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MOBILE MONEY: MPESA IN UGANDA

G. REVANTH KUMAR 1 NAKYAJJA JOAN

2

1 BBA Faculty, Nizam College, Basheerbagh, Hyderabad, India

2 Student from Uganda, BBA Graduate, Nizam College, Basheerbagh, Hyderabad, India

ABSTRACT

M-Pesa, a mobile-phone based electronic payments system has become an asset to all kinds of

people in Uganda because of its convenience, reliability and popularity. M-Pesa has recently proven

to be a major power as a company and in terms of usage to the people of Uganda due to its

capabilities to transform the financial fabric of society particularly for traders between Kenya and

Uganda. Since its launch in 2015, M-Pesa has contributed to the reduction of communication costs in

some parts of Uganda as a developing country from prohibitive levels to amounts that are in

comparison, virtually trivial. This has left a major impact to mobile advocates who are extremely

enthusiastic about its present performance. So now with its international acclaim and all the support

it‘s receiving in the Ugandan market, M-Pesa is set to transform the way the world does its

transactions.

INTRODUCTION

M-Pesa officially came into existence in 2007 through Vodafone for Safaricom which is the

largest mobile network operator in Kenya. It spread fast and by 2010 it had become the most

successful mobile-phone based financial service in the developing world. M-Pesa is a mobile money

transfer system created to allow microfinance borrowers and senders to conveniently send and receive

money through the conversion of cash through electronic systems which happens at retail stores

(agents). The transactions are all recorded and authorized in real time using secure SMS.

In 2015, Safaricom entered into a deal with MTN a leading mobile network in Uganda that will see

their respective mobile money customers transfer money to each other across the seven East African

countries. The official merging between two large mobile money operators now enables convenient

sending of cash between M-Pesa customers in Kenya, Tanzania, DRC, Rwanda and Mozambique

with MTN mobile money customers in Uganda and Zambia as well. The SafaricomCompany has

recorded over 1.5 trillion transactions in the first semi quarter of 2015 with M-Pesabeing its biggest

revenue platform. Apparently the two companies Safaricom and MTN boast about the very large

number of active M-Pesa users with Safaricom having 22million M-Pesa users and MTN Uganda

with 5million mobile money users as well which is considered a great deal among both companies.

According to the press, Safaricom‘s director of financial services Betty Mwangi said that this

was yet another affirmation of their intention to make it possible for their individuals and business

customers to enjoy convenient, affordable and reliable mobile money services across all borders. M-

Pesa‘s success means that there is need for small electronic transactions and it‘s designed with certain

limits on how much is to be transacted on a daily basis. M-Pesa acts as a role model to other mobile

money transfer businesses because of its major success despite all the corruption and development of

technology with the attached disadvantages also.M-Pesa subscribers can register for the M-Pesa

services by filling up a simple form and providing any identification proof. To load the money on the

wallet, the user needs to visit the nearest agent and deposit cash there and to access the service, the

users will be required to dial *840# then follow the instructions with the cash being sent in Kenyan

shillings and received in Ugandan shillings based on the prevailing exchange rates. The transaction

INTERCONTINENTAL JOURNAL OF FINANCE RESEARCH REVIEWISSN:2321-0354 - ONLINE ISSN:2347-1654 - PRINT - IMPACT FACTOR:1.552VOLUME 4, ISSUE 8, AUGUST 2016

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charges depend on the amount of money being transferred and whether the payee is a registered user

of the service plus the activation cost is a fixed amount for a given range of transaction.

―We are excited to offer affordable remittance services from M-Pesa to MTN mobile users in

Uganda‖, said Mr. Phrase Lubega MTN Uganda‘s General Manager in charge of financial services.

He also mentioned that their subscribers will from now henceforth be able to cash out at any of the

5500 agents across the country. The partnership between MTN and Safaricom is set to increase trade

between the two nations and offer more cheap remittance services especially since Uganda is one of

Kenya‘s top trading partners. The usage of the mobile money transfer service is mainly driven by the

high number of traders operating from Kampala and other towns in the country and other kinds of

regular day to day people like students, teachers, doctors, lawyers, etc. M-Pesa is also not classed as a

deposit taking institution such as a bank and its customers can deposit and withdraw money from a

network of agents that include airtime resellers and retail outlets acting as banking agents. The service

enables its users to; deposit and withdraw money, transfer money to users and non-users (subscribers),

pay bills, purchase airtime, transfer money within the service and in some nations like Kenya,

Uganda, Tanzania, Rwanda, etc.

OBJECTIVES OF THE STUDY

(i) To analyze the emergence and present status of M-Pesa in the Ugandan society.

(ii) To assess the opportunities and challenges of M-Pesa market in Uganda.

PLAN OF THE STUDY

The paper is divided into 2 parts

PART A studies the implementation, regulations, services, status of M-PESA in Uganda and

population of M-PESA Users

PART B Identifies the opportunities, challenges M-Pesa is facing, efforts needed to increase M-Pesa

market penetration and regular use and the key Highlights of M-PESA

PERIOD OF STUDY

The study has been conducted from the emergence of M-Pesa in Uganda from2015 till date

(2016).

SCOPE OF THE STUDY

The project has been focused on M-Pesa since its entrance in Uganda. It provides a strategic

analysis on the evolving success of M-Pesa and its current situation like its performance and success

rate.

PART – A

M-PESA

M-Pesa is the world's most successful money transfer service. It‘s one of the best products of

Safaricom Kenya. It was developed by Vodafone which initially holds a 35% share in Safaricom. The

―M‖ stands for mobile well as ―Pesa‖ in Swahili stands for money. It‘s a mobile based transfer service

that enables millions of people to have access to a mobile phone, but do not have or have only limited

access to a bank account, to send and receive money, top up airtime and bill payments. Customers



register for the service at an authorised agent, often this is a small mobile store or retailer and then

deport the cash in exchange for electronic money which they can send to their families or friends.

Once they have registered, all transactions are completed securely by entering a PIN number or code

and both parties receive an SMS confirming the amount that has been transferred. The recipient who

does not have to use the same network, receives the electronic money in real- time and then redeems it

for cash by visiting another agent.

Since its introduction in March of 2007, the M-Pesa money transfer system has seen its

popularity with the un-banked population rush, making the application a great success all over the

country. In a countries like Kenya, Tanzania, Uganda and other low earning countries where almost

80% do not have access to the traditional banking system and there are more mobile outlets like M-

Pesa than ATMs. Immediately after the system was launched, it was attracting new subscribers at the

rate of 12000/day, quickly building a massive network to operate.In addition to the millions of person-

to-person (P2P) and customer-to-business (C2B) transactions, M-Pesa has made a big difference to

peoples' lives in other ways. For example in Tanzania where the cost of travel prevents many people

from getting the medical care they need, one non-government organisation (NGO), Comprehensive

Community Based Rehabilitation in Tanzania (CCBRT), has used M-Pesa to send patients the money

to pay for their travel to its hospitals. In Kenya, water company customers use M-Pesa to buy credits

which are transferred from their phone to their key receiver which is then used to pay for fresh, clean

water when they need it. Since its commercial launch in March of 2007, M-Pesa has received

substantial scale and influential awards as well.

