Mobile Money_Uganda_FullReport_LowRes.pdf.pdf

7/29/2019 Mobile Money_Uganda_FullReport_LowRes.pdf.pdf

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Mobile Money in Uganda

The Financial inclUsion Tracker sUrveys ProjecT, ocTober 2012

Use,barriers andoPPorTUniTies


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2 Mobile Money in Uganda: Use, Barriers and Opportunities

execUTive sUMMary 3

glossary 5

MeThodology 6

Uganda coUnTry ProFile 7

Mobile Money adoPTion 9Mobile money adoption at the household level 9Mobile money adoption at an individual level 12Market structure or mobile phone communication and m-money services 13

MoTivaTors For and barriers To The adoPTion oF Mobile Money services 14The dynamics o adoption among registered MTN m-money users 14Sources o inormation about MTN m-money and adoption motivators 14Barriers to adoption 16M-money use or personal savings 18M-money use or business 18Lessons rom the most recent experiences o registered MTN-m-money users 19

hoUseholds Financial behaviors and The role oF Mobile Money services 20Remittances: sending and receiving patterns in the past six months 20Sending and receiving patterns in the past six months: non-remittance payments or ormal payments 26Mechanisms or household savings in the past six months 27Financial inclusion landscape: insurance and loan activities 28

hoUseholds Financial shocks and resPonses To shocks 30

conclUsions and recoMMendaTions 32

aPPendix a. individUal bases For rePorT FigUres 33

Table oF conTenTs


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InterMedia 3

execUTive sUMMary

In 2011, the Bill & Melinda Gates Foundations (BMGF) Financial Services or the Poor program commissioned

InterMedia to design and implement a project to track the uptake, use and market potential o mobile money

(m-money) services in Pakistan, Uganda and Tanzania. The ndings rom the Financial Inclusion Tracker Surveys

Project (FITS), which includes annual panel-based household surveys conducted on a national scale, are intendedto support the m-money activities o the BMGF, development organizations, mobile operators, regulators and others

that play active roles in m-money ecosystems. The surveys also are designed to acilitate analyses o m-moneys

relationship to household nancial behavior, particularly a households ability to manage economic shocks.

FITS data, reports and related analyses will be disseminated broadly to stakeholders in the nancial access

community, both in the countries studied and globally, to help inorm policies and practices in the eld o

nancial inclusion. In addition, InterMedia is making the data and analyses available on AudienceScapes,

www.audiencescapes.org/FITS, InterMedias online research knowledge base.

This summary presents some o the key ndings rom the rst annual FITS survey o 3,000 Ugandan households

conducted FebruaryMarch 2012.

One in fve households in Ugandahas at least one user o mobile money(m-money) services. M-money is mostly used or

Only 9 percent o households currently save with an m-money account; however, the service

seems to t well with households existing savings routines, andhal o households withregistered m-money users store money on their m-money accounts .

Regardless o the m-money

status o a household,

remittances are primarilyused or routine fnancialsupport among relatives livingin dierent households. Friends, peersand other acquaintances also appear to be using

remittances as a part o their lending routines.

keyFindings

The most common response to a negativefnancial shock is depleting a householdscash savings, ollowed by decreasing the amount ovarious household spending categories.

sending/receiving regular remittances and, to a lesser extent, or sending/receiving emergency help. MTN is the

leading provider o m-money services.

Households with registered m-money users are likely to engage in a greater numbero fnancial activities, including sending and receiving remittances, making and receiving payments,and saving money, than other types o households.


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Overall, the survey ndings indicate signicant potential or m-money expansion in Uganda, including among

bottom-o-the-pyramid populations. Sixty-two percent o all surveyed households have at least one active SIM

cardthe only requirement or using m-money. Moreover, more than hal o unbanked households and households

living below the poverty line own a SIM card.

Limited uptake o m-money, as well as limited use o services beyond remittances, appears to be related to anincomplete understanding o the available services among m-money users and nonusers. An insucient number

o m-money agents, inconsistent service quality and low liquidity have also emerged as serious impediments to

uptake and more requent use o m-money, particularly in the rural areas.

Subsequent FITS survey reports will monitor market growth and measure how eectively barriers to new or greater

adoption have been overcome, particularly amongst the unbanked and those living at the bottom o the pyramid.

Interviews with registered MTN m-money users show asteady, but gradual, increase in the m-money subscriberbase since 2009. However, the uptake o services beyond moneytransers is somewhat slow, and only 39 percent o registered users

report knowing about m-money applications other than money transers.

Awareness o m-money services among nonusers is relatively high presenting anopportunity or urther growth in service adoption: Only 32 percent o surveyed nonusers do not use m-money

servicesbecause they had not heard about them.

Registered users o MTN m-money most requentlycite media and riends as their initial sources oinormation about m-money. But most users decideto register or an m-money account because o a personal

recommendation.

Rural users are most likely to register in response to an agents recommendation .However, our in ve rural registered MTN m-money users reported at least one problem with an agentin the

past 12 months, and 44 percent o rural nonusers said they never use m-money because they cannot nd an

agent close to their home. This suggests that m-moneys expansion in rural areas might be hampered by the

shortage o m-money agents and the inconsistent perormance o some agents.

Rural users travel longer distances and spend more money on transportation

than urban users to reach an MTN agent. Once they get to an agent location,

rural users are also more likely than urban users to aceproblems related to agents absenteeism, agents experiencinga shortage o cash or e-foat, and agents charging an inormal deposit ee.


