In 2016, MTN collectively pioneered a unique yet beneficial loan scheme in partnership with CBA to its then robust mobile money customers where one could get a loan without lining up in a 5 meter long queue. One year down the road, Airtel unveiled its Wewole service that teased up a tight spread between the two telcos.
For the past 3 years since the CBA partnership with MTN gave birth to Mokash, the Yello camp has registered over UGX 100Bn disbursed as mobile money loans to customers. According to an email interview with the daily monitor, MTN’s Momo division head Ms Elsa Muzzolini confirmed the firm’s estimated disbursed amount from a tune of over 3.5 million active customers.
While Airtel’s Wewole service was launched 1 year ago as a partnership with Jumo. The red camp didn’t confirm it’s dispersed amounts even when interest is fetched inline with the payback period between 7-14days. On the contrary, MTN’s Mokash service has fairly contributed to the Yello camp’s loyalty streak with subscribers even after a furious license mash up recently with UCC. More so, with only 2 telecoms offering mobile loans in Uganda so far, the UGX 100Bn milestone has been a favorable go-ahead for subscribers as compared to the company’s gains as MTN’s division head remarked
“This is not really a revenue generating product for us. It is less than 1 % of our mobile money revenue. However, we see it as an amazing service that will sustain customer loyalty to MTN in the middle term” Ms Muzzolini
The Mokash grace period and how MTN has recollected borrowed funds
Although banks are best known for their tight annual interest rates. Mobile loans on the other hand feature favorable rates but with capped amounts based on a User’s mobile behavior to a tune that Mokash’s disbursed 100bn is trust bridge with subscribers.
Through a fair 9% interest rate levied on loans acquired through Mokash, the Yello camp recollects over 96% of the money borrowed through the service by customers. However, as per the previous CBA report that denoted over UGX 9.2bn as loans disbursed in less than a year after the partnership, the Mokash 100Bn rate is not a myth but instead an indicator of a much wider financial inclusion rate that currently raves at 78%.
In spite of Wewole and Mokash taking a lion’s share in the mobile loans space. The rate of financial inclusion mixed with the robust demand for these mobile loans may soon strike another product by adjacent providers like Africell money even with the 0.5% tax levied on withdraws.
