Exploring Usage of Mobile Money in Uganda

Posted: June 17th, 2011  |   viewed: (3,147)  |   Comments: ( 2 )  |  Topic: Blog Post, MTN MobileMoney  |   Region: Africa

Share: By Claire Penicaud

A recent study conducted by researchers from Uganda and Sweden[1], attempts to identify new ways of using mobile money to help the poor. The team studied mobile money users across three MNOs in Uganda: MTN’s MobileMoney, Uganda Telecom’s M-Sente, and Airtel’s Money (Formerly Zap).  The study provides insights on the current usage of mobile money by exploring different financial transactions of respondents, their relative importance, frequency and alternatives.

Mobile Money in Uganda is now starting to evolve from its initial infancy stage. MTN launched MTN MobileMoney in 2009, presently Uganda’s most successful deployment with over 1 million registered customers (out of 9.9 million mobile subscribers) and a network of 1,500 agents. While the initial mobile money offering focused on domestic money transfers, it is now expanding and it is imperative for MNOs and other stakeholders to understand the financial needs to its users.

In terms of current use, domestic money transfers largely dominate and are mainly used to support immediate family members. A large majority of respondents found this service to be cheap or average.

The respondents also used mobile money to buy airtime, pay television bills, school fees or tuition. While some of these services are new, they are perceived to offer important benefits to the users: speed (for 78% of the respondents), practicality (69%), and an affordable price (68%). However, a few concerns were raised regarding agents’ liquidity (35%), the risk to lose one’s mobile phone (and hence one’s mobile money) (31%), and long queues at agents’ location (29%).

In addition, while transferring domestic money is the most widely used service, the respondents highlighted three other services which they perceive to be more important: 1) airtime purchase or top-up 2) paying for transportation 3) Settling of hospital bills. These findings point to interesting potential scenarios for the extension of the reach of services based on mobile money. Besides, considering that hospital/clinic bills are infrequent transactions, integrating mobile money services in the health sector appears to be very promising: “Perhaps one key aspect to take away for MNOs and innovators who would like to build solutions on top of mobile money is the fact that the infrequent transactions tend to involve more money than more frequent transactions, and as such users might be willing to pay bigger premiums for the convenience of completing them.”[2]

Uganda is still an early market for mobile money. Similarly to M-PESA when it started in Kenya, but contrary to expectation, the mobile money services in Uganda seem to attract mostly banked customers (72.6% of respondents). This highlights the current limitations of the coverage of the formal financial sector in Uganda, indicating that banks could hugely benefit from partnering with MNOs in terms of customer satisfaction. Indeed, 71% of the respondents stressed the fact that they would like a linkage between their mobile money account and their formal bank account. We can also envision that mobile money could play an interesting role in the development of a saving culture amongst the unbanked population.

Despite respondents being more affluent than the average Ugandan, only 30% had sole ownership of their mobile phone. For 70% of the respondents, sharing their mobile phone also means sharing their mobile wallet, even though those they share it with cannot access the wallets’ content. What are the implications in terms of mobile money adoption and usage? It would be interesting to study whether or not there is a correlation between the number of active mobile money customers and the percentage of sole ownership of handsets.

[1] Applab, Makerere University, Stockholm, University and Mid-Sweden University.

[2] “Mobile Money Use in Uganda: A Preliminary Study”, http://scholar.mak.ac.ug/andiwalana/files/m4d-mobilemoney.pdf