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InterMedia 5

Banked householdsHouseholds that reported savingmoney in at least one bank account (including micro-nance institutions) in the six months prior to the survey

Boda-bodaA bicycle or a motorcycle taxi

Burial societies or akiyo/amorican/engoziA soci-ety o riends who voluntarily contribute unds usedas lie insurance Funds are paid out to amily membersupon the death o a member o the society or uneraland other expenses

Cashbox or mattress method o saving or storingmoneySavings kept in a hiding place at home or on aperson

e-oatWhen accepting deposits o cash rom cus-tomers, a mobile money provider issues a commodityknown as e-foat, measured in the same units as thenational currency and held in a registered account undera users name When a person sends/receives moneythrough an agent, the agent has to have e-foat (moneyon the agents account) available to transer to the recip-ients account Otherwise, the agent cannot help with thetransaction

Financial shockAn unexpected event that has a majorimpact on a households nances, either positive (eg,inheriting money) or negative (eg, spending money onhospital care or a sick household member)

Giting circle or nigiinaA group o individuals,who meet on a monthly basis and git each other pos-sessions (eg, domestic appliances or money) or services(eg, house construction or land cultivation) to helpeach other save money or boost each others incomesGits, money and services are oered on a revolvingbasis

Kutenga Pa NgongoleA credit at a local store with theexpectation the customer will pay the bill at the end othe month, or whenever the household has money

Merry-go-roundA group o individuals who pooltheir savings On a regular basis (monthly, weekly ordaily), each individual puts the same amount o moneyinto the pot and, on a revolving basis, one person takesthe total amount o money

glossary

Mobile money depositOne o the transactions mobilemoney (m-money) users can perorm using their ownor an agents account to cash-in (ie, put money in the

account) Sometimes, when using an agents account,m-money customers are required to prepay an inormaldeposit ee in addition to the money they are sendingvia m-money and the ees they pay or using the service

Non-remittance (ormal) paymentsFormal pay-ments sent to the government, educational institutions,ormal nancial institutions (eg banks) or private busi-nesses Non-remittances include payments o taxes, nesor ees, utility bills, goods, debt or insurance paymentsPayments might include ormal credit disbursementsand repayments

RemittancesMoney or its equivalent (ood orgoods) sent rom one household to another Remit-tances include any inormal credit and debt repaymentsbetween amily members or riends who live elsewhere,any repayment o debts, or payments or goods and ser-vices

Savings account at a SACCO or cooperative(MUSCO)Savings accounts oered by cooperatives totheir members only; the accounts do not have an expira-

tion date

Savings account at a Village Savings and Loan (VSLAlike CARE)Members deposit small amounts o moneyor a year At the end o the year, they share the moneythey paid into the account VSLA will also loan moneyto non-members known by the members

Urban and rural householdsUrban and rural house-holds are dened according to their residence in urbanor rural enumeration areas as prescribed by the UgandaBureau o Statistics

SIM cardA removable micro-card that contains asubscriber identity module that securely stores the elec-tronic codes used to veriy subscribers identities onmobile phones and computers


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The FITS household studies in Pakistan, Tanzaniaand Uganda are three-year, panel studies consisting othree annual waves o ace-to-ace household surveys

(n=3,000 households), and three telephone mini-surveys with the same households, conducted betweeneach wave The core o the questionnaire is the same inall three countries to allow or cross-market comparisons,although some sections and questions are tailored to the

MeThodology

local context to allow or a more accurate assessment othe development o mobile money (m-money) in dier-ent nancial, regulatory and socio-cultural environments

This report presents the ndings o the rst wave surveyin Uganda conducted February-March 2012 Separatereports address the rst wave surveys in Pakistan andTanzania

a noTe on daTa analysis and rePorTing

The FITS surveys are designed to collect trend data primarily about m-money use and overall

nancial behavior at the household levelthat is, the data represents collective usage patterns

or entire households. The households or this panel were selected rom a random sample rame

and thus are representative o usage and behavior patterns o Ugandan households in general.

In addition to the household-level data, the surveys gather data on behaviors and experiences

with specic m-money services, based on interviews with individual users o m-money services

among members o the selected households. The results o these individual interviews are not

representative o individual users throughout Uganda because the interviewees were not chosen

rom a random sample rame.

The section o this report on households nancial behaviors and the role o m-money is based

on a survey with individual users o MTN, Ugandas m-money service. The analysis ocuses on

MTN users because the number o users or each o the three other m-money services was notsucient or valid analysis (n


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InterMedia 7

Uganda coUnTry ProFile

general environMenT

Uganda is a landlocked country in East-Central Arica

Its population refects diverse ethnic groups with dier-ent political views The resulting tension among thesegroups has undermined the development o a stablepolitical community and caused violent conficts, whichare still ongoing today in the northern parts o thecountry Under the rule o president Yoweri Museveni,Uganda has rebounded rom economic and politicalchaos to relative stability1 The countrys main indus-try, agriculture, employs 80 percent o the workorceand coee exports bring in the bulk o the countrysrevenue2 Due to its dependence on exports, Ugandaseconomy was severely hit by the recent global economiccrisis

