Uganda:Shs100 billion given out in mobile money loans in three years

Telecoms have, in the last three years, disbursed more than Shs100b in mobile loans, according to data.

MTN, according to Ms Elsa Muzzolini, the company’s head of mobile money division, has given out in the excess of Shs100b through Mokash. The telecom, she told Daily Monitor, has about 3.5 million enrolled customers.

“Our partnership with Commercial Bank of Africa (CBA) has seen us disburse more than Shs100b since inception,” she said in an email exchange on Monday.

However, she said, the platform is has not grown to become a major revenue stream for the company compared to mobile money, data and voice.

“This is not really a revenue generating product for us. It is less than 1 per cent of our mobile money revenue. However, we see it as an amazing service that will sustain customer loyalty to MTN in the middle term,” Ms Muzzolini.

Mobile money and data are the largest revenue streams for telecoms. These have overtaken voice in the last five years. 

In 2016, MTN launched the Mokash platform in partnership with Commercial Bank of Africa as the lead financier.

The loan is repayable within a period of 30 days at an interest rate of 9 per cent per month.

According to the CBA’s 2016 report, in only five months, 1.5 million customers were registered for the service and Shs3.7b had been saved through mobile money while Shs9.2b worth of loans had been disbursed. 
However, the figure has since increased with Ms Muzzolini indicating that on average, the telecom gives out between Shs150,000 and Shs200,000 in loans and Shs40,000 per month.

Ms Sumin Namaganda, the Airtel public relations manager, told Daily Monitor in an emailed response to our questions that the talecom, through its partnership with Jumo, has reached out to a number of companies and individuals through Wewole – the equivalent of Mokash.

However, she did not indicate how much has been disbursed through the platform. Mobile services, according to a Finscope survey released in 2018, were the major driver of financial inclusion which currently stands at 78 per cent.

The report indicated that 23 per cent of adults in Uganda save money through mobile services, compared to 11 per cent in the commercial banks and related financial institutions.

High interest rates levied by banks have been blamed for the low growth in loan acquisition from financial institutions.

While MTN levies 9 per cent interest for its loans, Airtel levies interest based on the repayment period, a decision that is in most cases done by the customer.

Commercial bank interest stands at an average of 20 per cent, which is way beyond the reach of ordinary Ugandans.

The loan, which has a maturity period of 30 days, is written off after 90 days and is thereafter classified as a bad loan.

While Ms Muzzolini could not put the exact figure, she said they have registered 8 per cent as failed corrections over time.

At least, according to Ms Namaganda, 96 per cent of money loaned out to Airtel customers is recovered, which indicates that the telecom has a 6 per cent failure collection rate.

A loan that has been written off is counted as a loss to the disbursing financial institution such as CBA and Jumo.

Wewole- Launched a year ago in a partnership between Airtel and Jumo, the platform connects millions of small businesses and individuals to a world of financial choices. It also advises on the payment period which ranges between 7 and 21 days and service fee is charged.

Mokash- MTN and CBA charge 9 per cent interest on loans disbursed through Mokash.

The platform avails credit money to registered mobile money users according to the saving and consumption rate of a customer on services such as airtime and data. 
It also relies on how many years one has been with the telecom to qualify for the loan.

SOURCE:DAILY MONITOR