MTN’s mobile money micro loans grow to Shs1.4 trillion
MTN's microloans have been growing, growing four-fold in just two years. Photo / File
What you need to know:
- MTN’s mobile money loans have grown four-fold from an average of Shs400b to Shs1.4 trillion in the 12 months to December 2024
At least five million MTN mobile money subscribers applied for a short-term loan in 2024, causing an unprecedented spike in the company’s credit disbursements in the 12 months to December.
During the period, MTN noted that more than 34 million micro-loans were disbursed, causing a four-fold increase in the company’s mobile money micro-lending, which has since 2022 averaged at Shs400b.
The increase signals rising appeal, especially among low-profile borrowers seeking credit in a country that has historically had challenges with access to credit.
MTN lends through its mobile money subsidiary, which was about three years ago separated from telecommunication services under the National Payment Systems Act 2020.
In two years the company’s micro-lending has increased by more than 33.3 percent and is projected to grow further due to a diversified product and service portfolio.
Mr Richard Yego, the MTN Mobile Money managing director, at the weekend told Monitor that the company’s mobile money lending had grown from an average of Shs400b in the last two years, breaking into the trillion shilling mark.
“Our disbursements [of microloans] have grown four-fold from an average of Shs400b in 2022 to Shs1.4 trillion this year [2024],” he said, noting that the growth was a result of new product propositions, including four loan products that were deployed towards the end of 2023 and the beginning of 2024.
Mr Yego also indicated that the average loan size during the 12 months to December 2024 varied depending on the loan type, but overall disbursements averaged Shs42,000, with the majority of applicants falling within the Shs10,000 and Shs30,000 loan bands.
Mobile money loans carry varied interest rates ranging from 0.33 percent per day to 9 percent per month depending on the loan type.
Micro-lending details from other lenders such as Airtel and UTeL were not readily available.
However, mobile money micro loans have been growing reaching a monthly average of Shs33b, according to the Ministry of Finance.
The growth has been boosted by the expansion in the financial technology sector, which currently has about 42 companies licensed as payment service providers and payment system operators by Bank of Uganda under the National Payment Systems Act 2020.
Additionally, the growth has been boosted by an increase in partnerships between mobile money, financial technology companies, and financial institutions, which has enabled the creation of wider loan product offerings.
Mobile money companies are also seeking to tap into business-related loans by lending to small and medium companies. MTN had earlier indicated that it would last year boost its loan product proposition as part of the larger plan through which it would increase its credit portfolio to more than Shs1 trillion.
The company had also indicated that it was planning to roll out business-related loan products through a merchant code-supported system.
However, we could not readily establish how far the telecom had gone in this regard.
Mobile money loans have short recoverable terms ranging from one week to a month. They also have a low default rate since recovery is automated after expiry of the loan term.
During the 12 months to December 2024, MTN also indicated that its active mobile money subscriber numbers had grown from 9.5m to 13.5m, while active mobile money pay merchant codes rose from 50,000 to 400,000.
The company also noted that whereas it had slowed down agent recruitment in 2022 and 2023 to manage the quality and profitability of existing bases, it had however, resumed the acquisition drive, setting up 60,000 new agents in 2024 taking cumulative active agents to 230,000.
Stay updated by following our WhatsApp channel https://bit.ly/4aYJlp3