In 2011, Ugandas population was estimated at 338million, with 87 percent living in rural areas In 2009,the World Bank reported 65 percent o the popula-tion living on less than $2 a day3 In the same year, theGrameen Foundation estimated that 35 percent o thepopulation was living below the national poverty line4,5Ugandas wealthiest groups are the residents o the Cen-

tral regions urban areas; the poorest people are arm-ers in remote areas in the north and northeast regionsThe remoteness limits the poor populations access to

produce markets and nancial services Mobile money(m-money) has the potential to oer these populationsthe means to manage their limited cash resources insaer and more ecient ways6

TelecoMMUnicaTions environMenT

There are ve mobile network operators (MNOs) inUganda: MTN Uganda, Orange Uganda, Uganda Tele-com (UTL), Warid Telecom and Airtel (ormer ZainUganda) As o 2010, there were 99 million mobilephone subscribers across all ve MNOs; and the sub-scriber base has been steadily increasing7 Network tra-c is still dominated by voice, although SMS (text) andmobile internet usage grew notably in 2011 thanks topromotions, ree new services (eg, missed call alerts),cheaper bandwidth via undersea cables, and increas-ing 3G-network coverage8 Four o the ve MNOs oerm-money servicesMTN m-money, M-Sente romUTL, Airtel M-money and Warid Pesa rom Warid MTNwas the rst to launch m-money services in 2009 andremains, by ar, the market leader By law, each m-moneyprovider has to partner with a bank However, users do

not need a bank account to use m-money services9

1 http://wwwbbccouk/news/world-arica-14107906

2 https://wwwciagov/library/publications/the-world-actbook/geos/

ughtml#top

3 http://dataworldbankorg/indicator/SIPOV2DAY/countries/

UG?display=graph

4 National estimates o the percentage o the population alling below the pov-

erty line are based on surveys o subgroups, with the results weighted by the

number o people in each group Poverty rates vary by region with the Central

region enjoying the lowest percentage o impoverished population

5 This report reerences two poverty indexes: the World Bank index, which

denes poverty through daily consumption with poor households consump-

tion at lower than $2 a day, and the national estimates o poverty used by the

Grameen Foundation6 http://wwwruralpovertyportalorg/web/rural-poverty-portal/country/

home/tags/uganda

7 Uganda Government (2010) Status o the Communications Market

March 2010 Uganda Communications Commission (UCC) Kampala,

Uganda

8 Ibid

9 Ndiwalana, A et al (2010) Mobile Money Use in Uganda: A Preliminary

Study Working paperA boy carrying water walks along a path in the suburb ofKampala, the capital of Uganda.


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The m-money oerings o the our providers have manysimilarities: They all allow registered users to load moneyinto their accounts (cash-in), make transers to otherusers (both registered or not), buy airtime and with-draw money (cash-out) While m-money registrationis ree, all transactions have a predetermined ee SomeMNOs (eg, MTN) automatically deduct charges rom

the users account while others (eg, Airtel) have a seto recommended charges, but allow agents to set thembased on market demand10 The transaction ee can becalculated dierently or registered and non-registeredusers o m-money For example, in 2011 a registeredsender o M-Sente was charged 700 UGX ($028) to sendbetween 1 and 2 million UGX ($80808), while a regis-tered receiver paid between 0 and 17,000 UGX ($687),depending on the size o the transer A non-registeredclient was charged between 0 and 35,000 UGX ($1414)to send the same amounts, while the recipient was notcharged The maximum transaction amount also variesFor example, the maximum total amount an MTN orAirtel m-money user can send per day is 1 million UGX($40486),11 while an M-Sente user is allowed to send2 million UGX ($80572)12 Depending on the MNO, aregistered user has access to other m-money unctionssuch as check balancing, receiving m-money accountbalance mini-statements and making PIN changes

A local meat vendor, who also sells mobile phone airtime, advertises airtime prices in front of his shop. Mobile phonecommunication is an integral part of everyday life in Uganda.

Uganda is also a center o research on the impact omobile phones and m-money programs on peoples livesUsing a survey and depth-interviews with m-moneyusers o MTN and Airtel m-money services, and UTLM-Sente in Kampala, Mobile Money Use in Uganda:A Preliminary Study (Ndiwalana, et al, 2010) oundthat m-money helps bring some order to the domes-

tic money transer environment The study also showsm-money has the capacity to improve the national pay-ments system by providing innovative ways to meetthe transaction needs o ordinary people In Building,Incentivizing and Managing a Network o Mobile MoneyAgents: A Handbook or Mobile Network Operators,GSMAs Neil Davidson and Paul Leishman draw romMTNs experience in Uganda to discuss the ways MNOscan encourage m-money agents to become active andproductive participants in m-money distribution13

10 wwwimtuciedu//5%20Yawe%20and%20Nassalippt

11 Ibid

12 http://wwwsunriseug/component/content/article/40-business/478-mobile-

money-taps-into-ugandas-un-bankedhtml

13 Full report o the study is available at http://wwwgsmacom/development-

und/wp-content/uploads/2012/03/incentivisepd


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InterMedia 9

Figure 1. Percent o Ugandan households who own

a mobile phone and SIM card by subregion

Mobile Money adoPTion aT The hoUsehold level

There appears to be a great deal o potential

or reaching bottom-o-the-pyramid (BOP)populations in Uganda because the majority

o surveyed householdseven those below

the poverty line and the unbankedhave

access to at least one mobile phone and own

at least one active SIM card.

