IFC MOBILE MONEY SCOPING COUNTRY REPORT: UGANDA Margarete Biallas (with assistance from Alana Fook) UGANDA SUMMARY OVERALL READINESS RANKING xxx MOBILE MONEY SOLUTIONS 3 mobile money solutions, all offered by MNOs (Airtel, MTN and Uganda Telecom) POPULATION 38.3 million [Source: CIA] MOBILE PENETRATION 20.3 million (2015) [Source: UCC] BANKED POPULATION 44% all transaction accounts, 27% account with financial institution, 35% mobile account (2014) [Source: World Bank FINDEX] PERCENT UNDER POVERTY LINE 19.7% (2013) [Source: CIA] ECONOMICALLY ACTIVE POPULATION 18.6 million (May 2016) [Source: IFC] ADULT LITERACY 78.4% total, 85.3% male and 71.5% female (2015) [Source: CIA] MOBILE NETWORK OPERATORS 8 MNOs operating in the market, with 3 largest players (MTN, Airtel, Uganda Telecom) having >90% of the market Market Readiness Regulation 3 Financial Sector 3 Telecom Sector 3 Distribution 3 Market Demand 3 Macro-economic Overview Regulations Financial Sector Telecom Sector Other Sectors Mobile Financial Services Landscape Appendix: Interviews Conducted MOBILE BANKING MARKET POTENTIAL Key Country Statistics Insights . Population: 38.3 million [Source: CIA] . Young population, with nearly 70% under age 24 . Age distribution: 48% (0-14 years), 21% (15 -24 and a median age of 16, that primarily live in rural years), 26% (25-54 years), 3% (55-64 years), 2% areas, with high rates of poverty (over 65 years) [Source: CIA] . BoU estimates that 75-85% of retail transactions . Median age: 15.7 [Source: CIA] still take place in cash . GDP (PPP): $78.9 billion (2015) [Source: CIA] . GDP per Capita (PPP): $2,900 (2015) [Source: CIA] . Urban/Rural split: 16.1% of population lives in urban areas (2015) [Source: CIA] . Population below poverty line: 19.7% (2013) [Source: CIA] . Literacy Rate (age 15 and over can read and write): 78.4% total, 85.3% male and 71.5% female (2015) [Source: CIA] . Account Penetration: 44% all transaction accounts, 27% account with financial institution, 35% mobile account (2014) [Source: World Bank FINDEX] . Remittance Inflows: $1,075 million (2015) [Source: World Bank] . Workforce: 18.6 million (May 2016) [Source: IFC] . Mobile Subscribers: 20.3 million (2015) [Source: UCC] . Data penetration: 25% (2016) [Source: UCC] Macro-economic Overview Regulations Financial Sector Telecom Sector Other Sectors Mobile Financial Services Landscape Appendix: Interviews Conducted REGULATORY BODIES INVOLVED IN MOBILE BANKING Roles & Responsibilities Implications • In addition to BoU’s primary responsibility . There is no Payment Systems Act. for monetary policy and maintaining price . Together, BoU (FIs and MDIs) and UCC stability, BoU also regulates and supervises (MNOs) oversee offering of mobile money Financial Institutions. services in Uganda. UCC may also take Bank of Uganda • The BoU National Payment System action to improve competition in the market. Department (1998) oversees the national (BoU) . The provision of mobile money, including payment system with the objective of rights and responsibilities of various ensuring overall effectiveness and integrity stakeholders and well-developed consumer of the payment systems in the country. protection and transparency policies, is • BoU is in charge of approval and governed by the Bank of Uganda Mobile supervision of mobile money services.1 Money Guidelines, 2013. The Bank of Uganda Mobile Money • Effective March 1st 2012, UCC required all Guidelines, 2013 are an interim measure to SIM cards in Uganda to be registered facilitate the operation of mobile money in (photograph, photo ID2, name, address, Uganda. The BoU intends to develop a more Uganda DOB, gender and email address if comprehensive legal and regulatory Communications applicable) by March 1st 2013 or risk framework. deactivation . As of end of 2015, the deactivation of Commission • The Uganda Communications Act, 20133, unregistered SIM cards was still not (UCC) established UCC as the single regulatory completed, but MTN reported having body for communications in Uganda, where deactivated 3.7 million subscribers in 2015.4 the UCC essentially absorbed the functions . UCC assigns USSD codes of the Broadcasting Council 1 Bank of Uganda Mobile Money Guidelines, 2013 [Part II, Section 7(1)] 2 Acceptable forms of ID include passport, employee ID, student ID from accredited educational institution, voter ID card, original, stamped letter from employer or local council with photograph and confirming identity of person, name, DOB, gender, physical address, email address if available. 3 The Uganda Communication Act, 2013 harmonized the Uganda Communications Act, 2010 and the Electronic Media Act, 1996. 