NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, September 23, 2015

Electronic payment systems, like mobile money services, have become one of the most convenient ways of paying utility bills, as well as sending money to the remotest village and buying top-up airtime. From students to the working class, traders, and peasants, anyone with a mobile money service registered cell phone number is one only an agent-away from receiving their cash.

Things have become even better with the introduction of cross-border mobile money transfer services by all local telecom firms Tigo (Rwanda/Tanzania), MTN and Airtel for Northern Corridor countries). Tigo Rwanda and Tigo Tanzania’s Tigo Cash subscribers have been using the platform to send and receive money between the two countries, while MTN Rwanda and MTN Uganda subscribers are able to do the same under the One Area Network arrangement between the Northern Corridor states – Rwanda, Uganda and Kenya.

This direct service, especially between MTN Rwanda and MTN Uganda, has created uncertainty among mobile money agents who have been collaborating with their counterparts in Ugandan towns like Kabale, Mbarara and Kampala to send money on behalf of Rwandans at a fee. This, therefore, means that MTN Mobile Money subscribers are the big winners. So what will happen to the whole chain of agents who these people previously relied on?

Mixed reactions from mobile money agents

Robert Karyeija, a forex dealer at Gatuna border post, says the service has not yet affected his business. Yesterday, his exchange rate was 4.65 (Rwf1 is equivalent to Ugsh4.56).

Simon Mwangi, a mobile money operator in Remera, a Kigali suburb, echoed the same sentiment, saying nothing seem to have changed with the direct mobile money transfers between MTN Rwanda and MTN Uganda, and “there are no emerging fears yet”. Mwangi believes that old customers use services of agents for a number of reasons.

“We don’t levy any charges when sending money, and basing on the exchange rate, the sender just has to part with a round figure,” Mwangi says.