According to Bank of Uganda, the value of transactions through Mobile Money at close of 2015 was UGX 32.5 trillion, up from UGX 900 billion. Image Credit: acumen
According to Bank of Uganda, the value of transactions through Mobile Money at close of 2015 was UGX 32.5 trillion, up from UGX 900 billion. Image Credit: acumen

Ugandans woke up to a world with no access to social media platforms and Mobile Money services on the day of the 2016 General Elections. Whereas many users installed VPN apps to bypass the restrictions and access their favorite social media sites, it was only until late Sunday 21st that they could access Mobile Money.

During this three day shutdown of Mobile Money services, many businesses were hit hard as many of the smaller businesses rely on it for many of their transactions, both for their operations and to receive payments from their customers. Bigger businesses also receive payments by Mobile Money and must have lost some sales during that shut down.

The telecoms also incurred heavy losses during this three day shutdown. For example, MTN which is the market leader has an average of UGX 60 billion worth of transactions daily and hence lost the revenue from charges to those transactions during the shutdown.

The question that I ask myself is what if Mobile Money was permanently shut down either due to political reasons like what recently happened or due to an operational or economical hazard?

Mobile Money was introduced in Uganda in 2009 and has seen tremendous growth over the years. In 2009, there were at least 1,000 users of mobile money. According to the Uganda Communications Commission (UCC), there about 19.5 million users now, which is almost 53% of Uganda’s population.

According to Bank of Uganda, the value of transactions through Mobile Money at close of 2015 was UGX 32.5 trillion, up from UGX 900 billion. Image Credit: staticflickr
According to Bank of Uganda, the value of transactions through Mobile Money at close of 2015 was UGX 32.5 trillion, up from UGX 900 billion. Image Credit: staticflickr

The performance of Mobile Money in Uganda has been absolutely spectacular. According to Bank of Uganda, the value of transactions through Mobile Money at close of 2015 was UGX 32.5 trillion, up from UGX 900 billion. The bulk of these transactions are through MTN Uganda which alone has over 60,000 registered agents.

Since its introduction in 2009, Mobile Money has fostered economic development through financial inclusion, and has given millions of people access to basic financial services for the first time. Many of these people had been excluded from the commercial banking system because they probably live too far from the bank branches or do not have sufficient funds to meet minimum deposit requirements to open a bank account. In addition the network of Mobile Money agents is widely distributed in locations where it would not be economically viable to open a bank account.

Mobile Money has been hailed for its convenience. One can pay for their bills in their comfort of their homes without making unnecessary queues at different offices and also save on transport costs.

Abaho Titus a resident of Kiwatule, a Kampala suburb says, “I used to stand in long queues in the banking hall paying for my water and electricity bills. I also used to make weekly deposits in my SACCO in the bank too which was hectic. With Mobile Money all that is done in minutes at my convenience.”

“I also pay my children’s school fees using Mobile Money and am able to send money for my parents’ upkeep in Mittoma viilage Bushenyi conveniently and easily,” he added.

If Mobile Money were to be shut down, some of the players probably would not survive and would have to exit the industry. Be it the telecom companies or the numerous smaller businesses in the ecosystem that support the Mobile Money system, profitability would be difficult with this revenue stream removed.

Uganda Revenue Authority would also lose earnings since the telecom companies are some of the biggest tax payers in the country. In the 2014 budget, the government imposed a tax on all Mobile Money transaction charges, so that would also be lost revenue.

In conclusion, Mobile Money has become one of those things that we can’t imagine life without, and measures need to be put in place to prevent arbitrary shut downs and the resulting effects such have on the economy.

  • Thank you for the article Deborah. In recent weeks Uganda’s Daily Monitor, as well as a CGAP blog, reported the significant difficulties realized by Ugandan citizens, Ugandan businesses, the Ugandan government and more (i.e.: Ugandan mobile money users loosing trust in mobile money and draining their accounts) due to how the UCC (Uganda Communications Commission) ordered the disabling of mobile money platforms before and during elections. This broken-trust in mobile money reality could spread beyond the borders of Uganda. (Interestingly, in May 2015 a Ugandan judge ruled 5 Ugandan Carriers operating mobile money in Uganda were illegal based on his interpretation of Ugandan regulations on telecom and financial services [but another judge over turned that ruling]). Non-profit industry association FINCCLUDE got involved immediately. FINCCLUDE has parallels to AFI (Alliance for Financial Inclusion). Both facilitate harvesting and cross-pollinating success-knowledge for financial inclusion – AFI for policy matters – FINCCLUDE for operational strategic and tactical matters. FINCCLUDE immediately alerted its global member base who are experts in mobile money. Within 1 hour we uncovered success-precedent for another country also shutting down their mobile money platforms during elections, but without costly disruptions. Willing to share this success-knowledge (free and without obligation), FINCCLUDE reached out to the UCC and to leadership with all 5 Ugandan MNO/Carriers involved in operating mobile money in Uganda to make them aware that FINCCLUDE can connect them with success-knowledge (FINCCLUDE awaits their response). Visit FINCCLUDE.org’s “Impact” page to read more about this.