Uganda: Can new fintech companies compete with giants MTN and Airtel?

By Musinguzi Blanshe
Posted on Monday, 7 March 2022 13:46

Uganda Africa Mobile Money
Ugandans use a mobile money point in Kampala, Uganda on 29 September 2016. (AP Photo/Stephen Wandera)

Foreign fintech companies are entering the lucrative mobile money business in Uganda to compete with the behemoth telecom companies: MTN Uganda and Airtel Uganda. Will they be able to grow?

Rather than an all-out competition stretching from border to border, similar to that of telecom companies when they established their presence years ago, fintechs are targeting clusters of customers or regions where they hope they will have competitive advantage.

To begin with, they are also offering free cash withdrawal services in contrast with MTN Uganda, which charges $1.98 for withdrawal of amounts between $70.85 and $140.

  • Wave, a Canadian software company founded in 2009 entered the Ugandan market towards the end of 2021.
  • SafeBoda, a ride hailing app founded in 2014 in Kampala, has been adding financial services to its app. The latest is mobile money services that they launched after receiving a licence from the Bank of Uganda at the end of January.
  • Chipper Cash, a fintech company – started in 2018 by Ugandan Ham Serunjogi and Ghanaian Maijid Moujaled in San Francisco – that facilitates transfer of money within countries and across borders, has also entered the Uganda market. The company reached a valuation of $2bn in November 2021 after raising $150m in a Series C funding from venture capitalists.

What brings such fin-tech companies to the mobile money business is its lucrativeness.

According to a Bank of Uganda report, the value of mobile money transactions increased by 42.26% to UGX113.38trn ($32bn) at the 2020/21 financial year, from UGX79.7trn ($22.3bn) of the previous year.  The volume of transactions increased to 3.89 billion in 2020/21 from 3.16 billion of the previous year, according to the report.

Statistics also show that there were 21.18 million active mobile money users in Uganda in 2020. The advantage that telecommunication companies have over fintechs is their breadth and width. A person simply needs a mobile phone and sim card – from the telecoms firms – to register and start mobile transactions. However, for these fintech companies, they can only target 9.4 million Ugandans with smartphones who are able to download apps to enrol for their services.

An influential mobile money agent

As they enter the Ugandan market, fintechs aren’t establishing a new chain of mobile money agents, but rather tapping into the old system that has already been established by telecom companies.

For instance, a mobile money agent who has been working with Airtel and MTN is able to add SafeBoda and Wave services on his or her service menu.

With the introduction of agency banking in Uganda in 2017, some mobile money agents became mini bankers, helping bank clients to deposit and withdraw money. Agency banking was thought of as a mitigation of the challenge of non-bank service providers, such as telecom companies, encroaching on the market dominated by banks.

We end up having to compete as opposed to occupying our own niches.

In 2018, former Bank of Uganda Governor Emmanuel Mutebile warned that the growth of mobile money would “diminish the incentives for the public to hold demand deposits in banks, which in turn threatens to erode the banks’ primary source of low cost funds.”

However, as Mutebile warned in 2020, dividends of digital transformation in the financial sector are not shared equitably. “It may polarise the market by excluding those segments with low levels of digital and financial literacy,” he said at a conference of Uganda Bankers Association.

More than 10 million Ugandans have basic mobile phones that cannot connect to the internet, according to data from Uganda Communications Commission, the telecom sector regulator.

Targeting a Kampalan middle class

Tim Jamieson, the Vice President for Payments and On-demand services at SafeBoda, tells The Africa Report that they are not going to build an agent network in villages to compete with telecom companies. Instead, they will focus on winning customers in Kampala.

“We occupy a different space. Our target is smartphone-using Kampalans, typically middle class that love tech interaction with our drivers,” he says.

If fin-techs want to venture into large scale lending, there is no regulatory framework now.

Though SafeBoda is veering to financial services, it’s famous for its ride hailing app that connects riders and passengers. The app has a million downloads on Google play store and this type of customer base is what the company hopes to leverage to grow its mobile money business, Jamieson says.

‘Corroborate relationship’

SafeBoda had thought of building a relationship with telecommunication companies. For instance, its riders and passengers constantly move money from telecom companies’ accounts to the wallet on the app.

From the wallet, riders and passengers buy airtime as well as data and they can buy products or pay for cashless rides. Jamieson says SafeBoda approached telecom companies with a request for the company and its riders to move money from their telecom companies’ accounts to app wallet at no cost, but only Airtel Uganda agreed to the request.

Jamieson says because telecom companies impose high and prohibitive charges, “we end up having to compete as opposed to occupying our own niches.”

To incentivise people to use its wallet, SafeBoda gives a 10% annual interest to those who save money on its app. Jamieson adds that they plan to launch several other segregated saving schemes where its app users can lock money into a certain account for a period of time for future purposes, such as school fees, weddings, among others.

The company is also planning to start loan schemes, which means that SafeBoda will not only be competing with telecom companies, but also banks that have traditionally been offering these services.


Tonny Odokonyero, a researcher at Economic Policy Research Centre, a think tank at Makerere University, tells The Africa Report that fin-techs are restrained by a lack of laws and regulations. “If fin-techs want to venture into large scale lending, there is no regulatory framework now,” he says. However, Bank of Uganda is working on the requisite laws.

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