CONCEPT OF M-PESA

The initial concept of M-Pesa had been to create a service which would allow microfinance

borrowers to conveniently receive and repay loans using the network of Safaricom airtime resellers.

This would enable microfinance institutions (MFIs) to offer more competitive loan rates to their users,

as costs are lower than when dealing in cash. The users of the service would gain through being able

to track their finances more easily. When the service was started, customers adopted the service for a

variety of alternative uses and complications arose with MTN, the partnering MFI. In discussion with

other parties, M-Pesa was re-focused and launched with a different value proposition: sending

remittances home across the country and making payments. The transaction infrastructure between the

two networks has been enabled by MFS Africa, which develops and distributes mobile financial

solutions to markets across Africa. MFS Africa's Chief Executive Officer, Dare Okoudjou said, ―We

are confident that the cashless revolution that started in Kenya almost a decade ago, will now unlock

not only intra-African remittances but also serve as a catalyst for trade and economic growth in the

region.‖

The service does not require users to have bank accounts. All they need to do is register at an

authorised M-Pesa agent by providing their MTN mobile number and their identification card. Once

registered the user can buy digital funds at any M-Pesa agent and send cash to any other mobile phone

user in Uganda and other M-Pesa users across the Ugandan borders. Apparently M-Pesa gives people

too much access 24/7 to their cash which could eventually undermine the saving system. Analysis

shows that M-Pesa based cash transfers are secure, enable a quick emergency response, are cost

effective and empower communities. The cash transfers give users a wide range of services and its

empowering the lower class people especially to be able to send cash or receive cash across countries

and the ability of their phones to do the transactions through SMS which expands the range of cheap

communication available. Safaricom has had to generate super value services on M-PESA to be the

leader in the market. The following is a breakdown of the services within Safaricom the umbrella



company under which M-PESA operates. Primary activities include inbound logistics, inventory and

warehouse operations, marketing and sales, services aimed at maintaining and improving the product

value, customer support and training. These are services that are outsourced by Safaricom to achieve

the following objectives:

• optimize costs

• acuteness in meeting customer requirements and satisfaction

• Creation of a centralized as well as distributed warehouse capacity to support growth to

various locations in which Safaricom operates.

• Ensure service level monitoring and reporting of customer queries

LITERATURE REVIEW

Mobile banking is a powerful tool for economic growth and should be protected from

challenges it faces. Safaricom and MTN are just some of the biggest organizations that are offering

mobile money services and therefore this project will not only benefit it but other organizations which

offer the same services and other related industries such in Uganda. The mobile money services have

now predisposed Uganda to a better macroeconomic environment, where the country‘s main bank can

better monitor cash in circulation. M-Pesa has also become popular for paying utility bills with

corporates including the Uganda Water and Sewerage Company, Ugandan electricity board, DStv and

other services for payment of bills due to its convenience. M-Pesa has been successful because it

relies on traditional practices and structures and modernises these features. It‘s a model based on

indigenous payment practices, extended mobile phone networks and a large distribution network.

The Kenya – Uganda trade will receive a major boost and strengthen the relationship between

the two countries because of the merger signed between Safaricom and MTN that allows money

transfers across their networks. From the looks of it, M-Pesa is looking to provide an efficient next –

generation network on which they can offer high quality value added services to their customers.

Although they are faced with some challenges from defending their main fixed revenues, they are also

generating growth from new wave services and international operations. The expansion of the service

to Uganda follows its major success debut in Kenya from when it was first launched in 2007 which

has attracted a lot of customers. It‘s designed to encourage customers to experiment free and quick

registration, free deposits and the ability to be able to send money to any mobile phone.

In a far-flung African village, when an 80-year-old grandmother wants to send and receive

cash, she simply registers for mobile money with a service provider. If she wants to pay for services

or transfer money to someone in another village, she goes to an agent and pays the required amount,

which is loaded onto her ―account‖. The recipient can then withdraw the money from an agent in their

village. Mobile Money today represents a fundamentally transformational opportunity to connect

billions of people to the formal and informal economy, the unbanked and banked citizens of the

world. According to GSMA‘s Mobile Economy 2013 report, globally, more than 2.5 billion adults do

not have access to a formal bank account and are not able to access basic financial services in order to

save, borrow or transact. However, the report states that the increasing levels of mobile penetration

(there are 3.2 billion mobile phone users worldwide) presents a significant opportunity for financial

inclusion for the world‘s unbanked, through services such as Mobile Money.

Traders and farmers in the community have also benefited from the service. The community

is made of traders who travel deep into remote villages to purchase farm produce for retail purposes in



the big cities. If these traders run out of money in the course of their purchases, they usually contact

any of their co-workers, friends or beneficiaries to transfer money via Mobile Money. Looking at such

examples, it is clear that the benefits of Mobile Money are immense. So it is unlocking a previously

inaccessible customer base like an 80-year-old villager, thereby increasing financial inclusion and

enabling participation in mobile financial services for millions of the world‘s unbanked.

THE EXPLOSION OF M-PESA

New mobile financial service operators seek to mimic the success and market penetration

which Safaricom has been able to achieve. Between the years 2008 and 2011, M-Pesa grew at 88%

annually which was not the case from when it was first launched (Deb and Kubzansky, 2012). Never

before has there been such a take up of mobile financial technology. M-Pesa is also maintaining

growth at an unexpected rate, with competitors having a negligible effect on their vast market

penetration. M-Pesa has influenced its status as a mobile phone operating network to create a

profitable mobile financial system by fundamentally altering the credit system in place. The spreading

of informal credit has created benefits to those involved, has introduced a wide range of benefits and

diminished much of the risk present in an unbanked society. Nick Hughes, one of the men behind the

idea and creation of M-Pesa, contributes to the rise of two factors, ―targeting the unbanked‖ and

―learning to keep it simple‖ (Hughes and Lonie, 2007). Before M-Pesa, formal financial institutions

struggled with finding the appropriate means to connect with the general population in developing

countries.

M-Pesa unlocked a new medium for transfers and created an easier way to receive credit. In

addition, it also improved and accelerated avenues for trade, created a higher demand for saving, as

well as allowed the risk to be spread out amongst a larger network. The transference of money has

never been easier in the East African nation. Furthermore, the ease in which individuals can now save

has improved the informal credit market. With an increase in transfers, individuals can now be able to

have a better and smooth consumption, receiving aid from friends and family in times of hardships or

economic shock. The access to credit generally raises the wealth and consumption of individuals.

Not all the benefits went to the customer, as the agents and Safaricom still turn a certain

profit. This is derived from the high volumes of activities as well as cost cutting techniques. M-Pesa

was able to achieve a fresh volume, creating a familiarity and a huge level of comfort for its

customers. Mas and Morawczynski (2009) credit the uniformity of the brand to its booming success,

declaring that ―it is consistency among all elements of the customer proposition and Safaricom's

attentive monitoring of the entire system that best explains its success‖. A key element of this success

is that the agents presiding over the cash in or cash out stores are the cornerstone of the operation.

LIST OF COUNTRIES USING M-PESA

Sub Saharan Africa was the ideal environment for the development and growth of the mobile

money industry and it represented an area with a large number of unbanked individuals likely to using

informal savings and credit, large barriers of access to formal institutions, and high penetration of

mobile phones. Vodafone through M-Pesa expanded their mobile banking operations to countries in

Africa and some other countries just outside Africa.



