Last year, fraud and crime rates recorded by Ugandan mobile money agents were the highest in the region, according to latest industry research, but revenues earned by local operators remained the highest regionally.

The total number of mobile money users grew by 12.2 per cent to 21.1 million people in 2015, according to government data, out of a total population of 34.6 million people.

Uganda’s financial inclusion rate is estimated at 40 per cent of the population compared with Kenya and Tanzania who have more than a 50 per cent inclusion rate, the data shows. Financial inclusion refers to people’s ability to access financial services to get credit and savings facilities.

A new research report released by the Helix Institute of Digital Finance titled Agent Network Accelerator Survey: Uganda Country Report 2015 shows the number of mobile money agents who reported fraud cases in their operations stood at 53 per cent of the entire service provider pool compared with agents in Tanzania and Kenya who posted 42 per cent and 12 per cent fraud cases respectively during the period under review.

A precise breakdown of fraud rates registered in the Ugandan market shows 55 per cent of reported cases originate from Kampala — the most dominant transaction zone — while 45 per cent were reported by agents operating in rural areas.

The report also shows the more the transactions per agent, the higher the risk — agents who handle more than 40 transactions per day are more prone to fraud than those who conduct 20 transactions or fewer per day. Some of the fraud cases were perpetrated by employees, the report said.

The relatively high mobile money fraud rates recorded in Uganda are mainly blamed on weak internal controls, limited training and cyber-based fraudsters.

For instance, only 45 per cent of Ugandan mobile money agents display their call centre number while conducting transactions while an average of 18 customers were reported to have carried out transactions without showing their identification cards — a sign of poor compliance habits.

Theft cases

About 33 per cent of Ugandan mobile money agents reported cases of robbery or theft compared with 18 per cent and 15 per cent reported in Tanzania and Kenya respectively.

Robbery cases were mostly attributed to huge transaction turnover registered in urban areas during the late hours between 9pm and 11pm. Lack of strong security measures such as cash safes, armed escorts and security at premises have also left many agents exposed to criminal attacks. The report points to the existence of organised gangs who target the agents.

“The providers’ fraud management policies require urgent attention. It will be essential to incorporate fraud typology and mitigation measures into specialised training modules and ensure that all agents regularly receive high quality training. Providers should consider maintaining blacklists of operators who have committed fraud or theft in the past,” reads part of the report.

According to the report, although Ugandan agents’ revenues dropped from $136 per month in 2013 to around $120 per month in 2015, average earnings recorded in the local market remain higher than those recorded in regional markets.

Mobile money agents in Tanzania and Kenya registered average earnings of $94 and $110 respectively during the period under review.

“We have documented about 50 fraud cases on our network and alerted the agents about them but the fraudsters keep developing more. One of the most popular ones involves conmen who approach dealers and claim that they are performing a network upgrade,” said a senior manager at Airtel Uganda who requested anonymity.

The total number of registered mobile money agents in Uganda increased by 48 per cent from 53,560 in 2013 to 79,002 in 2014.