Bank of Ugandas acting Director of Communications Kelvin Kizito says that under the approved system, mobile money users will have the option to put aside a certain amount of money, also known as e-value, and earn interest on the saving after a specific period of time.
Bank of Uganda's acting Director of Communications Kelvin Kizito says that under the approved system, mobile money users will have the option to put aside a certain amount of money, also known as e-value, and earn interest on the saving after a specific period of time.
Kizito says the saved money will be moved from the mobile network operator's float account, held in a commercial bank, to a separate escrow or holding account for that particular user.
Kizito adds that Bank of Uganda does not allow banks to pay interest to the mobile network operator because the money essentially does not belong to them but to the user.
A similar system is already operational in neighboring Tanzania where, before the regulation was reviewed to allow for direct interest payments, the escrow accounts used to generate interests which were used for charitable causes by the mobile network operator.
Ben Leong, from WorldRemit, a United Kingdom-based money transfer firm, says that mobile phone should be used to break more grounds over and above few products like paying bills and insurance.
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Leong says paying interest on mobile money savings will attract more unbanked populations and deepen financial inclusion of the majority.
The latest figures from BoU indicate that there are over 20 million mobile money accounts across all platforms - MTN, Airtel, Africell and Uganda Telecom. Traditional banks have over three million accounts, with some individuals holding multiple accounts.
The World Bank estimates that commercial banks, together with savings and credit cooperative organizations (Saccos), hold just 35 percent of potential account holders.
Monthly, transactions valued at two trillion Shillings are carried out on MTN mobile money alone, constitution close to 10 percent of GDP.