Ugandans to Earn Interest on Mobile Money Savings – BoU

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In short
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 has approved a system through which mobile phone users can opt to save money on their mobile money accounts and earn interest.

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.

 

About the author

David Rupiny
In his own words, David Rupiny says, "I am literally a self-trained journalist with over 12 years of experience. Add the formative, student days then I can trace my journalism roots to 1988 when as a fresher in Ordinary Level I used to report for The Giraffe News at St Aloysius College Nyapea in northern Uganda.


In addition to URN for which I have worked for five years now, I have had stints at Radio Paidha, Radio Pacis, Nile FM and KFM. I have also contributed stories for The Crusader, The New Vision and The Monitor. I have also been a contributor for international news organisations like the BBC and Institute for War and Peace Reporting. I am also a local stringer for Radio Netherlands Worldwide.


I am also a media entrepreneur. I founded The West Niler newspaper and now runs Rainbow Media Corporation (Rainbow Radio 88.2 FM in Nebbi). My areas of interest are conflict and peacebuilding, business, climate change, health and children and young people, among others."