a mobile money agent based in Luweero, is still optimistic. He says despite the reduction in their commission, he still earns enough profits from the business.

He reveals that his monthly income on average is Ush500,000 commission which he says is usually enough to sustain him.

Increasing challenges in the mobile money business

According to the Chairperson of the agents’ association, Mr George Nyombi, mobile money agents endure a number of challenges which include increased insecurity which is a threat to their lives, including robberies, kidnaps and illegal or fraudulent transfer of cash from their accounts.

The mobile money agents association has over 180,000 members spread out across East Africa.

In May 2022, Airtel Money Uganda offered small businesses merchant numbers for mobile money accounts.

This year, regular Airtel Money customers and business owners across Uganda, using their existing SIM Cards, are now able to separate their business finances from their personal airtel money wallets by using the USSD Code 18510*10# to create a Unique Merchant Till Number.

Mr. Japhet Aritho, the Managing Director Airtel Mobile Commerce Limited (AMCUL) during the launch of the new service said;

“We are committed to delivering on our promise to grow financial inclusion for all in Uganda. Today, we have enabled small businesses, in the comfort of their shops, to create the Airtel Money Merchant Till Number. This is the first tool in business basic financial management. It will help these growing businesses to focus on growing their businesses

and tracking their revenues better.”

Airtel’s huge investment in telecom infrastructure includes over 21,000 masts countrywide

The telco MD acknowledged that;

“Airtel has deliberately built a telecom infrastructure of over 21,000 site masts across Uganda, and it is on the back of this infrastructure that innovative solutions like the Merchant Till Number service have been made possible. Customers can enjoy seamless border-to-border connectivity, get access to affordable devices, and affordable e-commerce solutions,” said Mr Aritho in May this year.

An Airtel money agent registers new customers

In line with this new development, Airtel customers can use this number to accomplish the following tasks: • Receive payments for goods and services from their duuka, Boda rides, saloon, etc. • Transfer money from the till number to their Airtel Money number and • View balances on both their new Merchant Till Number and personal Airtel Money wallet.

In conclusion, Japhet says,

“The new Micro Merchant Till number service will boost business as the proprietors will have proper accountability and oversight of their business. They will know the income that is resultant of the business transactions separate from their personal transactions. The users will use their current SIM cards, and be able to monitor up to 10 different branches of their small businesses.”

MTN Uganda has a product called MoKash.

Mokash is an MTN Uganda mobile money service that allows users to save and borrow money.

When you access a loan between Ush3,000 and up to Ush1,000,000, you will pay a nine percent facilitation fee. However, if you fail to repay the loan in 30 days, MTN will extend the loan period for another 30 days at a cost of nine percent.

In March 2022, the e-commerce platform Wave Mobile Money, a startup with a big footprint in several francophone countries, was 2021 licensed by the Bank of Uganda to operate financial services in Uganda.

Wave is a new entrant in the Ugandan industry, but with continental ambitions to cover the entire Africa, hopes to tap into a market that processed transactions worth $46 billion in 2020, a 23% increase from 2019.

On the other hand, SafeBoda customers who want to use their mobile money feature have to update their apps to the latest version(s) v.4.6.0 (Android) and v.4.2.3 (iOS) so as to be in a position to make money transfers to the bank or mobile money.

According to one the founders of the App, Ricky Rapa Thomson;

“The option of money transfer from one SafeBoda wallet to another is still available for customers. The SafeBoda Wallet is one of the most common features of the SafeBoda Super App —besides enabling you to use the app for more than just rides, the SafeBoda Wallet ensures that your digital payment experience is the very best,” he says.

Following a huge cash injection into SafeBoda, the ride-hailing App is expected to get more aggressive in the fintech sector. With funding from Google Africa Investment Fund at the tail of 2021, SafeBoda emphasises it will drive its growth in Uganda, Kenya and Nigeria, scaling its transportation-led app to offer new payment and financial services solutions for its expanding set of customers: passengers, drivers, and merchants.

According to SafeBoda co-founder, Ricky Rapa part of the objectives of the fund is to see the company launch its fintech service and make an impact on digital financial inclusion.