WhilethemobilenetworkinUgandastillhassomeroom to grow, mobile phones are quickly becominga common xture o everyday lie Among the 3,000surveyed households, 64 percent reported at least oneworking mobile phone and another 6 percent haveaccess to a mobile phone outside their household; 62percent o the surveyed households reported at leastone active SIM card As might be expected, urbanhouseholds, banked households and those living abovethe poverty line showed higher-than-average rates oownership (Figure 2)

Sixty-vepercentofunbankedhouseholdshadaccessto one or more mobile phones and had at least one

active SIM card Similarly, three in ve households liv-ing below the poverty line (less than $2 day) owned aSIM card and owned or could borrow a mobile phone

Mobile Money adoPTion

Source: FITS study o households in Uganda, February-March2012 and n=3,000. For detailed bases see Appendix A.

Figure 2. Mobile phone access, SIM-card ownership and m-money adoption rate by households

demographic characteristics

Consumption,above $4 a day

Consumption,$2 $4 a day

Consumption,below $2 a day

UnbankedRuralAll households

Have or can borrow a mobile phone Have a SIM card M-money user in a household Registered m-money user in a household

70%62%

25%16%

67%59%

16%12%

65%57%

14%10%

66%59%

15%11%

90%86%

50%44%

83%75%

39%

31%

Source: FITS study o households in Uganda, February-March 2012 and n=3,000. For detailed bases see Appendix A.


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Figure 4. Median monthly spending on various

essentials

Type o expenditure UGX $

Medical care 500 0.20

Clothing (men, women, children) and footwear 2,500 1.01

School fees and other education expenses 2,661 1.08

Mobile phone air time 3,000 1.21

Transportation 3,000 1.21

Food and water 215,800 87.36

O household members who never used m-money,14

only 36 percent cited the lack o a mobile phoneamong the top three barriers preventing them romusing the service41 percent o nonusers reportedthey do not use m-money because there are noagents in the area where they live

Householdsmedianmonthlyspendingonairtimeis comparable to the median monthly spending ontransportation, school ees or clothing, but is less thanone-tenth o the combined monthly median cost oood and water

AboutoneinvehouseholdsinUganda(21percent)have at least one user o any m-money service: 16 per-cent have at least one registered user and 5 percenthave at least one m-money user who is not registeredHouseholds that have at least one registered accountbut never use m-money are rare: 03 percent (nine

Figure 3. Percent o Ugandan households with

m-money users and registered users by subregion

households) o surveyed households have signed upor m-money but have never made any transactionwith this service

O the 21 percent o households that have m-moneyusers, 7 percent have two or more users Similarly, othe 16 percent o households that have a registereduser, 4 percent have two or more registered users

Awarenessofm-moneyamongnonusersisquitehigh:Only a third (32 percent) o surveyed nonusers15 saidthey did not use services at the time o the interviewbecause they did not know about m-money

TheCentralregion,whichincludessubregionsCentral1, home to the capital, Kampala, and Central 2, showsthe highest proportion o households with registeredm-money users (Figure 3) The Northern region (Kar-amoja, Acholi, and Lango) has the lowest proportionat 6 percent o the regions households, which is notsurprising given the continuous civil unrest, which hasdelayed the development o mobile communication inthis region16

Source: FITS study o households in Uganda, February-March

2012 and n=3,000. For detailed bases see Appendix A.



14 N=2,138

15 N=2,138

16 http://wwwbbccouk/news/world-arica-14107906


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InterMedia 11

As might be expected, urban households,

banked households, and households living

above the poverty line were more likely to

have at least one registered m-money user

than unbanked households, rural house-

holds, and households living below thepoverty line.

Urbanhouseholdsaremorelikelythanruralhouse-holds to have a registered m-money user When com-pared to rural households, urban households are morelikely to:

Own a SIM card, which is required to use m-money

Be banked and have at least some experience usingvarious nancial instruments or managing money

Have members who live outside the household andsend remittances to or receive remittances romthose members

Be living outside their home (migrating) at the timeo the survey

Live on more than $2 a day and have money to sendor save

Figure 5. Comparative overview o urban and rural

liestyles

Own a SIM card

Banked

A member livingoutside a HH

Exchange remittanceswith a member

outside a HH

Renting

Living outside home

Consumption,below $2 a day

Rural Urban

84%

7%

15%

47%

7%

48%

16%

34%

7%

25%

13%

60%

46%

84%

Source: FITS study o households (HH) in Uganda,

February-March 2012 and n=3,000. For detailed bases

see Appendix A.


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Mobile Money adoPTion aT an individUal level17

Based on the responses o randomly selected individuals, mobile technologies and m-money

services in Uganda are predominantly used by males, those with a secondary education

or higher, and those at their prime working age (35-54). Females, senior citizens (55+),

and those with no ormal education or only primary education, have the least access to

m-money services.

Figure 6. Access to mobile technologies and services among selected members o households by

demographic characteristics

55+35-5415-34FemaleMale

Post-secondary educationSecondary educationPrimary educationNo formal education

HH consumption, above $4 a dayHH consumption, $2 $4 dayHH consumption, below $2 a day

Have or can borrow a mobile phone Have a SIM card M-money user Registered m-money user

56%50%

15% 12%

38%29%

6%9%

41% 37%

11% 8%

67%

52%

16% 13%

32%

23%6% 5%

96% 95%

59%51%

58% 55%

19% 15%

36% 33%

6% 4%

41%

19%3% 2%

81% 78%

41% 35%

65%57%

25%19%

40%33%

7% 5%

17 The sample o individuals described in this section (n=2,997) was drawn by a random selection o one adult (15+) rom each o the sampled households

The analysis in this section is illustrative rather than conclusive and should be treated as such


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InterMedia 13

18 N=477

19 The survey was designed to gather inormation about mobile service

operators only rom the households with at least one m-money user20 N=57

Airtel, 3%

81% use MTN exclusively

2+ Mobile providers, 14%

Orange Uganda, 0.3%

Warid, 1%

Uganda telecom, 1%

Figure 7. Market share o mobile phone

communication service providers among

households with at least one m-money user



MarkeT sTrUcTUre For Mobile Phone

coMMUnicaTion and M-Money services

MTN is the leading provider o both mobile

communication and m-money services.

