Three months down the road in Uganda
Eighty-three thousand customers within the first 48 hours, 650,000 after one month, over 1,000,000 in three months: MoKash is off to a great start in Uganda.
MoKash has taken off strongly, being favourably compared to its counterparts M-Shwari in Kenya (645,000 customers in the 21 days after launch) and M-Pawa in the United Republic of Tanzania (250,000 customers in the first month).
The first mobile micro-saving and -lending service of its kind in Uganda has so far recorded rapid uptake (9,000 new customers registering daily), confirming its suitability to the Ugandan financial service market. Current statistics show that 30 percent of registered customers are actively saving, totalling savings of approximately U Sh 4 billion (US$1,150,000). Currently, MoKash is disbursing around 4,500 loans per day, totalling up to U Sh 2 billion (roughly $570,000).
The benefits of MoKash extend across all socio-economic spheres: to the rural woman who wishes to incrementally save small amounts of money for her family’s monthly expenses, to micro-entrepreneurs who aspire to grow their business, to students who must pay their school fees, and to farmers who need capital to boost their crop inputs—all thanks to the service’s instant loan processing capability.
MoKash at a glance
MoKash was launched through a strategic partnership between the mobile network operator Mobile Telephone Network (MTN) Uganda and the Commercial Bank of Africa (CBA) Uganda on 9 August 2016. The product provides convenient, useful, fast and easy access to savings and loans for all users without the need of a bank account. Activating MoKash is free. To gain access, one needs an MTN Mobile Money account, a minimum of six months of voice/data activity and an acceptable type of identification. The key features are an opt-in process that can be initiated and completed on the mobile phone using an unstructured supplementary service data (USSD) code; savings with quarterly tiered interest rates of up to 5 percent; and loans ranging from U Sh 3,000 to U Sh 1,000,000 ($1–$300), depending on the user loan limit, at a 9-percent facilitation fee for a period of 30 days. MoKash offers valuable and affordable financial services to Ugandans in rural, peri-urban and urban areas.
A favourable country context for a new digital financial service product
The success and rapid uptake of MoKash lies in the design of this new digital financial service. In the initial phase of their partnership, MTN and CBA sought technical support from the UNCDF MM4P team based in Uganda. MM4P’s technical assistance included market research that looked at customers’ saving and borrowing behaviour. Understanding the specific needs and expectations in particular in rural Uganda informed the design of MoKash for people with low and irregular income.
Uganda is a mature country for digital financial services with 20.4 million active mobile subscribers in Q4 2014, representing 55 percent of the total adult population. GDP per capita in Uganda stood at $675 in 2015. Findings from the Uganda FinScope III Survey indicate that the population’s access to formal financial services increased from 28 percent in 2009 to 54 percent in 2013, with this increase being primarily attributed to mobile money services.
Prior to the launch of MoKash, the saving and credit sector in Uganda was dominated by semi-formal and informal saving methods (e.g., keeping money in a box under the bed at home), saving groups, and loans from family members, friends or money lenders. These methods came with their own drawbacks, often deterring people from saving or taking loans during times of need, due to fear of significant potential risk. Regarding formal methods, an estimated 16.8 percent of the adult population has reportedly saved with a financial institution, and the percentage decreases to 15.7 percent for those who have borrowed from the same. To that issue, MoKash has improved, simplified and secured the process of saving money for customers with the added benefit of receiving interest on their savings.
The rapid uptake of MoKash demonstrates the adaptability of the Ugandan market to new technologies and a huge demand for a saving and credit product. Within 48 hours of launch, 83,000 customers had already signed up for the new service. CBA Group CEO, Isaac Awuondo, later reported that 650,000 customers had registered for the service in the first month. Three months after the launch, the number of registered customers is surpassing 1,000,000, further illustrating the success of MoKash.
Voice of the customers
During an interview, Mr. Awuondo stated that the product speaks for itself: “Customers so far say that the product is very convenient, they like the fact that they can earn interest on their savings and access instant loans when they need to borrow.” 
Following the introduction of MoKash, customers across the country have voiced their positive opinions on social media, from Facebook to Twitter. In addition, preliminary findings of a study performed by PHB Development point towards a positive product outlook.
Clients described benefits for banking and in-country financial inclusion through MoKash:
Anna Oyam, micro-entrepreneur: “The product is convenient because one can save small amounts.”
Betty Jinja, businesswoman: “This has many advantages compared to [a] bank and benefits for saving, and convenience saves on transport.”
