Mobile phones pulling Uganda into the future


Uganda’s mobile revolution is in evidence across Kampala. (Photo: Fiona Graham)

Ask anyone about the pace of technological innovation in Africa and they’ll usually point you straight to Kenya.

That’s not surprising – Safaricom’s hugely successful M-PESA service has put east Africa in the international limelight for leapfrogging the traditional banking sector with its mobile payments revolution.

But if you travel just a few miles west, Kenya’s smaller next-door neighbour Uganda is experiencing a major mobile revolution of its own.

The country is home to more than 19.5 million mobile wallets – almost as high as Kenya’s 25.4 million – making it one of the biggest Mobile Money markets in the world.

Mobile Money (the industry term for mobile payment services like M-PESA) has been available in Uganda since 2009, and has come to form a crucial thread in the country’s economic and social fabric.

Talk to any Ugandan and it’s easy to see why.

Staying connected to life in the village is extremely important for many Ugandans. Whether you’re from the matooke and fish-loving Nile area around Lake Victoria, or the ugali and groundnut stew loving North, Ugandans are proud of their roots.


Staying connected to the village is important. Ugandan’s lush green landscape is fertile and rich with nutrients, and farming is common. Photo: Fiona Graham

This strong connection to the village has been a major factor in spreading the use of Mobile Money.

Even as young people move to the cities, they regularly send money home to their parents, grandparents and other relatives.

Finding a safe, simple way to do this used to be extremely challenging. Usually it meant waiting until one could travel home, carrying large amounts of cash on long bus journeys.

When Mobile Money was first introduced by telecoms operator MTN, it offered a safe way to send money to anyone with a mobile phone in just a few minutes, for a small transaction fee.

Uptake grew as people tried out the service and encouraged their friends to use it. According to arecent survey, the most common reason for opening a Mobile Money account is because someone has sent them money.

The statistics help to tell another part of this story.

Uganda has one of the world’s lowest banking penetration rates: only three in 10 Ugandan adults have access to any type of account at a financial institution, according to the World Bank.

That includes local credit unions known as SACCOs (Savings and Credit Cooperatives), which traditionally have been a more affordable alternative to banks for ordinary Ugandans.


WorldRemit’s senior mobile money analyst Alix Murphy -left – on a recent trip to Uganda. Photo: Fiona Graham

Partly this is due to banking regulations which made it more difficult for banks and other financial institutions to conduct branchless or agent-banking (a type of banking which allows a licensed third party like an agent to conduct deposits and withdrawals on behalf of the bank).

Until very recently, any Ugandan who wished to have a bank account had to travel to the bank personally, often a long distance for those living in the countryside.

Services like MTN Mobile Money or Airtel Money, on the other hand, are licensed to operate through local agents like shopkeepers and mobile airtime sellers. Look around Uganda today and you’ll find a Mobile Money agent on almost any street corner and in almost every village.

As a result, Mobile Money accounts are now nearly three times as prevalent as bank accounts.

According to Uganda’s Central Bank, Mobile Money transaction volumes grew to over Sh 24 trillion ($8.5 million) in December 2014. MTN recently stated that their users are making 40 million Mobile Money transactions a month.


Mobile money agents can be found almost everywhere, making them far more convenient than banks. Photo: Fiona Graham

Today six Mobile Money services operate in Uganda, offering a wide range of options beyond transferring money to another person.

The electricity supply company Umeme has said it collects about sh5.8 billion monthly in payments made by customers using mobile wallets, while the National Water and Sewerage Corporation (NWSC) collects around sh2.1 billion monthly.

Hundreds of schools around the country accept Mobile Money, meaning parents no longer have to queue up at the school board, but can pay school fees directly from their mobile phone.

Beyond the basic necessities, Ugandans can also pay for TV subscriptions, purchase airline tickets, order food delivery, shop online and even play the lotto.

MTN recently began offering the opportunity to pay for petrol at Shell petrol stations, great news for thousands of boda boda – or motorcycle taxi – drivers.

Mobile Money is also a critical tool used by small businesses for daily trade and operations.

According to FSD Uganda, only 37% of businesses in Uganda have access to the internet, yet half of all small businesses and 57% of micro-sized enterprises (businesses employing fewer than five people) use Mobile Money.


More than half of all small businesses in Uganda accept Mobile Money. Photo: Fiona Graham

It hasn’t always been plain sailing.

Uganda’s impressive achievements in the industry today have come from lessons learned through some difficult challenges.

In 2011 MTN experienced a case of internal fraud which caused the company significant financial losses.

The case made international headlines and helped to focus the industry’s attention on internal security and fraud reduction processes.

As a result, Mobile Money services in other countries took important steps to strengthen their systems and educate customers about fraud.

After major investments and migration to a state-of-the-art Ericsson platform, MTN now has one of the most advanced and robust Mobile Money systems in the world.

Other markets continue to look to Uganda to see what will come next for the Mobile Money industry.

Just this month, parliament approved important amendments to the 2004 Financial Institutions Act, which is expected to bring further competition from banks who are now licensed to conduct agent banking.

International remittances – a relatively new opportunity for Mobile Money providers – are expected to have a positive impact on the economy by improving the safety and security of cross-border transactions.

These are all signs of a maturing and vibrant industry. Yet there remain many opportunities to innovate and build upon existing services, expand the offering of relevant financial services through Mobile Money such as credit and insurance, and to reach even more customers.

As WorldRemit celebrates its international partnership with MTN Mobile Money, we’ll be exploring some of the most interesting innovations taking place in Uganda, bringing stories from the country’s entrepreneurs to the wider world.

(This post written by Alix Murphy – a Senior Mobile Analyst at WorldRemit – has been reproduced from the WorldRemit blog. Alix’s Twitter handle is @AlixinLondon).


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