Monthly transactions on the mobile money transfer services are close to a trillion shilling mark, which is one-tenth of the 2012/13 national budget. According to Ben Sekabira, the Bank of Uganda executive director for supervision, in June alone 19.2 million transfers were made on the four mobile money transfer services totaling 904 billion shillings.
According to Ben Sekabira, the Bank of Uganda executive director for supervision, in June alone 19.2 million transfers were made on the four mobile money transfer services totaling 904 billion shillings.
The four mobile money transfer services are MTN Mobile Money, Airtel Money, Warid Pesa and M-Sente run by Uganda Telecom. In all there are nearly six million mobile money subscribers, accounting for half the adult population of Uganda.
Sekabira says as the mobile money transfer service grows, the risks have also grown. He said the central bank is working with the Uganda Communications Commission to draft a law aimed at regulating the service.
In May this year, MTN Mobile Money lost 14 billion shillings to fraud, leading to the sacking of eight officials. There are also reported cases of unscrupulous people issuing either fake currency notes to mobile money agents or running away without paying after transactions have been made.
Sekabira says while the central bank encourages innovation in the financial sector, there is a need to enhance regulation and supervision in a bid to address emerging concerns.
Presently the mobile money financial sub-sector is unregulated, although the service providers claim their transactions are backed by specific commercial banks.
Last month, Bugweri County MP Abdu Katuntu and businesswoman Kimberly Kasana sued MTN seeking court to declare that its mobile money service is a financial institution and an order directing the telecom to account and refund all the monies made from it.
In their plaint, Katuntu and Kasana allege that through the mobile money service, MTN has become a non-bank e-money issuer which is not prudently regulated like other financial institutions in the country thus contradicting the Uganda Communications Commission Act.
The plaint, filed through Muwema and Mugerwa Advocates, also seeks court to declare MTN’s mobile money promotions under the name and style of Sukuma SMS and other promotions as gaming under the law.