Ugandans to save, apply for mobile money loans on phone

Kampala.

Mobile money users, will for the first time in Uganda, be able to save and access loans on their phone handsets.
MTN Uganda and Commercial Bank of Africa (CBA) yesterday unveiled a platform that will see mobile money subscribers apply for loans and also save money using their phones.

“With MoKash, Ugandans can now securely save for future use in an interest bearing savings account or they can take advantage of access to micro-loans. Should customers want to access micro-loans for their businesses or personal reasons, they can apply directly from their mobile phones,” Mr Wim Vanhelleputte, the chief executive officer MTN Uganda, said at the launch of the service at Kampala Serena Hotel.

This will make Uganda the third country after Tanzania and Kenya to launch a similar micro savings and micro loans product. It is also expected to further improve financial inclusion in the country as people do not have to walk to formal banking institutions to save money or apply for a loan.

CBA is banking on the success of MTN mobile money for the service to reach many Ugandans.

“This innovative service has the power to unlock the economic opportunity that is held by cash transactions and informal savings and lending models,” says Mr Mark Odeke, the chief executive officer CBA Uganda.

Savings earn interest
According to Mr Eric Muruiki, the general manager new business ventures at CBA, all customers who will save money will earn interest on their saving of up to five per cent depending on the amount on their MoKash account.

“This is an open savings account where anyone with a positive balance earns interest every day. A customer may also withdraw money from the account at any point unlike the commercial bank that doesn’t allow withdrawals when it is a fixed deposit account,” he said.

Mobile money users will have to transfer funds to MoKash account if they want to save, immediately receiving a prompt on how much they can borrow. Also when they borrow, money is instantly transferred to their mobile money accounts.

“Depending on the customer’s level of use on all MTN services, like voice date or mobile money, they will be assigned a loan limit and they can, when need, access a full loan amount or smaller amounts against this loan limit by just using their mobile phone,” said Mr Phrase Lubega, the general manager financial services at MTN Uganda.
Borrowing is currently capped at Shs1m a month with interest of 9 per cent for a month.

And according to Ms Justine Bagyenda, the executive director supervision at the Central Bank, Bank of Uganda has okayed the product.