Households using MTN exclusively tend to

spend a larger proportion o their combinedmonthly household income on mobile ser-

vices, and use services beyond voice, SMS

and m-money compared with households

using other mobile operators.

Ninety-sixpercentofhouseholdswithm-moneyusersand 74 percent o households with registered users useMTN m-money services The percentage o house-holds using the remaining providers is at or less than 5percent o the households

Among households with registered m-moneyusers,18 93 percent use only one m-money provider,6 percent use two dierent providers and 1 percentuse three m-money providers There were no house-holds with registered users o more than three di-erent m-money providers

Inaddition,MTNappearstobeapreferredprovideror regular mobile communication services, including

voice and SMS: 81 percent o households with at leastone registered m-money user19 use MTN mobile com-munication services exclusively

TheuseofservicesotherthanvoiceandSMSisverylimited: 12 percent o households with an m-moneyuser (2 percent o all surveyed households)20 reportusing their mobile phone to access the internet


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The dynaMics oF adoPTion aMong regisTered

MTn M-Money Users

The number o m-money users has been

steadily increasing since 2009. However, the

adoption o services beyond sending and

receiving money is modest.22

TheexpansionofMTNssubscriberbasereectsthesteady uptake in m-money in Uganda since its intro-duction in 2009: 20 percent o interviewed users23opened an account in 2009, 30 percent in 2010 and 45percent in 2011 Three percent o MTN users regis-tered in January 2012 and 2 percent could not remem-ber when they registered

Thestudyshowsittakesusersabout12monthsfromthe time they register or an m-money account to startusing the services requently MTN registered users,who signed up or an m-money account more than12 months prior to being surveyed,24 were more likelythan newer users (those who registered three to 12months prior to the survey25) to say they were using

their m-money account more requently now com-pared to when they signed up or an account47 per-cent versus 39 percent o the respective groups

soUrces oF inForMaTion aboUT MTn M-Money

and adoPTion MoTivaTors

Media outlets and riends are the leading

sources o inormation about m-money;

however, most people register or an account

because o a riends recommendation (mostlyin urban areas) or the recommendation o an

m-money agent (mostly in rural areas).

Radioandfriendswerenamedasthemostimportantsources o inormation about m-money by all reg-istered users regardless o whether or not they wereearly adopters

MoTivaTors For and barriers To TheadoPTion oF Mobile Money services21

Thebulkofurbanregisteredusers(68percent)learned

about MTN mobile services rom media: 29 percentrom radio, 27 percent rom TV, 7 percent rom a news-paper, 4 percent rom billboards and 1 percent rom amagazine For urban areas, however, riends (named by25 percent) were as important a source o inormationabout m-money as TV and radio

Among rural registered users, 45 percent learnedabout m-money rom radio and 29 percent rstheard about the services rom a riend All otherinormational sources were noticeably less impor-tant in spreading the word about m-money

Figure 8. How did MTN m-money registered users

frst learn about the services?



M-moneyagents

FamilyColleagues andbusinesscontacts

FriendsMedia

Rural Urban

68%

58%

29%

1%

25%

1%5% 5% 7%

2%

21 Based on responses o registered MTN m-money users22 MTN m-money oers its users the ollowing services; cash deposit and

withdraw, money transers, bill pay, airtime purchase, balance check and

mini-statements (http://wwwmtncoug/MTN-Services/Mobile-Banking/

MTN-MobileMoneyaspx)

23 N=462

24 N=223

25 N=187


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InterMedia 15

Veryunlikely

Somewhatunlikely

Somewhatlikely

Very likely

72%

2%

24%

2%

Personalrecommendationswerethemainstimulusor signing up or an m-money account: 54 percento registered users decided to register or m-moneybecause another person recommended they do soThirty-our percent o urban users signed up becauseo a recommendation rom a riend; noticeablysmaller groups registered ollowing a recommendation

rom any other person

Whilefriendsrecommendationswereimportantforalmost one-third o rural users (28 percent), agentsalso played an important role, convincing 12 percento the users to sign up or an m-money account26

A request rom a remittance sender/recipient hadonly some infuence on a households choice o aremittance-delivery method; among registered MTNm-money users, 9 percent signed-up or the serviceollowing the request rom a household member

who sends money

Sinceafriendsrecommendationisanimportant

driver o m-money uptake, it is encouraging that two-thirds o registered MTN m-money users are some-what or very happy with the services,27 and virtuallyall users are at least somewhat likely to recommendMTN m-money to other people

Figure 9. From which media platorms did MTN

m-money registered users frst learn about the

services?



