MTN MoMo mulls plan to fund agents, merchants

The company’s agents have declined by 5.5% to 162,000 as it continued to execute its agent rationalisation strategy geared towards sustainable growth

Kampala, Uganda | PATRICIA AKANKWATSA | MTN Uganda’s subsidiary, MTN Mobile Money Uganda Ltd, plans to partner with financial institutions to extend credit to MTN Mobile agents and merchants to increase mobile money transactions and boost its revenues.

MTN Mobile Money Ltd’s Managing Director, Richard Yego, told the media in an interview on August.09 that the new credit will be rolled out before the end of this year.

“Over the years, we have been able to work on loan solutions for the customers such as savings and credit and we are now working on the solutions for the agents and merchants to boost their liquidity access in the market and also address capitalization,” he said.

“A good number of our agents are struggling with capital and we want to come to their rescue through the rollout of agent loans for them to be able to utilize funds that we shall provide in partnerships with banks and fintechs that have lending licenses but at the same time have the capabilities to do the customer scoring that is optimal.”

Yego said limited liquidity and capitalization have been a big challenge for mobile money agents for a long time, a development that slows down faster growth of the mobile money business.

Currently, MTN Mobile Money extends interest-free funds to its agents through a product dubbed MTN Xtra Float to ensure that customers are served at all times.

The funds capped at Shs 1 million depending on the agent’s commission earned in the previous month are payable within a maximum of 72 hours.

The company has a savings and credit product dubbed Mokash to enable customers to save and earn interest of up to 5% per annum as well as obtain credit at an interest of 9% per month payable within 30 days.

Yego said MTN Xtra Float has been successful since its rollout in 2020 as more than Shs6 billion are now transacted daily on the MTN Mobile Money platform.

This new development comes at the time MTN Mobile Money Ltd is pushing for mobile money payments to deepen financial inclusion as well as the digital economy as it strives to grow its revenues.

Last month, the company launched a mobile-based supply chain platform that allows businesses in the Fast-Moving Consumer Goods (FMCG) to place orders, generate invoices for deliveries, pay and collect returns in real time.

The platform dubbed FMCG Digital Suite automates the distribution of products and services and allows payment for delivered goods via MTN Mobile Money, eliminating the use of cash in the supply chain. The service has been developed by MTN’s Technology Business and fintech arm, MTN MoMo.

MTN Mobile Money Ltd has also reduced merchant payment collection fees from 2% to as low as 0.1% depending on the various sectors to promote mobile money payments.

However, businesses in the informal sector such as market vendors, saloons and boda boda’s have been exempted from merchant fees for payment collection.

MTN Mobile Money recorded an 18.6% growth in revenue for the first half of this year to Shs 358.3 billion supported by an 11.6% growth in subscriber base to 10.9million. This represents 28.7% of MTN Uganda’s service revenue of Shs 1.25 trillion.

The increasing customer adoption of mobile money payment saw merchants triple to 267,000 compared to the same period last year which enabled a 26.3% increase in our transaction volumes to 1.6 billion and transaction value growth by 44.4% to Shs 61.6 trillion.

However, agent numbers declined by 5.5% to 162,000 as the company continued to execute its agent rationalisation strategy geared towards sustainable growth.