On his way home from work, he hired a bodaboda to help him swiftly navigate the traffic jam only to get involved in a nasty accident that saw him lose his life. Charlie (name not real), was an ambitious young man who was out to curve a better world for himself. In his business, he used a lot of Mobile Money (MM) transactions since they offered a lot of flexibility and security. When he died, no one knew about the financial status of his MM account nor his pin code. Not even his wife!!!
Such scenarios are common in Uganda. People die, lose phones with their simcards or travel out of the country only to return years later and the Mobile Money is no longer available.
Where does this Mobile Money go? This is the key question.
It is typical of the telecom companies in Uganda to reassign phone numbers that have not been in use for a while. This re-assignment is done in such a manner that any Mobile Money that was on that account gets erased too. I have a sim card from Airtel and once, due to a long period of inactivity, it was deactivated. Before the deactivation, I had deposited UGX 20,000/= on the Moble Money. Upon reactivation, when I inquired about the MM, all I was told was that I had to register afresh. No explanation was given for the absence of my MM previously deposited.
Imagine a telecom deactivating at least 300 sim cards per day. Of those, let’s say 50% have Mobile Money leftovers that average out to UGX 20,000/= on their individual accounts. This gives a total of UGX 3,000,000/= (Three Million) daily being taken over by the Telecoms company. In a month, this works out to UGX 90,000,000/= (Ninety Million) and a year, that adds up to a conservative estimate of UGX 1,080,000,000/= (One billion, eighty million).
This may not look like much money to the telecom company but a quick analysis reveals that it can pay the annual salaries of at least ten middle level managers with each earning in the region of Eight to Nine Million shillings. This same amount can be used to pay up for the lease on the cars used by the telecom.
While appearing as a small loss on the part of the customer, this money when aggregated becomes massive and this is where the telecom companies benefit unscrupulously.
In another scenario, someone deposits UGX 1,000,000/= (One Million) onto the MM account and does not use it for a period of two weeks. The telecom company earns interest off that money but the customer is only entitled to the principal amount deposited. This is another ugly scar rearing its head in the MM field. Every day, you have Billions of Shillings deposited onto the Mobile Money systems and they earn a hefty sum for the Telecoms companies even if they remain unused for a mere few days. Is it fair that the status-quo continues? Isn’t it time the consumer was given their due?
Well, some telecoms have come up with a spinoff savings scheme using MM but that is like dragging wool over our eyes as clients. Whether I enroll for the savings scheme or not, for as long as I have my Mobile Money on the phone, it is prudent that any interest earned by the telco be passed on to me too (at least a fraction).
Currently there is no serious modality when it comes to regulation of Mobile Money. Like loan sharks, the players set their rules and determine how the game is played. Apart from the requirement by the Central Bank for the Telcos to have bank accounts that backup the electronic money with actual cash reserves, there is nothing more. When MTN suffered an internal MM fraud setback some years back, it was a result of system manipulation that led to issuing of more electronic money than the actual bank reserves had.
In this era as we transition from paper to digital money, it is prudent that the Bank of Uganda wakes up to its responsibility. They need to move swiftly with the times, work with the Uganda Communications Commission and any other parties to ensure that we have a fair and forward looking environment that will see a greater adoption of MM.
Digital Money is a reality we are faced with and have to ready ourselves to embrace it fully.
James Wire is a Small Business and Technology Consultant based in Kampala, Uganda
Follow @wirejames on Twitter
The Wire Perspective 
Dear James,
MM is kept on trust accounts in the banks that partner with the service providers.. This means the money is kept in trust for the mobile money customers, who own it and not the phone companies. Because of this banks are hesitant to give interest to the phone companies, and go away with with huge interest free M.M capital deposits. However regulators in countries like Tanzania have ensured that M.M deposits earn interest that is periodically distributed to customers , something which could probably be adopted here to ensure that customers get a fair share of the returns that the banks get from using their deposits.
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Under what regulation are the MM players in Tz mandated to offer interest to their customers?
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Dear James,
Thanks for the concern picked and raised, however, I think you should have first done research on how the Telcos handle such cases before publishing this Airtel. Then you would have only stuck to whether what is place is appropriate or not.
From my research, M.M business follows regulations that are issued by BOU, and so when it comes to deactivation of numbers, only numbers with a certain fixed minimum amount can be deactivated, with the minimum amount transfered to a suspense account, which is subject to audit by regulator. When the same number is re-issued to a different person, he only inherits the number but not the MM account, as he needs to furnish fresh KYC personal details while obtaining the number.
Hopefully I have incited you to research further so that you can finally make suggestions on how better the regulator can safeguard the Customer.
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Thanks for this information. I actually did some research and contacted a high level person at UCC who gave me a good brief about the current status-quo. So, unless I was not given the full picture but he didnt in anyway mention anything about MM being transferred to a suspense account.
Do you have anything to say about the interest on MM deposits?
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