KENYA

M-Pesa was first introduced by the Kenyan mobile network operator Safaricom, where

Vodafone is technically a minority shareholder (40%), in March 2007. M-Pesa quickly captured an

influential market share for cash transfers, and grew to 17 million subscribers by December 2011 in

Kenya alone.The growth of the service forced formal banking institutions to take note of the new

enterprise. In December 2008, a group of banks reportedly urged the Kenyan finance minister to audit

M-Pesa, in an effort to at least slow the growth of the service. This ploy failed, as the audit found that

the service was robust. At this time The Banking Act did not provide basis to regulate products offered

by non-banks, of which M-Pesa was one such very successful product. As at November 2014, M-Pesa

transactions for the 11 months of 2014 were valued at KES. 2.1 trillion, a 28% increase from 2013,

and almost half the value of the country's GDP.On November 19, 2014, Safaricom launched a

companion android app Safaricom M-Ledger for its M-Pesa users. The application, currently available

only on Android, gives M-Pesa users a historical view of all their transactions.

TANZANIA

M-Pesa was launched in Tanzania by Vodacom in 2008 but its initial ability to attract

customers fell short of expectations. In 2010, the International Finance Corporation released a report

which explored many of these issues in greater depth and analysed the strategic changes that Vodacom

has implemented to improve their market position. As of May 2013, M-Pesa in Tanzania has five

million subscribers.

AFGHANISTAN

In 2008 Vodafone partnered with Roshan, Afghanistan's primary mobile operator, to provide

M-Pesa, the local brand of the service. When the service was launched it was initially used to pay

policemen's salaries set to be competitive with what the Taliban were earning. Soon after the product

was launched, the Afghan National Police found that under the previous cash model, 10% of their

workforce were ghost police officers who did not exist; their salaries had been pocketed by others.

When corrected in the new system, many police officers believed that they had received a raise or that

there had been a mistake, as their salaries rose significantly. The National Police discovered that there

was so much corruption when payments had been made using the previous model that the policemen

did not know their true salary. The service has been so successful that it has been expanded to include

limited merchant payments, peer-to-peer transfers, loan disbursements and payments.

SOUTH AFRICA

In September 2010 Vodacom and Nedbank announced the launch of the service in South

Africa, where there were estimated to be more than 13 million "economically active" people without a

bank account. M-Pesa has been slow to gain a toehold in the South African market compared to

Vodacom's projections that it would sign up 10 million users in the following three years. By May

2011, it had registered approximately 100,000 customers. The gap between expectations for M-Pesa's

performance and its actual performance can be partly attributed to differences between the Kenyan

and South African markets, including the banking regulations at the time of M-Pesa's launch in each

country. According to MoneyWeb, a South African investment website, "A tough regulatory

environment with regards to customer registration and the acquisition of outlets also compounded the

company's troubles, as the local regulations are more stringent in comparison to our African



https://en.wikipedia.org/wiki/Vodafone

https://en.wikipedia.org/wiki/International_Finance_Corporation

https://en.wikipedia.org/wiki/Roshan_(telco)

https://en.wikipedia.org/wiki/Afghan_National_Police

https://en.wikipedia.org/wiki/South_Africa



counterparts. Lack of education and product understanding also hindered efforts in the initial roll out

of the product." In June 2011, Vodacom and Nedbank launched a campaign to re-position M-Pesa,

targeting the product to potential customers who have a higher Living Standard Measures (LSM) than

were first targeted. Despite efforts, as at March 2015, M-Pesa still struggled to grow its customer

base. South Africa lags behind Tanzania and Kenya with only c.1 million subscribers. This comes as

no surprise as South Africa is well known for being ahead of financial institutions globally in terms of

maturity and technological innovation. According to Genesis Analytics, 70% of South Africans are

"banked", meaning that they have at least one bank account with an established financial institution

which have their own banking products which directly compete with the M-Pesa offering.

INDIA

M-Pesa, was launched in as a close partnership with ICICI bank in November

2011.Development for the bank began as early as 2008. The service continues to operate in a limited

geographical area in India. Vodafone India had partnered with both ICICI and ICICI bank, ICICI

launched M-Pesa on 18 April 2013. Vodafone plans to rollout this service throughout India. The user

needs to register for this service by paying 100 Rupees, on which 25 Rupees will be credited back to

the users account and there are charges levied per M-Pesa transaction for money transfer services and

DTH and Prepaid recharges can be done through M-Pesa.

GHANA

UK Telecommunications Company which holds a 40 per cent stake in Safaricom recently

launched M-Pesa services in Ghana completing the spread of mobile money in most African countries

where the British firm has a presence. The M-Pesa service in Ghana is called Vodafone cash and its

launch brings to eleven countries where the UK has launched its mobile service globally. ―Ghana is

the last country in Africa where Vodafone has operations and where we had not yet launched the M-

Pesa service.‖ said former Safaricom CEO and currently the Vodafone director of mobile money

Michael Joseph.

EASTERN EUROPE

In March 2014, M-Pesa expanded into Romania, while mentioning that it may continue to

expand elsewhere into Eastern Europe, as a number of individuals there possess mobile phones but

not possess traditional bank accounts. M-Pesa has been able to provide or offer simple, safe and

secure mobile money transfer and payment services to approximately seven million Romanians who

transact mainly in cash. The service also offers banked customers the convenience of being able to

access and transfer money via the mobile phone.M-Pesa is based on simple text messaging technology

and operates over any of Vodafone Romania‘s mobile network connections, including 4G services

which launched in 2012. Romanian customers of M-Pesa are now able to transfer as little as one

Romanian leu (0.22 euro cents) up to 30,000 lei (6,715euros) per day.

IMPLEMENTATION OF M-PESA IN UGANDA

With much of the infrastructure for M-Pesa already in place, making the transition from an

idea to reality was not relatively easy. Five key areas needed to be addressed to ensure a successful

launch of the program include: a financial institution to hold their money, cooperation with regulators

(MTN), a supply of agents, cellular towers and servers and creating demand among consumers. All

these aspects that were masterfully tied together by Safaricom and MTN ensure a growing demand

with facilities to produce sufficient supply for their innovative platform.



https://en.wikipedia.org/wiki/ICICI_Bank

Before the development of M-Pesa, MTN completely enjoyed a large lead in the market share of the

Ugandan cell phone market. MTN reportedly controlled approximately 65% of the market meaning

that the service for their phones was already reaching nearly almost the entire population. On the

demand side, this extensive coverage allowed the company to build good relationships with its large

customer base. The new goal was to expand this network and create as much market penetration as

possible.

The most important parts of the M-Pesa operations are their agents in the field. Without

competent and consistent agents, the development of M-Pesa would prove to be futile. An agent can

create demand and is the corporate representative of M-Pesa, making them the cornerstone of the

service-oriented platform. The launch occurred on a massive scale and set the path to the rise as the

major mobile money service. The coupling of a reliable infrastructure with credible marketing was the

perfect recipe for creating the widespread adoption in Uganda. Being new to the market, M-Pesa's

intention was to create as much customer growth as possible over shadowing the Uganda Shillings

(Ugshs) for the creation of agents or increases in transactions. MTN aggressively marketed their new

product as an extension of their phone service, solidifying its reputation as a ―strong service brand‖

and a reliable corporation.