MagazinesBillboardsNewspapersTVRadio

Rural Urban

29%

45%

6%

1%

27%

0.3%3%

7%

3% 4%

26 There were no specic questions addressing the role o direct sales teams

(DSTs) in m-money uptake in Uganda, thereore, DSTs are not discussed in

this report as a separate group o m-money agents

27 Those who rated MTN mobile money services at 6 or above on a scale rom

1 (extremely unhappy) to 10 (extremely happy)

Figure 10. Users opinions o MTN m-money

services

How likely are you to continue to use MTN m-money

services in the uture?



How likely are you to recommend MTN m-money

services to other people?

Veryunlikely

Somewhatunlikely

Somewhatlikely

Very likely

71%

2%

25%

2%


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barriers To adoPTion

lmt ut m u

The survey suggests that registered users

o MTN m-money as well as nonusers o

m-money do not have a clear understand-ing o the range o m-money services pro-

vided by MTN, including the convenience

o m-money or making payments or stor-

ing cash as an independent unction rom

cash transers. This limited understanding

might be preventing Ugandans rom adopt-

ing m-money at a aster pace.

WhenregisteredusersofMTNm-moneywereaskedwhich statement best describes m-money services, 61percent said m-money is or sending and receivingmoney, 28 percent said it can be used in many waysto manage money, 7 percent believed that m-moneycan be used or storing money and 4 percent said itcan be used or payments These responses not onlysuggest MTN registered users have a limited under-standing o the broad range o m-money uses avail-able to them, but it is also possible that users cannotclearly dierentiate among dierent m-money opera-tions For example, they may perceive remittances,

payments and storing money as elements o the samem-money operation: sending and receiving cash

Notknowingaboutorunderstandingtheopportuni-ties and/or benets o the services also appears to bea actor deterring nonusers rom trying to use mobilemoney The majority o nonusers28 (78 percent) alsothink that mobile money is primarily used or send-ing/receiving money

Moreover, when asked about the top three reasonsor not using mobile money, 36 percent o rural non-

users and 31 percent o urban nonusers said theydo not understand the service; 32 percent o urbannonusers also think m-money is too complicated

Those who reported they either do not knowabout m-money services or do not understandit29 are likely to come rom rural households (89

percent), households that are below the $2-a-daypoverty line (84 percent in households living on lessthan $2 a day) and households that are unbanked(86 percent)

Pm t t

The low numbers, lack o liquidity and incon-

sistent perormance o m-money agents, as

reported by registered users, might be weak-

ening agents roles as important advocates o

m-money services, especially in rural areas.

RegisteredMTNusersexperienceswithagentsappearto be somewhat problematic: 88 percent o urban reg-istered users and 78 percent o rural registered userso m-money reported at least one problem with anagent in the past 12 months Overall, 92 percent o allregistered MTN m-money users reported at least oneproblem with an agent in the past 12 months: 68 per-cent had just one issue, 20 percent reported two issues,and 5 percent experienced three or more agent-relatedproblems

Threecommonproblemsreportedbybothruralandurban dwellers: the agent was absent rom the oce(39 percent o all registered MTN users), did not have

cash or did not have enough o it (28 percent), andhad no e-foat (16 percent)

In urban areas, the more common issue cited was arude agent (23 percent vs 7 percent o rural users);rural users were more likely to mention that anagent charged a deposit ee (15 percent vs 9 percento urban users)

Atthesametime,problemswithagentsmightbedif-cult or MTN to track given only 17 percent o reg-istered MTN m-money users who experienced an

agent-related issue actually sent an ocial complaintto MTN In addition, slightly more than one in ve(22 percent) registered MTN users see the same agentconsistently, indicating users may be experiencing di-erent problems with dierent agents

28 N=2,138

29 N=1,170


17/36

InterMedia 17

Figure 11. The top three problems with MTN

m-money agents, by region



Rural users are more likely than urban users to go tothe same agent on a regular basis However, the useo the same agent is likely driven by limited choice:O rural users who report returning to the sameagent,30 52 percent said they use the agents becauseit is convenient; 31 percent use the same agentsbecause they trust them Reliability, courtesy oraccessibility played less o a role

Theexperiencesofnonusersofanym-moneyser-vice reinorce the act that m-money agents play animportant role in stimulating m-money uptake in

Uganda, and the shortage o agents is one o the keybarriers to that uptake Forty-one percent o nonuserso any m-money services said they never tried to usem-money because they couldnt nd an agent nearbyThe proportion o rural nonusers who said this waseven higher: 44 percent o the group compared with17 percent o urban nonusers

T u

The majority o registered MTN m-money

users consider the m-money service easy to

use, although they also said the service is

prone to technical ailure due to mobile net-

work problems.31

Basedonuserresponses,m-moneyservicesarenotconsidered dicult to use Ninety-one percent o reg-istered MTN m-money users ound the process o reg-istration very or somewhat easy, and 92 percent saidthe same about the use o actual services The respon-dents were in agreement regardless o how long theyhad been using MTN m-money Sixty-one percent oregistered users said they make m-money transactionswithout any assistance; among the remaining 39 per-cent, 30 percent still turn to an agent or help

Among users who struggled with m-money accountregistration,32 the long wait or the account tobecome active was the most requent complaint Othe registered users who thought using m-moneywas dicult,33 most cited either diculties in deal-ing with an agent or problems withdrawing money

Althoughgenerallyeasytouse,MTNm-moneyisnot immune to technical ailures: 72 percent o regis-

tered m-money users said MTN m-money had beenunavailable at some point due to technical problemsand 55 percent said they could not withdraw moneyrom their account when they wanted to at least once(35 percent because the MTN network was down and20 percent or other reasons)

30 N=75 Note: there are not enough cases in the group o urban users, who

use the same agent (n=25), to perorm the same analysis

31 MTN, the primary m-money provider, had downtime >50% between

December 2011 and January 2012

32 N=42

33 N=38


18/36


M-Money Use For Personal savings34

While only a small percentage o MTN reg-

istered m-money users perceive savings to

be the primary use or m-money, hal o all

registered MTN m-money users elt com-

ortable enough to try storing money on anm-money account at least occasionally. The

other hal was split almost evenly between

those who did not have money to save and

those who did not perceive m-money as an

appropriate place to put savings.

