KAMPALA, UGANDA – Mr Godfrey Kiratira, a 32 year old driver of Zawadi Bus services was recently admitted at Lacor Hospital, Gulu in Northern Uganda after sustaining injuries in a highway robbery in Atiak Sub County.
Gunmen had ambushed Zawadi bus moving from Kampala to Elegu border towards the South Sudan border and robbed a businessman named Waya who was on the bus.
Waya reported that over UGshs 200 Million (about $66,000) was robbed from three money changers at the nearby Elegu border Market.
The police suspected that Waya was being trailed since he was the only person targeted in the robbery.
Incidences like these would be few and avoidable with the introduction of mobile money services in Uganda and Tanzania in 2008 and Kenya in 2007 in Tanzania among other partner states have provided solutions for this among the many reported and unreported cases in the region.
Kenya’s M-PESA for example is the country’s largest mobile-network operator used by over 17m Kenyans, equivalent to more than two-thirds of the adult population and around 25% of the country’s gross national product flows through it.
Although from the start each telecom operated from her home country, the service providers have found it inevitable to broaden operations in line with the EAC regional integration process and the development of the world into a single global village.
As a result, the telecom companies have now joined hands to further reduce the burden of and faster cash disbursements between the partner states of the East African Community (EAC) and beyond.
The companies include Vodafone and MTN Uganda, Kenya’s Safaricom, Vodacom of Tanzania and Airtel of Rwanda .
Vodafone and MTN Group recently signed a pact to allow M-Pesa and Mobile Money customers to transfer cash to each other. The interconnect partnership links M-Pesa customers in Kenya, Tanzania, DR Congo and Mozambique, and MTN Mobile Money customers in Uganda, Rwanda and Zambia.
Over 7 million M-Pesa customers in Tanzania and over 18 million Safaricom customers in Kenya can also send and receive money from each other. The service allows for mobile wallet to wallet transfers between the two largest telecom operators in East Africa. Customers transfer funds across the border at the same rate as sending money locally.
Vodacom Tanzania’s Managing Director Rene Meza said statistics indicate that over TZshs200 billion is sent from Tanzania to Kenya annually, while the latter sends over Shs26 billion to Tanzania.
“Statistics from the World Bank, (2013) indicate that Tanzania sent approximately TZShs 200 billion to Kenya through formal channels. Estimates would indicate that more than twice that amount was transacted via informal channels including bus drivers, friends and family” stated Meza.
“We have looked into the hurdles that our customers need to overcome in order to send and receive money across to our neighbours in Kenya and have come up with a safe, secure and convenient way to do so.
From today one doesn’t need to send money by suka wa basi au konda or incur hefty charges to transfer school fees, buy goods or settle business payments, he or she can do so directly from their M-Pesa wallet and… from the comfort of their home, anytime the need arises , ” says Meza.
Safaricom’s Chief Operating Officer Bob Collymore said “We believe we have launched a new chapter in the continuing growth story of M-Pesa Enabling transactions between Kenya and Tanzania will make it ever-more convenient for businesses and individuals to transact across borders and unleash the transformative power of a first of its kind cross-border payment system.”
“Vodacom customers will be able to send and receive money to and from Kenya through the same process that they are already used to. Their experience is the same as that of sending money nationally, the only difference is that a customer can now choose option 3 – send money to M-Pesa Kenya- and enter the mobile number beginning with the +254…prefix,” added Meza.
“Even before the money is sent, the customer will be shown the Kenyan Shillings equivalent value of the money that the customer in Kenya will receive. The currency conversion will happen immediately and the money will be available instantly for withdrawal or making bill payments, buying airtime or any other services on M-Pesa” he added.
M-Pesa is offered by Vodacom Tanzania Limited and Safaricom in Kenya – the region’s two biggest telecom operators. Vodacom has approximately 65% market share of mobile financial services in Tanzania whereas Safaricom commands over 80% share in Kenya.
Meza further says, “Our combined distribution of over 150,000 agents in Tanzania and Kenya will ensure that our customers continue to enjoy the many benefits that M-Pesa offers them today. This groundbreaking service in the evolution of mobile financial services as we know it today is supported by a fully-fledged customer service unit that is reachable 24 hours every day.”