Presented as a financial tool for the wealthy that was also accessible to the poor, a certain prestige was

attached to the service, driving up demand. Research shows that new technology excites individual

and creates desire for the product. To make the product even more attractive, M-Pesa developed a

platform that was accessible to all phones. To cool the confusion that accompanies a switch to new

services, MTN offered free simcard upgrades, creating the first interaction between customer and

agent, and establishing a platform to clear up any confusions.

REGULATIONS

Mobile money transactions present regulatory challenges ensure maximum development

benefits. First, mobile money traverses previously distinct and independent areas of regulation (most

notably, the telecommunications and financial banking sectors and often involves multiple ministries

and Government agencies, thus adding to the complexity of oversight needed. Secondly, there is a lot

of dynamism with disparate, changing technologies and business models as MNOs and other parties

explore emerging opportunities with the potential to change the financial landscape. Thirdly, there is

limited policy experience in other countries and regions to draw on when drafting relevant laws and

regulations. As in most other developing countries, national regulations have not kept pace with

developments in the field. It is therefore imperative that regional and national authorities identify and

address the gaps and potential overlaps between their existing regulatory tools and mobile money

infrastructures.

FINANCIAL LEGISLATION

Some of the pertinent financial legislation that influences the operations of Mobile Money within

Uganda

(a) The Bank of Uganda Act (enacted 1969, amended through 2000) — created the Bank of Uganda,

the financial regulator and defines its mandate.

(b) The Financial Institutions Act (enacted 2004)—provides the regulatory framework for the

financial sector in Uganda.

(c) Financial Institutions Licensing Regulationsand other related regulations(enacted 2005)—guides

the licensing and operation of financial institutions within Uganda.



(d) The Micro Finance Deposit-Taking Institutions Act (enacted 2003)and the Microfinance Finance

Deposit-Taking Institutions Regulations (enacted 2004)— regulate the provision of microfinance

services within Uganda.

(e) The Foreign Exchange Act (2004)— guides the exchange of foreign currencies, international

payments and transfers of foreign exchange within Uganda.

(f) The Foreign Exchange (Forex Bureau and Money Remitters) Regulations (2006)—

specifies licensing conditions and guides activities of entities licensed as Forex bureau or money

remittance businesses.

(g) The Draft Anti-Money Laundering Bill is yet to be passed by the Parliament of Uganda.

However, AML regulations and an Anti-Terrorism Act (2002) criminalize the financing of terrorism

and associated money laundering and help address AML/CFT issues in Uganda.

OTHER LEGISLATION

Legislation with the potential to influence the conduct of mobile money operations in Uganda

includes:

(a) The Uganda Communications Act (1997)— provides a legal framework for the communications

sector in Uganda. It established the Uganda Communications Commission (UCC), the sector regulator

and defines their mandate

(b) Electronic Signatures Act, 2010

(c) Electronic Transactions Act, 2010

PLAYERS

In 2010 to 2011, there were six operational MNOs that were licensed by the UCC in Uganda. They

include Airtel Uganda,MTN Uganda,Orange Uganda,Uganda Telecom Ltd (UTL),Warid

Telecom,and Suretelcom Uganda. Among these, four have operational mobile money platforms. The

table below provides an overview of MTN Uganda Mobile Money, Airtel Money and UTL M-Sente

OVERVIEW OF MOBILE MONEY PLAYERS IN UGANDA

OVERVIEW MTN Mobile Money Airtel Money UTL M-Sente

Mobile operator MTN Uganda Airtel Uganda Uganda Telecom

MTN Uganda www.mtn.co.ug Africa.airtel.com/uganda www.utl.co.ug

Bank partners:

Deposits

Stanbic Uganda Standard Chartered DFCU Bank

Stanbic Uganda www.stanbicbank.co.ug www.standardchartered.com/ug/en www.dfcugroup.com

Bank Partners:

Services

Post Bank Uganda

United Bank for Africa

Launch date March 2009 June 2009 March 2010

Service delivery STK STK USSD

Subscribers (May

2011)

1 900 000 135 000

60 000

Source: http://www.ilo.org/dyn/migpractice/docs/145/UNCTAD.



SERVICES

M-Pesa has developed to provide a variety of services that currently have different fees for customers

in Uganda and its neighbouring countries. Mobile money services can be broadly categorized into

three groups:

Types MTN Mobile Money Airtel Money UTL M-Sente

M-

TRANSFERS

Domestic transfers up to

maximum of 1,000,000 for

both unregistered (off-net)

and registered (one-net) users

Domestic transfers uo to

maximum of 35,000 to

unregistered (off-net)

and 70,000 to registered

(on=net) users.

Transfers from a

user’s phone to any

bank account.

Domestic transfers up

to maximum of

35,000 to both

unregistered (off-

net) and registered

(on-net) users.

Only MM platform

that registers users

on other networks.

M-PAYMENTS

• Buy airtime (on-network)

• Pay postpay phone bills

•Educational institutions

(school

fees)

• Multichoice Uganda and

StarTv

(Satellite TV bills)

• National Water & Sewage

Corporation

(water bills)

• Online payments

• Financial institutions (loan

disbursements

and repayments)

• Businesses (customer to

business

i.e. payments)

• Bulk payments (business to

customer i.e. salaries)

• Buy airtime (on-

network)

• Pay postpay phone bills

• Multichoice Uganda

(Satellite

TV bills)

• Businesses (customer to

business

i.e. payments)

• Bulk payments

(business to

customer i.e. salaries)

• Online payments

• Buy airtime (on-

network)

•Educational

institutions (school

fees)

• National Water &

Sewage Corporation

(water bills)

• Online payments

M-FINANCIAL

SERVICES

• Mobile banking services for

customers

of Post Bank Uganda

• ATM withdrawal by

phone

• Transfer funds from

and to a

user‘s Equity bank

account

Source: http://www.ilo.org/dyn/migpractice/docs/145/UNCTAD.pdf

M-TRANSFERS

Money is transferred from one user to another, normally without an accompanying exchange

of goods or services. These are also referred to as Person-to-Person (P2P) transfers and may be

domestic or international. Domestic m-transfers still have the upper hand amongst the mobile money



http://www.ilo.org/dyn/migpractice/docs/145/UNCTAD.pdf

services across Uganda. The extent of these transactions occurs between urban and rural areas, as

migrants to urban areas send money back to the rural areas to support their extended families. In this

case, mobile money replaces traditional familiar methods like sending money with someone or by bus

or taxi. Part of the success of M-Pesais connected to the lack of scale and reliability of

informalmethods.16 For example; consider an incidentwhere person needs to urgently send money

back to his or her village. This previously required finding an individual that could be trusted, who

was travelling to the relevant village and at the appropriate time (i.e. when the need arises). This

individual should also know the recipients of the funds and be willing to pass by their home or link up

with them to deliver the money. When considering that the person sending the money will most likely

in any event uses a mobile phone to call ahead to alert the relatives about the delivery that is to be

made and factoring in issues of reliability, security and speed.

