Nairobi — MTN will launch a mobile money transfer product in Rwanda before the end of this year.

This follows an extensive technological and legislative process supervised by the regulator, National Bank of Rwanda.

MTN Mobile Money will be the first of its kind in Rwanda. It will be available to the company's one million-plus subscribers.

The announcement comes just days after the MTN operation in Kampala said it would spread the mobile money product to the region.

Officials in Rwanda said the product would also go international soon.

Both developments not only shift the competition to a regional level, but ushers the telecom companies into one of the most capitalised industries: international remittances.

In Rwanda, remittances from abroad in 2008 were recorded at $150 million, while in Uganda they were at $724 million, down from $786m in 2007 as a result of the global economic crisis.

Traditionally, Rwandans transfer money to friends, relatives and business associates through various means -- financial institutions, the post office and third parties.

The money in circulation has also increased by 28 per cent in the same year, compared with 20 per cent in 2007, owing to high inflation.

The NBR deposits in banks also increased moderately by 6.4 per cent in 2008.

Though access to banking services, as demonstrated by an increase in bank accounts, increased dramatically in 2008 by 46.6 per cent, sceptics say MTN's Mobile Money might not be quick to revolutionise cash transfers in Rwanda as envisaged.

Money transfers by mobile phones have been quite successful in other operations in East Africa.

MTN Uganda and Zain have moved over Rwf10 billion in mobile money transactions since they started the service.

This is just a small fraction of the global trade that the telecoms are now likely to tap into.

Zain recently announced a partnership with Western Union that will allow clients to send and receive money worldwide.

Kenya's Safaricom -- the largest telecom company in the region and which recently announced its international money transfer line to the UK through M-Pesa -- said it intends to extend the service to Rwanda, too.

Safaricom pioneered money transfer via the mobile phone through M-Pesa in East Africa.

Currently, about six million people are signed onto the M-Pesa service.

Statistics show that about 52 per cent of all money transfers in the region are through M-Pesa, and that 93 per cent of the people surveyed are happy with the system.

MTN Rwanda has started testing the new system and is piloting with selected MTN Mobile Money Agents.

The International Telecommunication Union (ITU) says Rwanda's mobile penetration, as of 2008, is 31.4 subscribers per 100 inhabitants.

A stable and sufficient supply of electricity is the greatest obstacle to increasing mobile phone penetration rates in rural areas.

In Rwanda, only about 13.3 per cent of the nine million population use banking facilities.

From December 2007, there were only 751,142 bank accounts, which increased to 1.2 million at the end of December 2008.

The ITU says there are not more than 1.5 million mobile phone users in Rwanda, with MTN claiming 80 per cent of the market share.

MTN Rwanda chief executive officer Khaled Mikkawi said the ongoing tests are critical whenever a new product is being introduced to the market.

"We are proud to be involved in this initiative that is critical to the financial development of the Rwandan economy. We are also fortunate that other MTN markets have launched the product and we can draw from their experiences," Mr Mikkawi said.

The MTN Group launched the money transfer system for Africa and the Middle East, aiming to boost subscriber loyalty and entice new users.

The service has been piloted in Cameroon, Ghana, Cote d'Ivoire and Nigeria.