The link between mobile money and fake money

The recent story about the URA seizure of counterfeit currency notes to the tune of Shs189m at the Busia border on October 22 was significant in many ways.
First, it gave a clear indication that there is demand for counterfeit money in Uganda, which explains why the culprits could risk importing it. Second, the demand for counterfeit money is channelled through the uncontrolled growth of mobile money transaction whose value is now in excess of Shs15 trillion (about $4b).
Despite its strong economic attributes, which includes the promotion of financial inclusion, the mobile money platform in Uganda today provides the weakest link in our financial system.

It provides the easiest entry point for fake money and I have no doubt that the impounded counterfeit money was intended for the mobile money market.
Many unbanked Ugandans who cannot take advantage of the high precision and sophisticated note sorting machines that banks use to protect customers against fake money are suffering on a daily basis without recourse.
When Ugandans receive fake money, which they cannot detect, from some mobile money agents who exploit a system wanting in rigorous risk and compliance safeguards coupled with an unreliable consumer protection mechanism, they are beside themselves with misery.
The dearth of a national payment system, inadequacies of Bank of Uganda Mobile Money Regulations 2013 and the mis-regulated role of telecoms as financial service providers of mobile money only helps to compound the matter.

Apart from counterfeit money, other scams are thriving on the mobile money platform because of poor regulation. To appreciate the endemic level of the problem, you need to check out the New Vision newspaper stories in the month of October alone under the following titles:
‘Government officials conned in new mobile money scam’ - October 19 P4; ‘Mobile money scam; MTN to assist conned customers’ - October 21; ‘Legislators fault Bank of Uganda over mobile money transactions’, October 25 P6; ‘MPs question safety of mobile money transactions’, October 27 P6.
Counterfeiting of any product is very dangerous, but the counterfeiting of money must rank very high. I agree with Oscar Zach when he writes in his article titled ‘The importance of money’ published on June 24, 2014 that money dictates the flow of human living in the modern world.
Without money, life is often difficult and painful. We should be very concerned that if money, which dictates the flow of life can be counterfeited ,what else cannot be.

What will happen if currency note detectors which are supposed to detect fake notes are also counterfeited?
It is already very difficult and painful for Ugandans to find work and earn a decent income. That their meager income can be lost to counterfeit currency notes smuggled across our porous borders must call for urgent action.
The commendable effort by URA in impounding the counterfeit money must not be stymied by inaction from our financial regulators. Government must show more interest in protecting its legal tender than the counterfeiters are interested in imitating it.
The public can help government in this effort if it is made aware of the security features of the genuine money so that it is easy to identify fake money through concerted awareness campaigns.
Unless preventive measures are swiftly put in place, mobile money will continue to grow as the fake money grows.

Mr Fred Muwema is the director legal & corporate affairs Anti-Counterfeit Network Africa