M-PAYMENTS

Money is exchanged between two users with an accompanying exchange of goods or

services. From m-transfers, MNOs have broadened mobile money services to include a range of m-

payments. MNOs started out by targeting individuals that receive recurrent payments from different

customers like utility companies (e.g. power, water, sewage, Pay TV, etc.) and those that make bulk

payments (e.g. salaries and school fees). Many of these services were launched as free promotional

offers to help build the businesses and prove their utility to the consumer. Some service providers

have stated that they can bear the cost for their customers remitting dues via mobile money because it

affords them a cheaper avenue to collect dues from customers on a regular basis. Others, like the

National Water and Sewerage Company in Uganda, have scrapped all of their cash collection centres

and resorted to using banks and mobile money as the only ways for users to pay their dues.

MNOs have also started cultivating merchants for m-payments, mainly targeting large entities

with multiple Outlets like supermarkets. For example, M-PESA and MTN as one are working with

Uchumi supermarkets in Uganda. Many small businesses cannot qualify for m-payments because they

need to open a corporate account that requires them to be legally registered with a range of documents

and a permanent physical address. Institutions in other sectors, such as education, health, tourism and

insurance, are increasingly waking up to the opportunities of using mobile money as another payment

channel for their customers.

M-FINANCIAL SERVICES

M-Pesa services may be connected to a bank account to provide the user with a whole range

of transactions (savings, credits) that they would generally access at a bank branch. In other cases,

users can access different financial-related services like insurance, micro-finance, etc. via their mobile

phone. Some transactions spread to different service categories. For example, a user can access his or

her bank account and transfer money to another bank account holder or mobile money wallet without

an accompanying exchange of goods or services. This leads to both m-transfers and m-financial

services. Currently, M-Pesa transactions can be local (within the jurisdiction of one country) or

international (across different national borders).

STATUS OF M-PESA IN UGANDA

M-Pesa is marketed as a money transfer service, but an estimated 40% of its customers now

also use it for some form of savings. These numbers of its usage are growing and banks and other

financial institutions are more interested than they used to be in selling savings, loans, health and life



insurance, pension and investment products to these customers either via M-Pesa rail or on their own.

Worth noting in any discussion of Uganda is the greater freedom mobile money network operators

enjoy with regard to banking services. In most regulator environments, telecoms are not allowed to be

financial intermediaries and in most cases, they must partner with banks to offer even mobile transfer.

In an effort to spur financial inclusion for the approximately 80% in Uganda without access to

formal banking three years ago, the government further relaxed rules for mobile operators already

serving the financial needs of low-income households. Close to half of all 35 million Ugandans live

below the poverty line and earn less than US$5 per day and only an estimated one- fifth of this

population have access to formal banking. When a small village on the banks of Lake Victoria relies

on almost entirely on fishing for its livelihood. With very little infrastructure, this village is 450km

away from the capital city (a day's journey on the bumpy dirty road). The village is one of many on

the banks of Lake Victoria and one of the most remote. Given a choice between buying from the

fisherman from this village and any of the others closer to the capital, most of the fish wholesalers

take the easier and most cost effective route. To add to the woes of the fishermen, many of the

wholesalers loath to carry big sums of cash required for the trade due to high crime risk. Without a

bank in the village the locals were also forced to carry cash after sales. Trade especially between

different countries and regions was suffering and the already improvised residents of the villages as

well were struggling to make ends meet until in Uganda 2015 when M-Pesa was launched. More

particularly, the wholesalers were now eager to do business with villages and neighbouring countries

as well that use M-Pesa as their risk has been significantly reduced due to the electronic transactions

of mobile phones.

The total number of registered customers increased by 30.1 percent from 14.2 million

customers in 2013 to 18.5 million customers in 2014. The number of transactions increased by 28.9

percent from 38.3 million in 2013 to 49.4 million in 2014 and the value of the transactions increased

by 16.9 percent from 1,982 billion shillings in 2013 to 2,316 billion shillings in 2014.

Mobile money services is one of many value-added services that since gained a significant

foothold in the communications sector. Since its introduction about five years ago, mobile money

services have grown by leaps and bounds, to the point where much as mobile telephony subscription

grew faster than MM subscription (14% compared to 10%), when one makes adjustment for the

multi-SIM culture and environment in Uganda, MM subscription actually grew faster than mobile

telephony subscription. For the review period, the number of mobile money subscribers grew by 10%,

resulting into 1,846,773 new mobile money subscribers. On the other hand, the number of mobile

SIMs subscribers grew by 14% bringing on board 2,666,928 new mobile subscribers. The drop in the

growth rate of the mobile money subscribers is partly attributed to inability of the agent network

expanding fast enough to cope with extra demand for cash-in and cash-out services needed by

subscribers.



Uganda Mobile Money Transactions, 2010 - 2014

DESCRIPTION PERIOD

2010 2011 2012 2013 2014

Mobile money registered customers

(number '000)

3,683 2,829 5,662 14,243 18,529

Transactions (number '000) 28,820 87,500 94,500 38,351 49,418

Transactions (Value bn Shs) 963 3,753 4,900 1,982 2,316

Source: Uganda Communications Commission

Source: http://www.ucc.co.ug/files/downloads/Annual%20Market%20Industry%20Report%202014-

15-%20October%2019-2015.pdf

MTN UGANDA

Launched in 1994, the MTN Group Limited (MTN Group) is a multinational

telecommunications group, with its core operations in 21 countries in Africa and the Middle East. As

at the end of December 2008, MTN had more than 90,700 000 subscribers. On October 21 1998,

MTN Uganda launched commercial services in Uganda, just six months after acquiring and signing of

the license. MTN has since grown to be the leading Telecommunications Company in Uganda

servicing in excess of 3,500,000 customers. Despite insufficient infrastructure (power, roads etc.)

MTN has covered in excess of 90% of the urban population, providing services in over 150 towns and

villages and their immediate environments. In Uganda MTN offers fixed and mobile wireless

telecommunication services. Over 2500 pay phones were installed in less than 24 months and the

demand for these is growing. The payphones also use wireless technology and can be used to make

both local and international calls. MTN together with the Grameen Foundation set up village Phones

to provide affordable telecommunication services in rural areas. With over 300 employees in

Uganda,MTN Uganda has a 52 per cent market share. Each service provider has a range of products

and customer options, including fixed-call costs within specific zones and charges per second. There

1,55,35,9891,66,65,310

1,92,44,020

2,19,10,948

56,62,871

1,21,17,821

1,76,44,162

1,94,90,935

0

50,00,000

1,00,00,000

1,50,00,000

2,00,00,000

2,50,00,000

2011/12 2012/13 2013/14 2014/15

No of mobile subscribers

Mobile Money Registered Subscribers

16

%

16

%

14

%

16

%

47

%

16

%

10

%

16

%



are peak, off-peak and discount calls. The 2008 national average per minute cost of intra-network and

inter-network calls was UGX 309.89 (US$ 0.15) and UGX 379.8 (US$ 0.19) respectively.