In May 2021, Bank of Uganda issued licences to payment service providers Airtel Mobile Commerce Uganda Limited and MTN Mobile Money Uganda Limited.

The available bank options that allow money transfers from the SafeBoda wallet include; KCB, Stanbic Bank, Equity Bank, ABSA Bank, DFCU Bank, and Centenary bank.

As for mobile money, SafeBoda as of now only allows the transfer of money from your SafeBoda Wallet to your Airtel Money account.

SafeBoda is curerently in talks with MTN Mobile Money Uganda and will soon have this feature available for their customers.

How to transfer Money from SafeBoda Wallet to a Bank Account

Open the updated SafeBoda app and click on ‘Withdraw’.
Select the ‘Bank’ option and a list of available banks will be displayed for you to choose from.
Enter the bank account details including the name and account number. The bank account number should match the account name for the transaction to be completed successfully. If it does not, the transaction is aborted and the amount refunded back to your wallet.
Input the amount you wish to send and confirm the transaction with your Wallet PIN.

The transaction charge is only Ush1,000.

The SafeBoda Wallet was approved by the Central Bank of Uganda that allows customers to send and receive money, recharge airtime & data bundles, pay utility bills, shop online, or pay to friends/vendors.

Mobile money adoption is growing at a fast pace in Uganda.

According to industry experts, in an underdeveloped financial infrastructure in Uganda with a large section of the population having no formal bank accounts, the mobile money market in Uganda leverages the use and convenience of mobile phones offered by the mobile money service to these consumers.

Wave’s business presence in Uganda and Kenya is evidence of new competition for long term telcos like MTN Uganda, and for Airtel’s Airtel Money—the country’s flagship mobile money giants.

MTN has been a leader in this domain, since the launch of Mobile Money services in Uganda in 2009.

MTN Uganda starting from USSD-led mobile money 1.0 to smartphone-led mobile money 2.0 with the introduction of the MTN MoMo app.

The increase in the number of players in this sector is a welcome move for most people who had voiced growing concerns from some sections of the public that felt existing players were overcharging due to lack of competition.

As a result, many view the entry of Wave as healthy competition to MTN Mobile Money and Airtel Mobile Money.

Wave relates itself in similarity to PayPal in terms of offering easy money transfer between peers, but it works with mobile money accounts instead of bank accounts.

How it works, Wave customers visit physical agent posts to make deposits and withdrawals without a fee, or use a smartphone app with a flat 1% cut of the money being sent.

Wave Mobile introduces free charges

Wave on their twitter page, explained that users can pay for utility bills such as electricity, water, and pay TV free of charge using the Wave Mobile Money Platform.

With both MTN MoMo and Wave, customers can withdraw or deposit money and pay utility bills without the use of the internet or offline.

Wave mobile money uses a QR code on a card for offline access. Customers without a smartphone are registered and given a card with a QR code which they can use to deposit and withdraw money from their Wave accounts.

“We are so excited about our expansion in Uganda. Our mission remains the same, build an inclusive and affordable financial network for all everywhere,” Wave stated in a recent tweet.

The tech firm recently poached MultiChoice Uganda’s head of marketing Collin Asiimwe to lead its marketing team.

Colin-Asiimwe recently joined Wave from MultiChoice Uganda

The growth of mobile money across Africa

On a continental scale, it has grown tremendously in the West African nation of Cote d’Ivoire, from being used by 30% of the population in 2016 to 83% in 2021.

In 2020, East Africa as a sub-continent had more active mobile money accounts (94 million) than West Africa (47 million) but West Africa had more live services (70) in comparison to East Africa’s (57).

In 2021, Uganda’s mobile money transactions hit the one billion mark, translating into an average of 15 transactions per active account every month.

Bank of Uganda (BoU) in 2021, separated mobile money services from telecom services. This was done under the National Payment System Act 2020, which was guided by the National Payment System Implementing Regulations.