Other clients discussed the convenience associated with and the value added through additional financial banking options:
Edward Oyam, businessman: “MoKash is easily accessible and I can save conveniently … I do need regular access to loans … It’s a good way of saving and accessing loans with improved security.”
Brenda Oyam, student: “I need loans for school fees and emergencies, but I would also like to save small amounts for airtime and emergencies. I hope to use it to improve my life.”
Jerome Tororo, teacher: “It is very good because one can take loans easily every time. [It] provides easy access due to the link to the Mobile Money account.”
Clients saw the value added in micro-savings through MTN:
Abdallah Amudat, community-based trainer: “Convenient—you can save and take loans individually, without others getting involved.”
Winnie Masindi, student: “The product is good to help growth and security, and is faster than most methods.”
The way forward—a customer-centric approach to overcome challenges
This is just the beginning, and MoKash will continue to contribute to steadily growing financial inclusion and prosperity in Uganda. However, despite the promising performance of MoKash, MTN and CBA will need to address some of the challenges that clients currently face:
- Product education can help clients better understand the terminology involved in ‘terms and conditions,’ particularly amongst unbanked customers;
- Customer communication should be expanded beyond English and Luganda to include a variety of languages to bridge the language barrier;
- Financial education would help clients understand the different product features and implications of defaulting; and
- Registration issues experienced by some customers resulted from the stringent know-your-customer (KYC) protocol implemented to prevent non-performing loans. Communication on accepted ID types and on how customers can avail of service centres and agents to resolve KYC issues could improve overall product uptake.
MoKash is expected to challenge the status quo in Uganda by encouraging a saving culture, offering quick and convenient credit facilities, and ultimately leading to increased levels of financial inclusion.
Stay tuned for more news on the story of MoKash in Uganda!
By Anna Ferracuti, KM Consultant UNCDF MM4P
MM4P AT A GLANCE
Mobile Money for the Poor (MM4P) is a programme launched by UNCDF in partnership with the Swedish International Development Agency (Sida), the Australian Department of Foreign Affairs and Trade (DFAT), the Bill & Melinda Gates Foundation and The MasterCard Foundation. MM4P provides support to digital financial services (DFS) in a selected group of least development countries (LDCs) to demonstrate how the correct mix of financial, technical and policy support can build a robust DFS ecosystem that reaches low income people in LDCs.
November 2016. Copyright © UN Capital Development Fund. All rights reserved.
The views expressed in this publication are those of the author(s) and do not necessarily represent the views of UNCDF, the United Nations or any of its affiliated organizations or its Member States.
 CIO East Africa, ‘21 days of M-Shwari: 645,000 clients, KSh. 150 million saved,’ 18 December 2012. Available from http://www.cio.co.ke/news/top-stories/21-days-of-m-shwari-645,000-clients,-ksh.-150-million-saved
 Okuttah Mark, ‘CBA registers 250,000 Tanzania mobile bank customers,’ 11 June 2014. Available from http://www.theeastafrican.co.ke/business/CBA-registers-250-000-Tanzania-mobile-bank-customers-/-/2560/2344268/-/ylcvcc/-/index.html
 Acceptable ID types: National ID, Local Council Certificate, Passport, Voter’s Card, Company ID, Driver’s Licence
 Uganda Communications Commission, ‘Post, Broadcasting and Telecommunications Market and Industry Report: First Quarter (January-March 2015),’ table 1 (Kampala, 2015).
 World Bank, ‘GDP per capita (current US$).’ Available from http://data.worldbank.org/indicator/NY.GDP.PCAP.CD (accessed 11 November 2016).
 Economic Policy Research Centre, Uganda 2013: FInScope III Survey Report Findings—Unlocking Barriers to Financial Inclusion (Kampala, 2013).
 World Bank, ‘Financial Inclusion Data / Global Findex: Uganda.’ Available from http://datatopics.worldbank.org/financialinclusion/country/uganda (accessed 11 November 2016).
 Isaac Awuondo, CBA Group CEO, statement to Citizen TV Kenya on 28 September 2016 (seven weeks after launch).
 David Herbling, ‘M-Shwari clients in Uganda hit 0.6m in two months,’ 27 September 2016. Available from http://www.businessdailyafrica.com/Corporate-News/M-Shwari-clients-in-Uganda-hit-0-6m-in-two-months/539550-3397076-t367ds/index.html