The licence given to the company authorises MTN Uganda Limited to construct, maintain and

operate a 900MHz and 1800MHz national second generation digital mobile radio telephone service

within the geographic territory of Uganda. The licence is valid for a period of 20 years. The license

required that MTN provide 89,000 lines in the first five years of operation. MTN adopted a wireless

approach to providing telecommunications services to the Ugandan market which has proved to be

convenient and fast in rolling out of services. The Group paid an initial licence fee of US$5, 8 million

and an annual spectrum fee of 1% of network revenue is payable as a contribution to the Rural

Communications Development Fund. The Uganda Communications Commission (UCC) is the

regulatory body for telecommunications, broadcasting and postal services. The UCC is accountable to

parliament and the Ministry of ICT. It is responsible for issuing licences. The UCC is funded by a levy

on operators‘ Gross Annual Revenues. The interconnection fees between operators are not regulated

by law but commercially negotiated. The fixed line operators do not provide cross subsidies to their

mobile units and fixed services are subject to price caps. Mobile handsets are imported and subject to

10 per cent tax while there is a 30 per cent levy on mobile phone usage.

To date MTN has border-to-border coverage in 52 district capitals and over 150 towns have

network coverage-from Kisoro (Rwanda border), to Busia - Malaba at the Kenya border to Arua and

Koboko at the Sudan/Congo border to Kabale and Kisoro close to the Rwanda border.Ericsson

provides all MTN technical infrastructures. Three large capacity switches with complete back up

guarantee that the network operates smoothly all year round. This same technology is able to support

all value-added services that MTN offers to its customers, such as, voice mail, SMS, data, etc. MTN

has also installed high technology equipment at all its base stations in the country.MTN Uganda has

the biggest customer services centre in Uganda offering the largest language preference base and

extended hours of operation. MTN has established customer services points at Shoprite Ben Liwanuka

Street, lugogo Mall, General Post Office, Crested Towers, Kikuubo branch, Jinja and in Mbarara.

MTN offers Customer Care in over 19 local and international languages when customers call the 123

help line for prepaid customers or 121 for Post-paid queries.

SERVICE CHARGES OF MTN UGANDA

The mobile money agents represent a critical component of the mobile money ecosystem.

They provide an interface through which users cash-in (convert cash into mobile money) or cash-out

(convert mobile money into cash) allowing convertibility between mobile money and cash. In the

beginning, both cash-in and cash-out transactions were associated with certain fees. However, with

growing economies of scale and greater competition, all MNOs in EAC now offer cash-in services for

free. Once users have mobile money in their wallet, they can perform a range of the transactions

highlighted above. The range of possible transactions is growing. Other payment instruments like

debit or credit cards in EAC are still the preserve of the well-off and individuals with bank accounts.

M-transfers are still the dominant form of transaction and given the lack of viable alternatives, are

priced at a premium. The smaller the amount transferred, the higher the total fee (sending + receiving)

as a proportion of the amount transferred via mobile money. For example, consider the lowest

threshold on MTN Mobile Money. To transfer U Sh 5,000, the total fee (sending +receiving) is U Sh

1,500, or 30 per cent of the transaction amount. For a transactional amount of U Sh30,000 within the

same threshold, the fee is similar, but then corresponds to only 5 per cent of the transaction amount.



Nevertheless, users are still willing topay because there are no cheaper alternatives that will

enable a user to send such small amounts of money while taking into account issues of reliability,

security and speed associated with informal methods. In addition, it is always more expensive to send

money to a non-registered user than to a registered one. This holds true across all mobile money

platforms in EAC. For registered users, the total m-transfer fee is split into a sending and a withdrawal

component and shared between the sender and the receiver, making it appear cheaper to both parties.

For m-transfers to non-registered users, the cost is borne entirely by the sender. The pricing

mechanism seems set up to encourage registered users to make more transfers amongst themselves

(and presumably find another reason to stay with the provider) as opposed to non-registered users. For

some platforms (e.g. M-PESA), more money can be sent in a single transaction to registered than to

non-registered users. Besides attracting non-registered users to join the platform, some may also argue

that a sender may have some influence over the receiver.

MTN Mobile Money charges for M-transfers in Uganda (Sending and Receiving)

MTNM. MTAmount UGX Sending Money UGX Withdrawing Money UGX

To registered

user

To non-

registered user

Registered

User

Non-registered

User

5000-30,000 800 1600 700 0

30001-60,000 800 2000 1000 0

60001-125,000 800 3700 1600 0

125,001-250,000 800 7200 3000 0

250,000-500,000 800 10,000 5000 0

500001-1,000,000 800 19000 9000 0

Source: MTN Uganda website, http://mtn.co.ug/MTN-Services/Mobile-Banking/MTN-MobileMoney-

Rates.aspx.

In the past year Safaricom has been on an expansion plan for M-Pesa across the region, after

the Central Bank Kenya (CBK) awarded it a cash remittance for operating license last year, enabling it

to carry money transfers out of the country. Before licensing the telecom was not allowed to handle

outward cash transmission even to neighbouring Uganda or Tanzania and had been offering onesided

international cash transfer services moving money into Kenya through partners such as Western Union

and Money Gram.The large population of Kenyan students who depend on remittances from their

parents or guardians provide a big base for Safaricom to grow its business in the country. Safaricom

signed a similar money transfer deal with Vodacom in Tanzania in March send Rwanda's MTN in

October this year. Under the agreement with Vodacom, Safaricom subscribers sending money to

Vodacom's M-Pesa network would be charged one per cent of the value of transaction plus an

exchange rate fee. The same will also apply to Vodacom M-Pesa clients. Safaricom's signing of deals

with individual country mobile operators comes months after the British telecommunications giant

Vodafone, which owns 40% stake in Safaricom, signed a deal with South African telecommunications

company MTN to have their respective mobile money customers transfer money across the seven

Eastern African Countries.



http://mtn.co.ug/MTN-Services/Mobile-Banking/MTN-MobileMoney-Rates.aspx

http://mtn.co.ug/MTN-Services/Mobile-Banking/MTN-MobileMoney-Rates.aspx

PART – B

OPPORTUNITIES

The opportunities created for the M-Pesa agents has had a serious impact on the economy of

Uganda. But the innovative operation chain does not stop with the agents, as it also stimulated the

brains behind the service and those who work on creating new services under M-Pesa. It also has

opportunities to grow revenues on premise retail payments, where it so far has only a basic offering.

This initial offering is expected to expand as Safaricom develops a more comprehensive long-term

proximity payments strategy. Vodafone which developed the M-Pesa platform and is a major

shareholder in Safaricom, has the ambition of expanding the M-Pesa services across its emerging

market footprint. Besides Kenya, M-Pesa has been now deployed across Vodafone operations in

Afghanistan, Qatar, South Africa, Fiji, Tanzania, and India and most recently in Uganda.

The simplicity of the service makes it attractive to even illiterate and semi illiterate people

who otherwise would not have access to bank services. M-Pesa does not discriminate against any

population, community, gender, or individual because the services can easily be accessed by a trader,

farmer, a banker, a mechanic, or even a beggar as long as they have authentic identification

documents such as an ID passport and are registered for the service by any M-Pesa agent country

wide. Everyone is open to use the service whether as a corporate, a small scale business or as an

individual. M-Pesa has been instrumental to many of its users ever since it was started or launched.