4 MTN Annual Report, 2015 as cited in DFS: Regulating for Financial Inclusion – An ITC Perspective (ITU, 2016) REGULATORY FRAMEWORK, SLIDE 1 Current Regulations Implications . Requirements to be a MMSP1 . Banks/MDIs intermediate between MMSPs . Registered limited liability company and BoU, acting as a conduit for . Be licensed by BoU, or partner with a authorizations, reporting and enforcement licensed institution . Even previously licensed FIs and MDIs require . Seek approval from BoU to provide a letter of no objection from BoU to offer Mobile Money mobile money services mobile money or partner with an MMPS4 Service Provider . Proof of financial position, business . BoU guidelines encourage (but do not (MMSP) plan and risk management proposal expressly require) MMSPs to use systems . Appropriate and tested technology capable of becoming interoperable with other . Responsible for managing the mobile money payment systems locally and internationally6 platform, including risk management, AML/CFT, . MMSPs are required to assign each agent a consumer protection and reporting to BoU2 unique identification number, keep up to date . MMSPs may use agents records of agents, and provide regular training . Qualified Licensed Institutions include:3 . Mobile Money Services may only be offered by . FI licensed by the BoU under the or in partnership with BoU licensed instutions Partnering Financial Institution Act, 2004 or (FIs or MDIs) Licensed . MDI licensed under Microfinance . MMSPs may partner with several licensed Institution Deposit-Taking Act, 2003 institutions . Licensed Institutions assume responsibility for: . Ensuring the MMSP complies with BoU regulations, including having AML/CFT measures in place5 1 Bank of Uganda Mobile Money Guidelines, 2013 [Part II, Section 6(a)] 2 Bank of Uganda Mobile Money Guidelines, 2013 [Part II, Section 3(3)(a)] 3 Bank of Uganda Mobile Money Guidelines, 2013 [Part I, Section 5] 4 Bank of Uganda Mobile Money Guidelines, 2013 [Part II, Section 6(b)(i)] 5 Bank of Uganda Mobile Money Guidelines, 2013 [Part II, Section 6(b)(v)] 6 Bank of Uganda Mobile Money Guidelines, 2013 [Part II, Section 8 REGULATORY FRAMEWORK, SLIDE 2 Current Regulations Implications . Mobile Money Agent defined as a third . Agreements with agents should not be party acting on behalf of a mobile money exclusive service provider to deal directly with . MMSPs are ultimately responsible for the customers 1 actions and omissions of their agents . Agents must be a registered business with . Agents may register customers, cash Agents physical address and must have an in/out, address complaints, but may not account with a BoU licensed institution2 transact when system is down, or on . Agents are required report suspicious behalf of customers, or charge fees and/or large transactions to Partnering directly to customers3 Licensed Institution, which should in turn report to BoU . MMSPs should have adequate AML/CFT . BoU will review transaction limits measures in place . As of November 2015, the National . KYC/CDD requirements include at least Identity Registration Authority (NIRA) had one of the following to verify the identity of ceased issuing replacements, pending a the customer (valid passport, driving bill on how replacements are to be done5 KYC/AML permit, National ID card, financial card, local administration letter or business registration certificate)4 . Limits should be set for transaction value, volume, frequency 1 Bank of Uganda Mobile Money Guidelines, 2013 [Part I, Section 5] 2 Bank of Uganda Mobile Money Guidelines, 2013 [Part II, Section 7(5)(a)] 3 Bank of Uganda Mobile Money Guidelines, 2013 [Part II, Section 7(5)(b) and Part II, Section 7(5)(c)] 4 Bank of Uganda Mobile Money Guidelines, 2013 [Part II, Section 7(5)(b) and Part II, Section 11(a) 5 Uganda: No regulations for replacing National ID (allAfrica, November 19, 2015) Macro-economic Overview Regulations Financial Sector Telecom Sector Other Sectors Mobile Financial Services Landscape Appendix: Interviews Conducted FINANCIAL INCLUSION – ACCESS AND USAGE, SLIDE 1 Access Ownership/Usage Key Insights • Physical access for informal • Rates of ownership among • Physical access to informal (86% of adults are within 5km) Ugandan adults (age 15+) 2 Fis is almost triple that of and semi-formal (51%) • Account 44.4% access to commercial banks1 financial institutions (FIs) was • Mobile account 35.1% • Physical access to financial significantly better than for • FI account 27.8% institutions is better in urban commercial banks (29%) 1 • Debit card 17.8% than rural areas, and in • Proximity to FIs was better in • Own debit card 16.9% Central and Western parts of urban areas1 • Credit card 1.6% Uganda1 • Commercial banks: • Rates of usage of various • The gap between rural and Rural 22%/Urban financial services/products urban residents was largest in 58% among Ugandan adults2 the access