Uganda’s central bank has since then gone on to licence 14 companies to offer similar financial services. They include Airtel Mobile Commerce Uganda, MTN Mobile Money Uganda, Interswitch, Pegasus, Micropay and Wave.

In addition to this, the following players were granted Payment System Operators, Payment Service Providers and Issuers of Payment Instruments permits. They are Chipper Technologies, Future Link Technologies EzeeMoney, Guiness Tech and Agent Banking Corporation.

Some of Uganda’s top commercial banks such as Stanbic Bank Uganda are now officially e-money providers.

Ugandans can now expect improved access to financial services as a result of this increasing number of companies who are joining the fold of service providers.

Business Times Uganda

Musa Hashim Kasibante

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The Ultimate guide to being a Mobile Money Agent in Uganda

The mobile money business In Uganda is fast growing. As the country heads towards a cashless economy, mobile money is an important aspect in that regard. In 2017, a total of 44 trillion worth of transactions was recorded by the Mobile Money service providers. One aspect that is vital for the mobile Money industry to succeed is a mobile money agent. It has also become a top employer in Uganda of late. So let’s look at how to become a mobile money agent in Uganda.

What is Mobile Money?

Mobile Money is a term generally used to refer to payment services operated under financial regulation and performed from or via a mobile device. A consumer can use a mobile to pay for a wide range of services and digital or hard goods.

Who is a Mobile Money Agent?

This is a person or business that is contracted to facilitate transactions for users. They sometimes register new users and also teach users how to best use the service.

Other terms associated with Mobile Money Service.

Aggregator: A person or business that is responsible for recruiting new Mobile Money agents.

Master Agent: A person or business that purchases e-money from a Mobile Network Operator wholesale and then resells it to agents who in turn resell it to users. They manage the cash and e-money liquidity of their agents.

E-Money: Known as Electronic money in full. It is stored value held in the accounts of users, agents and the provider of the Mobile Money service.

Cash In: The process by which a customer credits their account with cash. This is done usually via an Agent who receives the cash and proceeds to credit the customer’s account.

Cash Out: The process by which a customer withdraws cash from their Moblie money account. It is done usually by an Agent who gives the customer cash equivalent to a transfer the customer makes to the Agent’s Mobile money line.

Float: The balance of e-money or physical cash that an agent can immediately access to meet customer demands to purchase or sell e-money.

Liquidity: The ability of an agent to meet customers’ demands to purchase (cash-in) or sell (cash-out) e-money.

Mobile Money Transfer: A movement of value that is made from a mobile money account to another through the use of a mobile phone.

Platform: The hardware and software that enables the provision of a mobile money service.

Requirements To become an Agent

You must be a registered as a Limited company that has existed for a period not less than one year.
Must have physical permanent or Semi-Permanent premises from which to operate, Counter Layout.
Must have three months Company Bank Statement
Existing Business Turnover of at least UGX 5 Million per Month.
Registered Board Resolution to start Mobile Money Agency Business.
Photocopy of Certificate of Incorporation
Photocopy of Certified Memorandum and Articles of Association
Photocopy of Valid Identification of all Directors (making at least 50% ) shareholding.
Letter of Introduction from the Local Council
Map and Photos of the Agent Premises.
Letter of Introduction of appointed handlers from the Director’s
Official email and phone contacts
Proposed outlets will be inspected by the Telecom’s regional account representatives prior to commencement of business

Money Mobile Agent’s Duties

Register Mobile Money Customers.
Deposit cash into registered customers Mobile Money accounts
Process cash withdrawals for registered Mobile Money customers
Process cash withdrawals for non-registered Mobile Money customers
Customer Education
Compliance with Mobile Money Regulations
Compliance with Mobile Money business practices
Sell airtime to the customers

Related Article: A quick guide to getting mobile money loans in Uganda

Cash Investment

This depends largely on the Service Provider’s terms and conditions. The prices listed there in are approximations and subject to change

Search Fee – 25,000/=
Starter Kit – 87,000/=( Includes Phones, Agent Packs, Mobile Money T Shirts,
Transaction Books, Snapper Frame & Price Poster)
Minimum Float deposit of UGX 3,000,000
Minimum float balance of UGX 1,000,000
Minimum Cash Balance of UGX 1,000,000

What the Service Providers Provide.