CHALLENGES FOR M-PESA MARKET IN UGANDA

The purpose of this study is to acknowledge the challenges facing the M-Pesa market, growth,

penetration and usage of mobile money services in Uganda especially rural areas. Usage of M-Pesa in

rural areas is further low due to different factors. One among them is the usage of double or triple

simcards by the same subscribers. According to intermedia study on mobile money use, there was low

usage among households in rural areas.

NOT OWNING A MOBILE PHONE

The factor that since many people especially in the rural areas did not own a mobile phone,

the scope for them to use the mobile money services was very limited. They can only use friends' and

relatives' phones to send or receive money. This makes them non-regular users and they also can't use

any value added services such as purchase of utility bills and payments. The problem of phone

ownership had further challenges and the mobile phone owners among rural residents and those below

the poverty line reported that they must pay to charge their phones, as they had no access to

electricity. Without a charged phone actively using mobile money is very difficult.

AGENTS’ UNAVAILABILITY AND CASH BALANCING PROBLEMS

The agents' unavailability in at least the nearby areas made the usage of the M-Pesa services

limited as it was difficult to access them. This also included lack of adequate capital in terms of float

or cash money. In rural areas customers found it difficult to reach an agent who had enough money to

enable withdrawals or deposit money especially when the amount was above 150,000 Ug shillings.

Problems like did not have enough e-float, cash, etc. as some of the top problems were the same as

well with other service providers. It becomes frustrating for the customer to move from one agent

door or outlet to another with answers like there is inadequate float or cash to serve the customers,

wasting time and causing delays and not able to achieve the timeliness of the transaction. Apart from

those challenges mentioned, others in this category included the working schedule. Most of the agents

were closing at 06:00pm thus limiting the service from working 24/7.



POOR NETWORK CONNECTIVITY AND UNRELIABLE SERVICES

The major factor that hindered the large population of customers from using the service was

the network or service failures. Many times there were network connectivity problems causing

customers to receive messages stating that ' service is not available please keep trying, or try again

later' or service hanging. This is a more challenging aspect to customers and agents as they were

exposed to the risk of losing their cash, wasting time and other problems like loss of customer

goodwill. The truth that customers were having no information about other services that M-Pesa

provide was strongly linked to the poor network across the rural areas of Uganda. Hence its low

market penetration. Even if its company network was available in the urban areas, it could not achieve

market penetration in mobile money services. Therefore the enhanced connectivity to rural areas was

required.

LACK OF INFORMATION AND UNDERSTANDING AMONG NON-USERS

In many cases no-users may be aware of M-Pesa services but had only had a basic

understanding of the uses and benefits most of them have little or no knowledge whatsoever about M-

Pesa's existence especially since the information about it is also limited to the names of the providers.

Agents may frequently report that they do not believe that it‘s their responsibility to educate non-users

or advocate for M-Pesa's use or services in general. They are willing to explain M-Pesa mobile money

services to customers who specifically ask. But they do not explain or promote M-Pesa to other

customers unprompted. Most agents considered educating customers to be the responsibility of

service providers.

EXPENSIVE TRANSACTION CHARGES

Most customers may complain about the mobile phone operators seeking to earn more profits

from providing the M-Pesa services especially since it is new to the country and the charges are a bit

higher compared to the other mobile money service operators. Questions are also posed on double

charging i.e. in both transfers and withdrawals as to why the sender was charged and the same time

recipients were also charged for the same transaction. Complaints were also raised on the large

amount charged for these transactions and most customers also rated M-Pesa withdrawal charges as

the highest. People who used formal banks to send or receive money were charged a negligible

amount or a little charge comparatively for performing such services.

FRAUD / RISKS IN M-PESA MOBILE MONEY TRANSFER

Customers agreed strongly or may agree that fraud or cheating was hindering growth and

marketing penetration of the mobile money services. Customers also claimed that they are often

victims of fraud because in case they have not adequately protected their PIN. Fraud issues were a

matter of concern for many agents, as different fraud modalities and cheating methods were used.

Swapping of simcards, unfaithful workers, and transfer of money from one account to another account

unknowingly due to PIN leakage fake money and fake mobile money withdrawal text messages were

commonly observed by both agents and customers.

LIMITED MOBILE MONEY SERVICE VARIETIES

Customers claimed that most of the transactions they were performing were money transfers

and cash outs. Although airtime topping was common through other mobile money services, a greater

percentage of customers have not yet used purchasing airtime through the M-Pesa services. This is

because of the little information about the value added services and also due to the fact that customers

were not really using M-Pesa services as a wallet. Customers claimed that there was still a scope



providing more services through M-Pesa, this included exchange of money from one currency to

another, disbursal of salaries, payment of school fees, etc. Better service for those service varieties

was required because customers often reported that some services were not reliable. Many delays

were also experienced and uncompleted transactions were charged. For example uncompleted and

reversed transaction to or from bank were charged and this charged amount was not refunded. So, all

these challenges have to be solved to make the mobile money service easily adoptable.

EFFORTS NEEDED TO INCREASE M-PESA MARKET PENETRATION AND REGULAR

USE

Customers accepted that if efforts were put in increasing more service varieties, they will

increase usage of M-Pesa services. Customers may not need or may not have money only to send or

withdrawals but may need to utilise that cash for personal issues so more services that are like reliable

bill payments, purchase of goods and services like paying for tickets will facilitate more frequent

usage as people will need to travel or buy goods as well. In this regard, the timely response from the

service machines will be the key to success and unlike the current situation where there is a likelihood

to wait for longer time to receive these services.

IMPROVING NETWORK COVERAGE

Many customers insisted that more efforts are to be put on covering rural unreached areas.

This is because with no reliable network connection, customers were unable to make calls and to

make any significant transactions. Absence of network was forcing people to travel longer distances to

avail the service. They were even made to wait for some time to the transaction response. In general,

customers insisted that more improvements were required in the rural areas where a substantial

population was unbanked and for urban areas, also improvement is required due to several occasions

of service unavailability and frequent hanging transactions without prior information or notification to

users.

IMPROVING AGENTS’ PRESENCE AND FINANCIAL CAPITAL AVAILABILITY

Agents' presence is a requirement along with network availability and reliability in order M-

Pesa to penetrate the market and grow. Customer views are that demand was more on rural unreached

areas where unlimited network connectivity is available. Therefore limited numbers of agents were

available in rural areas. On the other hand, working capital for agents is a matter of concern in both

urban and rural locations. Agents, customers and companies' territory managers expressed their views

that reflect on problems related to working capital. Most of the agents had limited financial capital in

terms of float or cash or both. Improvement is required in both urban and rural areas to support the

mobile money services penetration and expansion. Most of the agents are also undertaking their M-

Pesa services agency as a secondary or tertiary business. Therefore they are likely to diversify the

limited capital to other business portfolios as well, depending on the demand or other investment

opportunities that were available to them. Loans should be provided from parent mobile service

providing companies or aggregators and attractive commissions will encourage agents to improve

their working capital which will result into improved transaction volume per day.

BRAND AND INCREASED VALUE ADDED SERVICES

Branding and widespread publicity should go hand in hand with product availability. The

ratings made by customers illustrate that moderate efforts are required in both rural and urban areas.

More publicity is required for value added services' varieties, rather than concentrate only on cash

withdrawals and transfers since cash as a resource was scarce and no one can afford sending

limitlessly. M-Pesa users are not aware of many other M-Pesa based services. Even if the users heard



of such services, they are afraid of losing their money in any attempt of utilising those resources.

