East African Business Week (Kampala)
Edris Kisambira
2 November 2008
Kampala — Mobile money transfer services will be the next battle ground for Uganda's mobile telephone operators with plans to launch the service by two of the four operators at different stages of development.
While MTN Uganda has kept its plan to go into money transfer under wraps, Zain Uganda has come out with it.
Yesse Oenga, Zain Uganda's country manager said the company plans a service that will see its customers send and receive money over its 'one network.'
Zain's 'one network', which was first launched in East Africa to initially cover Uganda, Kenya and Tanzania, has since expanded to cover 22 countries in Africa and the Middle East. A top official at MTN has confirmed the company is looking to introduce a money transfer service but did not go into details. For Zain, the company looks at money transfer as one of many arenas for growth from now going forward.
In Kenya, Zain has abandoned an e-cash product the firm had launched onto the market to counter Safaricom's M-Pesa, but has abandoned that one for the new service, which it reckons will be superior because it will be available to users in the three neighbouring countries of Uganda, Kenya and Tanzania.
The e-cash service is looked at as a centre-piece of Zain's target of becoming one of the top 10 mobile phone companies with a combined subscriber base of 110 million with a EBITDA (earnings before interest, taxes, depreciation and armotisation) of $6 billion.
Should both Zain and MTN go ahead with their plans for the service, a big percentage of Uganda's mobile phone users will be able to send and receive money via their handsets.
Zain and MTN put together have a subscriber total of about 5 million. The two telecoms will also have opened up competition against money transfer service providers like Western Union.
The money transfer service is a segment of the financial sector that is growing as a result of Uganda's growing immigrant labour.
Immigrant labour continues to grow worldwide. Currently, Uganda has a steadily growing immigrant labour force in countries in the Middle East like Saudi Arabia, Kuwait and Iraq. Just this week, some 800 Ugandans headed to Saudi Arabia for work. Today, some 3,000 Ugandans work in Iraq on guarding duties, while numbers in Kuwait and Saudi Arabia and the United Emirates are on the rise.
What seems to make mobile money transfer - at least in Safaricom's case are the low costs associated with the service as it negates the need for physical points of presence on top of other costs.
The two Ugandan operators are following on from Kenya's biggest mobile operator, Safaricom, which launched a service called M-Pesa (mobile money) last year. M-Pesa has revolutionised banking in Kenya where more than 80 percent of the people are excluded from the formal financial sector. Apart from transferring cash - a service much in demand among urban Kenyans supporting relatives in rural areas - customers of the Safaricom network are able to keep up to Ksh50,000 ($735) in a "virtual account" on their handsets.
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