Agent Agreement form
Exclusivity Agreement form
Agent application form
An Account Manager for day to day support

The forms listed above should be filled out at the point of application and can be accessed from the Telecom Offices

How the Mobile Money System Works

Here we shall look at a typical illustration of a mobile money transaction.

A customer registers for the mobile money service with the telecommunications provider who creates the mobile money account associated with that particular registered phone number.

The customer then proceeds to cach-in onto their mobile money account by using a Mobile Money agent whom they give cash in exchange for e-money on the Mobile Money account.

This customer can through the execution of some commands send e-money to another mobile money account holder anytime they so wish. The recipient is also at liberty to cash-out at any time they want.

How does one start as a Mobile Money Agent?

You need to have the following basics:

Sim cards: Airtel and MTN are the biggest networks so far as far as mobile money is concerned and handle at least 90% of the transactions. Having those two lines is a necessity.
Display Table. You need to have a display table that will not only store the tools of your trade but it can be stocked with other complementary products like mobile phones, accessories like phone jackets, screen protectors among others.
A dual sim card phone
Transaction books
Good and strategic Location

How to Kick Off

Hiring a Transaction Line: Here, you hire an already registered Mobile Money transaction line from someone or a company. With this line, you simply start off business without going through any registration hurdles. The things to note about this option include among others:

Paying a monthly rental fee of at least UGX 50,000/= for the Mobile Money line.
Income is in the form of a percentage commission earned on each transaction and is paid at the end of the month.

Acquiring a Transaction Line through an Aggregator or Master Agent: These get agency tenders through some bidding process and thereafter become responsible for licensing Mobile Money agents in their territories. For one to be licensed as an agent, you need to:

Present an Identity Card
Present a letter of introduction/recommendation from the Local Council
Have a deposit of UGX 80,000/= (Eighty Thousand Shillings) to purchase the kit
Fill in an application form
Have starting Float of UGX 2,000,000/= (Two Million shillings)

Income earned here is in form of commission on transactions. An additional surcharge of upto 10% (depending on the Master Agent) of your income is deducted for tax to the Uganda Revenue Authority.

Direct Registration with a Mobile Network Operator (MNO): Here, one is at liberty to register as an agent directly with any Service Provider like MTN or Airtel.

Starting a Mobile Money business is relatively simple and the venture is highly profitable. Above is a guide on how to become a mobile money agent in Uganda.

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Embracing Mobile Money For Uganda’s Financial Prosperity

Uganda has witnessed a faster growth in mobile money transfers surpassing account holders in commercial banks..

Customers pictured at an MTN MoMo kiosk. (FILE PHOTO)

Cashless economies where transactions are done using digital payments instead of cash are gaining momentum across the world. This has been supported by enormous investments in digital payment infrastructure such as mobile money platforms, making it convenient for people and businesses to buy and sell products and services digitally.

Indeed, Uganda has witnessed a faster growth in mobile money transfers surpassing account holders in commercial banks. The latest data from the industry regulator, Uganda Communications Commission (UCC), indicates that the total number of registered mobile money accounts stands at slightly above 37.3 million since MTN Uganda first rolled out the service more than a decade ago.

A total number of registered mobile money accounts stands at slightly above 37.3 million. DATA FROM: UCC quarterly report between January – March 2023

In contrast, the number of bank accounts stands at a paltry 20.7 million as of June 30, 2022. This is less than 50% of the country’s population estimated at 45.5 million. This underscores the power of fintechs especially mobile money in driving financial inclusion, especially among the unbanked population.

However, the population’s transition towards cashless payment with great innovations such as mobile money has remained low.

This is the reason MTN Mobile Money Uganda Limited is carrying out a campaign dubbed “Pay with MoMo,” to encourage customers and merchants to pay and accept products and services including transferring money, paying bills, and performing various mobile phone transactions using digital money.

Fintech, particularly mobile money, emerges as a transformative force that can bridge the gap and empower the unbanked population.

