In a strategic move to enhance its mobile money ecosystem, MTN Uganda’s subsidiary, MTN Mobile Money Ltd, is actively considering the launch of a groundbreaking funding initiative, tailored for its dedicated agents and diligent merchants.
This ambitious plan entails forging collaborative partnerships with key financial institutions, with the ultimate goal of facilitating access to credit for these vital contributors to the MTN Mobile Money network.
Richard Yego, the Managing Director of MTN Mobile Money Ltd, in a recent interview with the media said that the upcoming credit service will be introduced before the close of this year.
Yego mentioned that a significant portion of MTN’s agents are facing challenges related to capital, and that the telecommunications giant aims to assist them by introducing agent loans.
“These loans will enable them to utilize funds provided through partnerships with banks and fintech companies that possess lending licenses and the necessary customer scoring capabilities,” he said.
It is noteworthy that limited liquidity and capitalization have long been a major hurdle for mobile money agents, hampering the rapid expansion of the mobile money business.
Presently, MTN Mobile Money offers interest-free funds to agents through the MTN Xtra Float product, ensuring continuous customer service. These funds, with a maximum cap of Shs 1 million based on the agent’s earned commission from the previous month, are payable within a 72-hour timeframe.
The company also provides a savings and credit product called Mokash, enabling customers to save with up to 5% interest per annum and access credit with a 9% monthly interest, repayable within 30 days.
Yego noted the success of MTN Xtra Float since its launch in 2020, with daily transactions on the MTN Mobile Money platform now exceeding Shs 6 billion.
This new initiative coincides with MTN Mobile Money Ltd’s efforts to promote financial inclusion and grow the digital economy by advocating for mobile money payments.
Recently, the company introduced a mobile-based supply chain platform, FMCG Digital Suite, which facilitates real-time orders, invoices, payments, and returns for businesses in the Fast-Moving Consumer Goods sector, eliminating cash usage in the supply chain.
To encourage mobile money payments, MTN Mobile Money Ltd has reduced merchant payment collection fees to as low as 0.1% across various sectors. However, businesses in the informal sector, like market vendors, salons, and boda bodas, are exempt from these fees.
In the first half of this year, MTN Mobile Money recorded an 18.6% revenue growth to Shs 358.3 billion, supported by an 11.6% increase in subscriber base to 10.9 million, contributing to 28.7% of MTN Uganda’s total service revenue of Shs 1.25 trillion.
The adoption of mobile money payments by customers led to a threefold increase in merchants to 267,000 compared to the previous year, resulting in a 26.3% rise in transaction volumes to 1.6 billion and a 44.4% growth in transaction value to Shs 61.6 trillion.
However, agent numbers decreased by 5.5% to 162,000 as the company pursued its agent rationalization strategy aimed at sustainable growth.
The nascent initiative, still under contemplation, underscores MTN MoMo’s unwavering commitment to innovation and adaptability.
As the telecommunications giant traverses uncharted territories in its pursuit of redefining the mobile money landscape, the prospect of empowering agents and merchants through accessible credit stands as a testament to the brand’s enduring dedication to propelling financial empowerment and technological progress.
MTN’s prospective funding initiative marks a visionary stride towards fostering growth, driving financial inclusion, and propelling the ever-evolving landscape of mobile money services.
By contemplating this strategic partnership with financial institutions, MTN MoMo is poised to herald a new era of possibilities for agents, merchants, and the broader digital financial ecosystem across Uganda.
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