Brand recognition and trust are very important in any industry especially since it is an initial stage.

This is what made any outlet be known as an agent so for the users and agents' sake, availability of

branding materials is necessary. Branding is also required in terms of info such as pricing tags which

keeps changing from time to time.

IMPROVING SECURITY AGAINST FRAUDS/RISKS AND CUSTOMER CARE

FACILITIES

Customers or users have lost their money in many instances by fraudulent practices faced in

the process. The users suggested that improvements are required in terms of security starting from

agents or their workers who are likely to share information of the confidential PIN codes of some

customers. This would be misused by some unfaithful agents or workers. Some users might share

their PIN codes with their agents or their family members in the case of emergencies, something that

poses a threat of security issues. Some company staff are misusing the agents' and customers' trust on

them to borrow money from the cash balance available in their M-Pesa accounts. Subsequently, some

of these staff went completely disappearing without paying back the cash. Education to the end users

and the agents is essential to make them aware of all the possible frauds, risks and the ways to prevent

them. Companies' customer care centres have to also provide immediate support when fraud cases are

reported.

INCREASING M-PESA SERVICE VARIETIES

The current dominant use of mobile money services was for mostly money transfer and

withdrawals of cash sent. More efforts are required to increase the usage beyond these remittances and

airtime top ups. More service varieties are possible through inviting banks, micro finance institutions

and third parties to make the service less reliant on transfer of e-money and convert to hard cash

money on the recipient's side. People who make a minimum of ten transactions per month

automatically get insured. Many users are also not aware of some of the services provided by M-Pesa

and how it initially works. This alone poses a challenge for awareness creation about most of the

mobile money based service varieties.

IMPROVING AVAILABILITY OF ELECTRICITY

As mobile phones require charged batteries to be on air, the availability of reliable electric

power in both rural and urban areas is a step needed to stabilise the usage of mobile money services.

This is because many transactions require prior voice communication before the real transaction is

made. Subsequently, confirmation or acknowledgement messages are to be sent. All these transactions

require an electrically charged phone. Hence electric power is required to sustain the M-Pesa services.

Power rationing has to be minimised; new electric projects are required in rural areas where people

spend a lot of time and money. All these expected developments would reduce the cost incurred and

time spent in kiosks to charge the phones.

EFFORTS FOR TRAINING AND INFORMATION TO END USERS

Training and providing information to agents and customers regularly should be practiced as

part of marketing efforts by companies' representatives. It will make agents and end user customers to

be aware of most of the choices available in mobile money services and utilise any new products in

the M-Pesa mobile money services. Though value added services are being advertised in the media,

customers may not even test them due to fear factors as there is doubt about these service authorities.



KEY HIGHLIGHTS OF M-PESA

• One does not need a bank account to use M-PESA. All one needs to do is register at

authorised M-PESA agent using their MTN mobile number and identification.

• Put money into their mobile account by depositing cash at a local Agent

• Send money to other mobile phone users by SMS instruction, even if they are not Vodafone or

MTN subscribers.

• Withdraw cash at local an Agent

• Buy MTN airtime for themselves or other subscribers

• Only MTN subscribers can send M-PESA, but anyone who can receive ansms can receive

money by MPESA.

• Cash is paid into M-PESA and withdrawn at M-PESA Agent outlets. These outlets are

typically local Safaricom Dealers, but can also be other kinds of retailer such as petrol

stations, supermarkets and local shops. There is currently a large network of M-PESA Agents

across the country who have been trained to use the service. It is planned to grow this network

significantly in the coming months.

• M-PESA has partnered with over MTN and Vodafone organizations and both bank and non-

bank financial institutions in offering more efficient services.

• There are currently many bank branches that offer M-PESA services.

• It has agent outlets employing more and more people directly and indirectly.

• M-PESA records a daily average of 10,000 registrations every day.

• Customers can easily access their money 24 hours a day. Safaricom has partnered with Bank

of Uganda a fast growing bank in a service that allows registered MPESA users withdraw

money from the ATM without the use of an ATM card.

• MPESA has won various awards for its innovation both locally and internationally some of

which are; Kenya Banking Awards 2007/2008, the Marketing Society of Kenya Best product

innovation 2008, the Stockholm Challenge 2008, World Business.

SUGGESTIONS

The fact that M-Pesa has found its way into Uganda, shows how much power it has over the

East African countries and other developing countries and since it has started in Uganda in less than a

year there is little information in aspects like how the users are so far reacting to it, what they're real

conclusions to M-Pesa are, and so much more. More researchers should find out more about its

evolution into the market and what its competitors think and will do about it. M-pesa should also add

more funds into advertising its services elsewhere in Uganda especially in the rural areas, work on

strict and better measures to avoid fraud in order to gain customer trust which will increase on their

market penetration in Uganda making it another huge success story or a major fail as well.

CONCLUSION

M-Pesa's launch is enabling and advancing the access to financial services in Uganda and

across the Ugandan border making other competitor mobile networks come up with similar services

just to reach its standards which may not be possible because of its fast growth. Though it has almost

just launched in Uganda (2015), it has shown a major increase in the number of customers regardless

of the challenges it‘s facing as well. With an increasing customer base, M-Pesa is expected to gain a

higher force making the mobile money channel a vital part in transfer of small sums of money country

wide and international wise. This report shows an update of how M-Pesa came about its way to

Uganda and its current status in Uganda.



BIBLIOGRAPHY

www.businessdailyafrica.com/corporate-news/m-pesa-customers-get-access-to-seven-african-

countries

www.kopokopo.com/m-pesa-usage-in-uganda

www.techweez.com/2015/09/30/mtn-to-mpesa-transactions

www.johnbessant.net/resources/case-studies/m-pesa-case-study

www.gsma.com/mobile-for-development

www.hannahsiedek.com/can-we-have-another-mpesa-a-study-analyzing-7-african-markets

www.ukessays.com/essays/information-technology/m-pesa-service

www.sagentia.com/case-study/vodafone-m-pesa-mobile-micro-finance-service-for-emerging-

markets

www.cnbcafrica.com/news/east-africa/2015/12/29/m-pesa-enters-uganda

www.focus.rw/wp/2015/10/15/mtn-rwanda-mobile-money-linked-to-m-pesa-kenya



http://www.kopokopo.com/m-pesa-usage-in-uganda

http://www.techweez.com/2015/09/30/mtn-to-mpesa-transactions

http://www.johnbessant.net/resources/case-studies/m-pesa-case-study

http://www.gsma.com/mobile-for-development

http://www.hannahsiedek.com/can-we-have-another-mpesa-a-study-analyzing-7-african-markets

http://www.ukessays.com/essays/information-technology/m-pesa-service

http://www.sagentia.com/case-study/vodafone-m-pesa-mobile-micro-finance-service-for-emerging-markets

http://www.sagentia.com/case-study/vodafone-m-pesa-mobile-micro-finance-service-for-emerging-markets

http://www.cnbcafrica.com/news/east-africa/2015/12/29/m-pesa-enters-uganda

http://www.focus.rw/wp/2015/10/15/mtn-rwanda-mobile-money-linked-to-m-pesa-kenya

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