MTN Uganda takes on banks with micro-loans product

Tuesday August 9 2016

An MTN mobile money agent in Kampala.  PHOTO | FILE

An MTN mobile money agent in Kampala. MTN Uganda has partnered with Commercial Bank of Africa (CBA) in a pact that will see customers access micro-loans through their handsets. PHOTO | FILE 

By Philomena Matsiko

Telecom operator MTN Uganda has partnered with Commercial Bank of Africa (CBA) in a pact that will see customers access micro-loans through their handsets.

Dubbed ‘MoKash’, the virtual banking platform is designed as a credit facility for the unbanked population as well as those lacking collateral and credit history and thereby locked out of the loans market.

According to MTN Uganda chief executive officer Wim Vanhelleputte, the service is targeted at easing access of financial services by enabling customers to save and borrow money using their phones.

The service requires MTN Mobile Money users to open a mobile bank account, MoKash, into which they can deposit as low as Ush50 in savings and borrow up to Ush1,000,000 payable with a flat rate of 9 per cent.

All loans are payable within a month of disbursement.

MTN hopes to replicate the success Safaricom has had in Kenya after partnering with CBA to launch a similar service in November 2012, M-Shwari. As of March 2016, CBA had disbursed Ksh10 billion in loans while collecting Ksh8.1 billion in savings from 3.9 million active customers.

Uganda becomes the third country, in which CBA has operations, to roll out the virtual banking platform. The bank launched M-Pawa in Tanzania in May 2014 in partnership with Vodacom.

“Enough research was put into this innovation to enable it reach even the last person in the rural area, therefore, we e expect it to have the ability to drive Uganda into a cashless economy gradually as it also improves the livelihoods of the people,” Mr Eric Muriuku, CBA’s general manager of new business ventures said.

Advertisement