Mobile money transforms Uganda

The days when you had to spend USh10,000 on bus fare just to deliver USh20,000 to a relative in the village or join a long queues in banking halls to pay bills are soon coming an end.

The advent of mobile money, a platform which allows people to use their phones to transfer money, conduct banking services and pay for goods and services, has started to gather an unexpected pace.

The massive uptake of the mobile commerce platform as opposed to traditional banks can be explained by the rapid growth of mobile phone penetration.

With a population of about 32 million people, Uganda has over 10 million mobile phone subscribers and only about three million bank account holders.

The platform took advantage of the extensive reach of mobile phones to improve financial access and bring a good number of people into the formal banking system.

The service rides on Zain’s Zap, Uganda telecom’s M-sente and MTN’s Mobile money.

Mr Brandon Semanda, the Zain Uganda marketing manager says the firm has about 140,000 active clients using Zap and over 1.4 million customers with enabled sim cards and Uganda Telecom’s M-sente has a subscription of about 29, 510 as of August 8, 2010.

The convenient, flexible, low cost and instantaneous nature of the platform has led to its swift popularity among Uganda’s underserved and unbanked population.

Using the mobile phone as a bank account reduces the need to carry cash and enables users to purchase airtime, pay bills including water, electricity, cable TV services, school fees, merchandise.

Zap moves an estimated USh2 billion monthly and the average amount sent per transaction is between USh50,000 and USh500,000.

M-sente moves an average of USh300 million per month, says Mr Mark Kaheru, Uganda telecom’s relations manager.

An average of USh43 million was withdrawn per week and airtime worth USh2.5 million was purchased.

The platform has been taken up by many people, especially the unbanked, as a substitute of a savings account, which enables them to deal with unexpected expenses such as medical treatment.

Much cheaper

Thus, sending money using mobile money is much cheaper and faster compared to the slow and costly transfers via banks and traditional money sending agents.