Technicalissuesaside,registeredusersuniversallyper-ceive MTN m-money to be a sae place or their money(97 percent) Moreover, hal o registered users eltcomortable leaving money on their m-money accountor more than just a ew days; 28 percent reportedsaving money on their m-money account by makingdeposits with the intention o withdrawing moneylater Urban residents were more likely to store moneyon their m-money account; however, there were nosignicant dierences among registered users by daily-consumption level or banked/unbanked status

Overall, among those who keep money on theirm-money account or more than a ew days, urban

users35

are likely to save by depositing moneydirectly into their accounts (62 percent), while themajority o rural users36 save by leaving money ontheir account that was sent to them by somebodyelse (55 percent)

Among registered users who reported saving moneyon their m-money account,37 two-thirds (64 per-cent) said they saved or emergencies and a third(35 percent) saved or a specic goal or a uturepurchase; 14 percent saved just to have some extraincome in the uture

O the users who do not leave money in theirm-money account or more than a ew days (49percent o all users),38 46 percent said they alwaysneed money immediately and 31 percent do not savebecause MTN m-money is not a bank

M-Money Use For bUsiness

Nineteen percent o all registered users39

said they use their m-money account as part

o running their business: most said theyeither received a payment rom customers

or paid or inventory. Urban dwellers are

more likely to use MTN m-money accounts

or business purposes.

34 In this report, the term savings when related to m-money reers to storing

cash on ones account; it is not a ormal savings product and does not oer

any interest rates

35 N=84

36 N=146

37 N=125

38 N=221

39 N=85


19/36

InterMedia 19

Figure 12. Factors involved in the most recent m-money transaction by urban/rural user

Factors Urban Rural

Distance to the agent, km (median) 1 3

Time to get to the agent, minutes (median) 20 25

Cost of travelling to see the agent (median) 0 UGX/$0 1,000 UGX/$0.4

Time to get the transaction done, minutes (median) 10 10

Cost of m-money transaction (median) 800 UGX/$0.32 800 UGX/$0.32

Percentage of m-money users reported having problems with the same agent prior to the mostrecent transaction

29% 40%


lessons FroM The MosT recenT exPeriences

oF regisTered MTn M-Money Users

The descriptions o MTN m-money users

most recent transactions suggest it is more

costly (in terms o both money and time) or

rural users than or urban users to perorm atransaction through an agents account.

Whendescribingtheirmostrecenttransactionswithan m-money agent, registered MTN m-money usersin rural areas reported, on average, they had to coverthree times the distance and had to pay more ortransportation to see m-money agents than did urbanusers In addition, because o the longer trips, ruralusers were more likely than urban users to use a boda-boda (48 percent vs 28 percent o urban users); urbanusers were more likely to walk (64 percent vs 32 per-cent o rural users)

Moreover,mostruralusers(78percent)werecomingrom their homes and had to pay the same amount toreturn to their homes By comparison, 39 percent ourban users made transactions on their way to or rom

work (58 percent o urban users travelled to the agentrom home)

Inadditiontothehighercostsassociatedwithtripstoagents oces, rural users also were more likely thanurban users to experience a problem when dealingwith agents Forty percent o rural registered users

o MTN m-money reported previous issues with thesame agent compared to 29 percent o urban usersAmong rural users who experienced agent-relatedproblems prior to the most recent transaction,40 thetop three complaints were: agents did not have enoughcash (14 percent), were absent (11 percent), or chargeda deposit ee (6 percent)

Despitethetechnicalanduser-relatedproblemsMTNregistered users occasionally ace, 96 percent say theyare very or somewhat likely to continue using MTNm-money services Moreover, more than hal o ruraland urban registered users (62 percent and 78 percent,respectively) believes that i MTN m-money were toclose, it would have a negative eect (large or small)on their lives

40 N=160


20/36


hoUseholds Financial behaviorsand The role oF Mobile Money services

Households with registered m-money users

are likely to engage in a greater number ofnancial activities than other households

(either those with non-registered users or

those with no users o m-money).

Overall,70percentofhouseholdswithregisteredm-money users41 reported remittance-related activi-ties, and 40 percent sent or received other typeso payments in the six months prior to the surveyAmong households with non-registered users,42 therespective proportions were 45 percent and 38 per-cent Households with nonusers43 were ar less activein both remittance and payment-related activitiesHowever, savings-related behavior was similar acrossall three groups

reMiTTances: sending and receiving PaTTerns in

The PasT six MonThs

Households with registered m-money users

are more likely to have sent or received remit-

tances o any kind in the past six months

compared with other households. Moreover,

households with registered m-money users

send cash, as opposed to ood or other goods,

more oten than other households.