One of the foremost advantages of transitioning towards a cashless economy is the enhanced security it offers. With digital transactions, the risks associated with physical cash, such as theft, counterfeit currency, and loss, are dramatically reduced.

The transparency of electronic payments creates a traceable record of transactions, facilitating the detection and prevention of fraudulent activities. This heightened level of security not only safeguards the assets of individuals but also bolsters confidence in the financial system.

Furthermore, a cashless economy brings undeniable efficiency and convenience to both businesses and individuals. Digital transactions are processed swiftly, eliminating the time-consuming burden of handling physical cash. The ability to make payments and access funds through mobile phones or electronic devices at any time and from anywhere enhances financial inclusivity and empowers individuals to participate more actively in economic activities.

Cost savings and economic growth are two other compelling reasons for countries like Uganda to embrace mobile money and reduce reliance on cash. The expenses related to the management of physical cash, including security, transportation, and storage costs, can be significantly minimized. These savings can then be redirected towards critical sectors of the economy, promoting sustainable growth and development. Furthermore, a cashless economy facilitates faster and more efficient transactions, which can stimulate economic activities and drive overall prosperity.

However, the transition to a cashless economy in Uganda is not without its challenges. Limited infrastructure and connectivity in far remote areas pose significant obstacles. Addressing this issue requires concerted efforts from telecom companies like MTN to expand network coverage and enhance connectivity in underserved regions. Additionally, educating and training individuals in these areas on how to effectively use mobile money services is crucial to ensure that the benefits of a cashless economy reach everyone.

Building trust and increasing awareness about the security and advantages of digital transactions are also paramount. Initiatives like MTN MoMo’s educational campaigns and community partnerships are playing a big role in overcoming these concerns. By fostering financial literacy and awareness, these efforts are gradually breaking down barriers and making people more comfortable with embracing mobile money as a means of financial empowerment.

As such, the transition towards a cashless economy, driven by mobile money transfers, holds immense significance for Uganda. It not only enhances security, efficiency, and convenience but also offers cost savings and the potential for economic growth.

While challenges exist, the concerted efforts of both public and private sectors, as exemplified by MTN MoMo’s initiatives, are paving the way for a more inclusive and prosperous financial landscape. As the mobile money ecosystem continues to evolve, Uganda is on the path to unlocking the full potential of a cashless economy, bringing financial access and empowerment to its people.

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Emmanuel Tumusiime-Mutebile: The development in mobile banking in Uganda

The views expressed in this speech are those of the speaker and not the view of the BIS.

Mobile money

Mobile money was introduced in Uganda in 2009. The business model involves a partnership between a mobile money operator and a commercial bank. The services offered have so far been restricted to domestic remittances, basic retail payments and money storage services. The growth in mobile banking has been phenomenal. As of December, 2014, there were over 18 million registered mobile money customers, and the average monthly number of transactions in the last quarter was 46 million while the average monthly value of the transactions was UGX 2.1 trillion. Mobile money therefore has a high potential to foster financial inclusion in Uganda.

Mobile money regulation

Money transmission is a regulated financial institutions business under the Financial Institutions Act, 2004 (FIA). Therefore, all mobile money operators have to get clearance from the Central Bank before they launch their services:

- If an operator is not a licensed financial institution, it must partner with a licensed financial institution.

- The licensed financial institution applies to the BoU for approval of the partnership with a mobile money operator to offer mobile money services.

- The financial institution must carry out a due diligence on the mobile money operator and must obtain proof of financial position, review the operator's business plan, risk management proposal, technology system and Anti Money Laundering (AML)/ Countering the Financing of Terrorism (CFT) measures.

- There must be an agreement between the financial institution and the mobile money operator. This agreement provides for the establishment of an escrow account in the financial institution where money is deposited before creation of e-value. Safeguarding customers' virtual money which they purchase with cash from mobile money agents has been the BoU's main concern. The BoU has only allowed mobile money operations when this is done in partnership with a supervised financial institution. Mobile money operators have to hold, in an escrow account in their partner financial institution, the equivalent in value of all the mobile money that they have sold to their customers. This means that the mobile phone operators, which are not licensed financial institutions, cannot themselves intermediate the funds that they have mobilised through the sale of mobile money. The parties must be able to reconcile the balances of the escrow account and the mobile money accounts.

