Uganda: Many Mobile Money Agents to Miss Out On Agency Banking

By Mark Keith Muhumuza

Kampala — Thousands of mobile money agents will not qualify to be agents of commercial banks once agency banking is rolled out around the country. In the regulation that awaits being gazetted, mobile money agents that conduct business in temporary kiosks, umbrellas and without specific physical addresses shall be excluded from agency banking.

Additionally, a bank will not be allowed to appoint a business entity that has only opened up to become a banking agent.

Agency banking is where commercial banks appoint a third party (agent) to carry out transactions on its behalf.

"In the regulations, agents will be required to have been in operation for at least 12 months with a physical address, good facilities and already practising underlying business activity. In the instance that the underlying business closes, the commercial bank must terminate the relationship with the agent," revealed Ms Gertrude Karugaba, a partner at Sebalu & Lule Advocates, during the Stanbic Uganda Agency Banking conference held in Kampala yesterday.

That means retail shops, supermarkets and petrol stations among others, will be the facilities that qualify to become agency banking agents.

Agency banking was introduced after amendments to the Financial Institutions Act, 2004 were made in 2016 to bring financial services closer to Ugandans.

Mobile money agents were being considered to work with third parties. However, to ensure less operational risks, Bank of Uganda (BoU) regulations have added another layer.

"Regulations should be responsive because this is new and a Ugandan reality. So we need to have some sort of regulatory review in the future. I am concerned about how the rural agent will work in this instance," saids Mr David Crackell, the global director for Technical Excellence at Microsave.

Mobile money accounts are estimated to be in the range of 21 million. The platform's success is pegged on the fact that people could access the services.


There are an estimated 3,000 mobile money agents and banks are looking to have at least 1,500 agents countrywide - including those currently not providing mobile money services.

Ms Justine Bagyenda, the executive director supervision at BoU also revealed that agents would not be allowed to sign exclusivity agreements with a specific bank.

"Exclusivity caused a lot of problems when we started mobile money. We are not going to allow exclusivity clauses in the agreements. When an agent serves the entire sector, it is a win-win situation. If we allow the silo mentality, then we won't be improving access to financial services," Ms Bagyenda explained.

In the regulations, any bank will be allowed to use an agent of their choice. Often, like in the telecom sector, agents can transact exclusively for a specific telecom company.

This locks out another mobile agent from transacting for another company.

The regulations in agency banking indicate that there will be no exclusivity.

Terms of the deal

Agents will be able to accept cash deposits, withdrawals, money transfers, facilitate disbursement and payment of loans, receipt and forwarding documents for loan applications, account statements, and account balance statements. They are, however, not expected to carry out foreign exchange and cheque transactions.