The boom in mobile money businesses

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Uganda is reportedly seeing mobile penetration rise at one of the fastest rates in the world, and it is expected to reach 71% by 2014, according to Pyramid Research.

Mobile money has exploded in east Africa, arriving in Uganda about five years ago. It enables people to send money via text message across the country, in a simple and user-friendly process.

Supermarket owner Stephen Amukun from the town of Serere, says the majority of his TO GO WITH Lifestyle-IT-India-business-vcustomers bought items from his shops with mobile money. Most of Serere’s estimated 12,700 population has a mobile phone, despite the town’s frequent power cuts.

I discussed the impact of mobile money with Fred Omach, state Minister for Finance, when I met him at his government office in Kampala.

“Mobile money is very effective to the development of SMEs and it has brought a lot of innovation,” he said. “But many banks are now complaining because they are losing business.”

Omach discussed the proposed 10% tax on cash transfers by mobile. The plan has reportedly caused controversy among telecoms providers who claim this will drive up the price of services. He explained the government also wants to encourage a move away from the exchange of physical cash, which will help stabilise money circulation, particularly in the informal sector.

One of the main challenges to mobile money is liquidity problems with mobile money agents: when a customer goes to one of these shops there is no money to withdraw. There have also been reported cases of fraud.

But despite these challenges, the popularity of mobile money shows no signs of slowing down.

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