Ugandans holding big amounts of money on their Mobile Money accounts are at a high risk of losing all their savings in case the business of any of the telecom companies collapses, Members of Parliament have established.
The ‘discovery’ comes in the wake of the Bank of Uganda (BoU) Executive Director Supervision Justine Bagyenda, who also doubles as the Acting Deputy Governor, telling MPs that the Central Bank is not the Mobile Money regulatory body in Uganda.
Ms Bagyenda, who was appearing before Parliament’s Committee on Communication and Technology, also urged its members to quickly come up with a law that will govern all MM businesses, adding that the central bank can only offer redress of Shs3 million to an MM client who falls victim should the holding telecom collapse.
And because they setup monetary guidelines in the country, the MPs were interested in getting answers from the BOU officials about the mobile money operations. However, the MPs were left unsatisfied with the official’s answers.
“There is no Mobile Money insurance and in case maybe a telecom company winds up and a person is supposed to get his money; in case of Mobile Money they can’t get it because how do you claim for that money? And to which bank or to whom do you go to claim for your money?” Tororo North woman MP Annett Nyakecho, who is also the chairperson of the committee wondered.
She added: “So these are the most of the big questions we are looking at and maybe if they come up with a new law it will answer most of these questions but as it stands now it’s just open, you bank with MM you lose your money on closure.”
Nyakecho noted that on many occasions the BOU officials were cagey, for instance on how the telecom companies lend out money through mobile money and yet the population is not aware that the money they borrow, for example from ‘Wewole’ (Airtel lending slogan), is not actually from Airtel as company but from businesspeople.
“So we were tasking these people to tell us why these people charge exorbitant interest rates and they are making a lot of profits but BOU has denied that they don’t regulate money lending,” Nyakecho said.
Further, Nyakecho noted that the telecoms have been carrying out MM transaction for 9 years, unregulated.
“It si now nine years down the road and people are transacting in mobile money business but it is not regulated at all and if there is a problem today you can’t run anywhere to seek redress,” she added.
However, Ms. Bagyenda later told MPs that if a person holding huge sums of money on his MM account is insured, the BoU can only pay out Shs3 million in compensation.
“In case you are under insurance, Bank of Uganda can pay you for the loss and its only three million,” she said.
This prompted the former state minister for labour Henry Kabafunzaki to ask what would happen to a person having more than Shs3 million on his MM account and the telecom company collapses.
“That person qualifies to be remunerated but what then happens to the balance of the money the client had on his account?” Kabafunzaki wondered.
And, to the shock of the MPs, Ms. Bagyenda replied: ‘Loss’.
However, the MPs were not done, with the Samia Bugwe North legislator Gideon Onyango blaming Bagyenda for failing to clarify why BOU does not regulate MM activities.
“Somehow BoU is not bothered about what is happening in the MM world; Ugandans are not protected in any way and the whole thing is a total mess. We call upon all Ugandans to be very careful as they transact MM services because it is clear that you are not safe at all,” Onyango said, describing Ms. Bagyenda as ‘arrogant’.
Onyango also urged Ugandans to snub the MM lending service, saying ‘it very dangerous’.
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