“Kenya is Tanzania’s largest trading partner and it was therefore logical that we activate the service there first,” says Meza. “This is our own way of further cementing the ties that bind the people of the EAC region,” says Meza.
He says communication is about connecting people and communities regardless of the geographical barriers that stand between them – something that Vodacom does only too well across the countries where it has a presence around the world.
Tanzania is home to approximately 300,000 Kenyans who remit funds to their country via informal ways and channels including bus drivers, friends and family.
There is also a sizeable part of the Tanzanian population that has chosen to educate their children in Kenya and rely on the very same means to transfer money.
“This service will now empower a trader or a small business owner in Kariakoo or any other part of Tanzania to transact with his customers or suppliers in Kenya. For the parents whose children go to school in Kenya, settlement of school fees has been simplified because of this service. Gone are the days that bus drivers, friends and family had to carry cash across the border to settle such dues For all Kenyans who reside in Tanzania today, M-Pesa now makes it easier for them to send and receive money home,” added Meza.
“This service will also eradicate the need for people to carry large amounts of money in physical cash.
However, industry sources criticized mobile money companies for limiting the amount one can have on a phone account. Some of them like MTN, the highest one can place on ones phone is only Ush4m.
“Mobile money is good for safety but they limit you,” said Fred Musisi, a businessman in Kampala. “So if a trader wants to purchase items of more than Ush4m from a rural area, it is not possible whereas banks are not everywhere.”
“Improved telecom infrastructure after liberalization, social dynamics and enabling regulatory environment also explains this rapid growth,” the report said.
Most Africans do not have bank accounts and many have to travel long distances to access retail bank outlets. But increasingly, Africans are using mobile financial services to buy goods, pay utility bills and send and receive money.
However mobile operators and banks in the region are competing aggressively to provide mobile money services as the growth curve in the voice market has began to flatten.
In Zambia, mobile money accounts have already overtaken traditional bank accounts. Zambia’s Central Bank, which gathers statistics about mobile money accounts, also said that the number of users of mobile money services is expected to increase significantly over the next three years.
By December last year, statistics from Zambia’s Central Bank showed that the country’s mobile money accounts had reached 3.4 million compared to 2 million bank accounts.
“Plans are under way to partner with all the three mobile phone operators in the country to enhance financial inclusion through mobile money,” said Central Bank Deputy Governor Tukiya Kankasa-Mabula .
Airtel Africa recently launched the mobile money service enhancing cross-border transactions for its subscribers on its network in Zambia, The Democratic Republic of Congo and Rwanda. CEO of Airtel Africa, Christian de Faria explained that the move is to ‘increase financial inclusion and regional trade opportunities in sub-Saharan Africa.
“Airtel Money offers a secure, cost-effective and quick way of helping the communities enhance both trade and personal financial transactions, a thing we’re so far behind in in Africa as most people prefer to keep their money in their pockets, or at home,” he noted. The initiative has been launched to provide competitive remittance rates seeing as Africa has some of the highest in the world! According to a report by the World Bank, they found that most of the fees charged for transfers are so high for the amounts of money being sent, the incomes of the senders.
And just last month, Zimbabwe joined the group of countries where more people use mobile money than have bank accounts.
As of the end of last year, only 14% of Zimbabwe’s 13 million people, or approximately 1.8 million, have bank accounts, according to a study conducted by First Bank Corp. Securities of Zimbabwe. Meanwhile, mobile money accounts held by the country’s two largest mobile phone operators have reached around 5 million. The rise in the use of mobile money in the region has also been fuelled by the increasing availability and use of mobile phones as operators try to capture customers in rural areas to increase their customer base and improve on their balance sheet.
The amount of money sent to sub-Saharan Africa via mobile services is expected to hit $33 billion this year, reflecting the increasing number of mobile phone users on the continent.
There has been significant growth in mobile money remittances in Kenya, South Africa and Uganda recently but there has been stagnation in Nigeria, Africa’s largest telecom market by investment and subscription, according to WorldRemit, a global money transfer company.
Nigeria received $21 billion in 2014 via mobile money, accounts for two-thirds of remittances to the region.