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MTN Uganda service takes off

Paul Vecchiatto
By Paul Vecchiatto, ITWeb Cape Town correspondent
Cape Town, 03 Jun 2010

MTN Uganda's MobileMoney has registered 890 000 users in its first year of operation. This is 16% of the operator's total subscriber base, and it expects this to grow to more than two million by year-end.

MobileMoney is developed by South African-owned MTN, with Cape Town-based mobile financial services developer Fundamo.

The system is a SIM card deployment, enabling transactions through a secure channel. The cryptographic features of the SIM card allow it to encrypt highly-sensitive and confidential data, such as bank account numbers and PINs, transaction records and other data.

The success of the MTN-Fundamo service emulates the success other network operators, such as Safaricom and Zain, have had in meeting the money transfer needs of Africa's population. Most of the continent's citizens do not have access to the formal banking sector.

According to a statement, MTN Uganda is anticipating accelerated year-on-year growth, increasing to 3.5 million users by 2012.

MobileMoney transaction and distribution statistics show $195 million worth of transactions have been processed since the platform launched in March 2009. There have been over 11.8 million transactions since launch, with the average transaction being worth about $21. Statistics also show there are 1 005 active agents, more than 2 500 direct sales reps and over 1 600 MTN MobileMoney service outlets. Approximately 60% of transfers are to recipients in rural areas - serving the unbanked.

Arthur Goldstuck, MD of research firm World Wide Worx, says this is another of the many African success stories in the innovative use of mobile technologies, as well as payment systems.

“The most significant aspect, however, is not the transactional value, which is relatively low, but the distribution model. By having an army of sales agents, both to get the word out and to sign up people, they are addressing the central gap in the take-up of mobile applications and services, namely education. The models that combine both an easy and quick user interface with a strong educational strategy are the ones most likely to succeed,” Goldstuck notes.

Themba Khumalo, CEO of MTN Uganda, says: “We have taken a direct sales approach to educate and provide access to subscribers who are unfamiliar with electronic financial services.”

Aletha Ling, COO and executive director of Fundamo, comments: “These services must be able to cope with accelerated uptake; allow for more sophisticated services to be rolled out quickly and easily; and they must meet with existing and future regulatory standards. MTN Uganda's approach has delivered one of the most successful mobile financial services in the world.”

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