- Once approval is obtained, mobile money is treated as a financial institutions business regulated under the FIA.

In 2013, the BoU issued mobile money guidelines which stipulate the approval process for the mobile money services, as well as the roles and responsibilities of all parties involved. They address interoperability, system standards, competition, AML/CFT, and supervision. They also stipulate the safeguards to protect customers among which are:

- Transactions must be real time and only carried out when the mobile money system is up and running, and must be authenticated by customers' PIN numbers. The customer must receive confirmation of execution of the transactions. In case of sending mobile money, the sender must be able to verify the recipient's name before completing the transaction.

- The customer obtains a copy of terms and conditions of the service at the time of registration and must be given a minimum of thirty days' notice before any changes.

- An agent must clearly display the identity and a dedicated telephone contact of the mobile money operator, the unique identification number of the agent, charges, notice that no charges are levied at the agent location, and a notice that the agent does not carry out transactions on behalf of customers

- Complaints handling and consumer recourse mechanisms.

Mobile money supervision

BoU has the powers to supervise the mobile money services. However, the mobile money operator has the duty to supervise its agents to ensure that agents conduct the business in accordance with the mobile money guidelines. Periodic reports regarding the performance of the mobile money services are submitted to the BoU. The BoU developed a compliance matrix to assess the level of compliance and is developing supervision procedures for the mobile money services.

Collaboration with UCC

The mobile money platforms ride on mobile networks and this called for regulatory collaboration with the Telecom regulator, the Uganda Communications Commission (UCC). First of all UCC has to allow telecos to provide mobile money as a value added service. Secondly, UCC is responsible for ensuring network availability (network system uptime), which is necessary for mobile money services to run. UCC has also to ensure that there is no unfair competition, i.e. that telecos do not lock out, nor unfairly charge other mobile money service providers who wish to use their networks. As is standard practice, regulators enter into Memorandum of Understanding (MOUs) to mainly exchange regulatory information and also provide for other regulatory issues in which they can collaborate. BoU and UCC are discussing the essentials to be included in the MoU.

Future developments

We envisage that mobile money will become an integral part of the National Payment System. The Bank of Uganda Act is being amended to include powers of the Central Bank to regulate and supervise the payment systems, and a National Payment Systems Legislation is being developed whereby payment service providers will be licensed by the Central Bank. Once this legislation is enacted, payment service providers will be directly licensed as payment operators.

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Unlocking Uganda's financial future: embracing mobile money for prosperity

Cashless economies – where transactions are done using digital payments instead of cash – are gaining momentum across the world. This has been supported by enormous investments in digital payment infrastructure such as mobile money platforms, making it convenient for people and businesses to buy and sell products and services digitally.

Indeed, Uganda has witnessed a faster growth in mobile money transfers surpassing account holders in commercial banks. Latest data from the industry regulator, Uganda Communications Commission, indicates that the total number of registered mobile money accounts stands at slightly above 37.3 million since MTN Uganda first rolled out the service more than a decade ago.

However, the population’s transition towards cashless payment with great innovations such as mobile money has remained low.

This is the reason MTN Mobile Money Uganda Ltd is carrying out a campaign dubbed "Pay with MoMo," to encourage customers and merchants to pay and accept products and services including transferring money, paying bills, and performing various mobile phone transactions using digital money.

Fintech, particularly mobile money, emerges as a transformative force that can bridge the gap and empower the unbanked population.

Building trust and increasing awareness about the security and advantages of digital transactions are also paramount. Initiatives like MTN MoMo's educational campaigns and community partnerships are playing a big role in overcoming these concerns. By fostering financial literacy and awareness, these efforts are gradually breaking down barriers and making people more comfortable with embracing mobile money as a means of financial empowerment.

