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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
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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
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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
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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
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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.
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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
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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.
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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.
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(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.
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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
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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
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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.
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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
%
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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.
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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.
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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.
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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
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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
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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.
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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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.
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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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
INTERCONTINENTAL JOURNAL OF FINANCE RESEARCH REVIEWISSN:2321-0354 - ONLINE ISSN:2347-1654 - PRINT - IMPACT FACTOR:1.552VOLUME 4, ISSUE 8, AUGUST 2016
www.icmrr.org 65 [email protected]