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The case of Mobile Money innovation in Uganda

Undeniably, a lot has been said as well as written about mobile money. However, it seems there is still some unfinished business related to the topic of mobile money. This unfinished business explains why there is still an ongoing debate about the effect of mobile money on an economy, in this case the economy of Uganda. I found this debate a very intriguing one and I got tempted to contribute to it, particularly from the perspective of inclusiveness and poverty reduction. I would like to rebuff the line of thinking that mobile money has adverse effects on the economy and instead reiterate the counter argument that mobile money has already been playing significant roles, which are quite relevant in the quest for economic transformation and mass poverty reduction.

First, I introduce the concept of inclusion and how this concept relates to poverty reduction. Thereafter, I will put forward the arguments for and against mobile money. I will then use some numbers concerned with mobile phone growth and coverage to demonstrate what mobile money has done to this country’s economy so far.

Low income people can participate in their own capacities as producers or consumers of a product or a service. Inclusiveness simply means harnessing the capacities of poor men, women and youth to participate in the market, as consumers or producers. An inclusive market will be that market, where hindrances of poor people’s participation are at their basic minimal, or completely absent. The advent, growth and expansion in coverage of mobile phone has, to this date, been such an exposé in the development circles, particularly because of the way that mobile money brings poor people, in their various categories – men, women and youth to participate in the financial market. I will spare this discourse for later, as I prefer to illustrate this point using numbers.

Hereby, macroeconomic juxtaposition of mobile money!

An awesome number of arguments concerning mobile money has, by and large, been based on macro-economic theories. This is not surprising, because most of the research done on this topic has been academic, applying macroeconomic frameworks for data collation and analysis. Macro-economic arguments about mobile money has orbited around money demand, inflation, credits and interest rates, aggregate output and monetary policies. I will endeavour to tackle some of these theories as well arguments and counter arguments that theorists put forward.

Some studies show that the proliferation of mobile money payments may disadvantage commercial banks by weakening their liquidity positions. In response to these studies, other studies show that the adoption and use of mobile money implies a gradual substitution of real cash balances for banks deposits. By so doing, mobile money reduces demand for real cash, thereby strengthening liquidity of banks. Some studies claim a positive effect between mobile money balances and price index in the medium term and long term. In response, there are modest and insignificant effect of mobile money on inflation processes. Inflation is probable if mobile money does not lead to improvement in production and overall gross domestic product.

With respect to aggregate output, antagonists of mobile money argue that it may increase the demand for money. And for this, other studies show that innovations in the financial sector (including mobile money) are negatively associated with money demand. This is because, the increase in the velocity of money arising from application of mobile money is not yet higher than that of cash transactions. Notably, from the macro-economic perspective, there is very minimal adverse macroeconomic effect of mobile money and most of such effects appears only in the short run.

Now, inclusiveness and mobile money in numbers!

Mobile money is driving financial inclusion in Uganda. The advent of mobile money in 2009 has helped expand formal financial services to populations that were previously excluded. In 2013, 56% of all adults were using mobile money services. By August 2016, the value of mobile money transactions had reached 3.6 trillion and balances on mobile money reached 326 billion. Mobile money continues to be the predominant financial service and registered mobile money accounts increased from 35% in 2015 to 38% in 2016. Almost all who are included can access their money digitally. Mobile money access continued to grow in 2016, because of increase in the numbers of mobile money agents, who are men, women and youth. Notably, most agents are women. There is new evidence that having a registered mobile money account increases the likelihood of having some household savings.

From macroeconomic and inclusive perspectives, mobile money does not have any adverse effects on the economy Instead, mobile money has already been playing significant roles, which are quite relevant in the quest for economic transformation and mass poverty reduction. There is rich evidence, to support the cause for enhancing the contribution of mobile money services to the economy. Interventions, which are policy or innovations related, that can drive mobile money further will unleash the latent potential of mobile money to transform our economy. A framework through which mobile money balances could yield interests can go a long way to attract users and continuously elicit the potential of mobile money.

By Jimmy Ebong Research Specialist, FSD Uganda

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How to Start Mobile Money Business in Uganda

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