Figure 13. Households fnancial activities in the

past six months



41 N=477

42 N=139

43 N=2,384

No m-moneyuser in the

household

Non-registeredm-money user

in the household

Registeredm-money user

in the household

Sent or recevied remittances Sent or received other paymentsSaved money

40%

70%

96%

87%

45%

21%

38%

93%

28%

Figure 14. Remittances sent or received in the past

six months



Received(cash only)

Received (cash,food or other goods)

Sent(cash only)

Sent (cash, foodor other goods)

Registered m-money user in the householdNon-registered m-money user in the householdNo m-money user in the household

25%

52%

18%

42%

19%

30%

10%

43%

16%

35%

28%

11%


21/36

InterMedia 21

Mt mm mt f

mtt

More households with registered users

choose to use an m-money account to send

or receive remittances. Households without

registered users o m-money opt or hand-delivery methods, although some occasion-

ally use m-money through an agent or a

riend, relative or acquaintance.

Thesurveycollectedinformationonthelastthreeremittances sent and received by the interviewees, andthe remittance pathways or those transactions

Seventypercentofhouseholdswithregisteredusersused an m-money account to send remittances: Othese, 52 percent used a household account, 15 per-cent used an agents account and 3 percent used theaccount o a riend, relative or acquaintance

Bycomparison,24percentofhouseholdswithnon-registered users used an m-money account o eitheran agent (15 percent) or a riend, relative or acquain-tance (9 percent) to send remittances Eleven percento households with no m-money users indirectly usedan m-money account via an m-money agent (5 per-cent), or a riend, relative or acquaintance (6 percent)

to send remittances

Yet, the majority o households with non-registeredm-money users (55 percent) or no users (81 per-cent) were most likely to choose a type o in-persondelivery: hand-delivery by sel or by a riend, ordelivery by a riend taking a bus or boda-boda

Anm-moneyaccountisthemostcommonmethodor households with registered m-money users toreceive cash remittances: 54 percent received moneyon their own account, 15 percent on an agentsaccount, and 7 percent on the m-money account o ariend, relative or other acquaintance

Figure 15. Three most common methods o sending remittances in the past six months by type o m-money

user in the household


Figure 16. Three most common methods o receiving remittances in the past six months by type o m-money

user in the household


On a bus orboda-boda with

a friend or relative

Hand-deliveryby friend

Hand-deliveryby self

Agentsm-moneyaccount





Householdsm-moneyaccount

Registered m-money user in the household Non-registered m-money user in the household No m-money user in the household

52%

15% 12% 15%22%

33%41%

32%

8%

On a bus orboda-boda

with a friendor relative





M-moneyaccount of a

friend, relativeor acquaintance

M-moneyaccount of a

friend, relativeor acquaintance


Householdsm-moneyaccount


54%

15%7%

25%17%

33%

12%

23%14%


22/36


Twenty-ve percent o households with non-reg-istered m-money users went to an agent to use theagents m-money account to receive their moneyMost households with no m-money users once againpreerred hand-delivery or receiving remittances

Overall, hand-delivery (by sel or by riend)appears to be the most common method o

delivering remittances, ollowed by a house-

hold m-money account. Based on the house-

hold reports, hand-delivery is also the cheapest

way to send/receive a money transer.

Ppt t t fft mt f

mtt

Regardless o their m-money status, mosthouseholds choose a remittance-delivery

method based on ease o use and conve-

nience. Saety, speed and sender/recipients

preerence did not rank high among the

reasons or using a given delivery method.

Figure 17. Costs o sending/receiving remittances using various delivery methods

Delivery method

Last three remittances (aggregate amounts) sent/received

% o householdsusing this method

Amount sent/received (median) All-inclusive cost o delivery (median)46

UGX $ UGX $

Hand delivery (by self or by friend) 40 45,000 17.93 0 0

M-money delivery via householdsaccount (any provider)

19 54,500 21.71 1,900 0.76

Bus/boda-boda delivery with a friendor a driver/courier

9 40,000 15.94 925 0.37

M-money delivery via an agentsaccount (any provider)

6 50,000 19.92 1,575 0.63

M-money delivery via a third-partyaccount (any provider)

6 30,000 11.95 1,800 0.72

Direct deposit into a bank account 2 100,000 39.84 2,500 1.00

Western Union or Moneygram 1 200,000 79.68 7,500 2.99

Thirty-onepercentofthemostrecentremittancessent by the surveyed households,44 and 30 percent othe most recent remittances received by those house-holds45 in the past six months were sent/received usinga specic method o money-delivery because it waseasy to use Nineteen percent and 22 percent o therespective groups chose a method that was convenient

Securityoftheremittance-deliverymethoddidnotappear to be a major concern: slightly more than 1percent o all households that engaged in remittance-related activities in the past six months reported someloss o sent money and/or goods Not surprisingly,saety ranked only third among the actors aectingthe choice o method or transerring money

Them-moneystatusofthehouseholdscounter-party or sending/receiving cash remittances also doesnot seem to have an eect on the choice o deliverymethod Most households, regardless o their ownm-money status, chose the method that was the easiestand most convenient or them and not or their coun-terparties


44 N=781

45 N=752

46 Cost o delivery includes ees or sending and collecting the money as well

as transportation costs or both the sender and recipient o a remittance


23/36

InterMedia 23

cmm f mtt-t tt

Many households use remittances primarily

as a part o routine fnancial support among

household members and riends or acquain-

tances; ewer households send or receive

remittances or emergency help.

Amonghouseholdsthatengagedinremittance-related activities in the past six months,47 50 percentsent money and 52 percent received money as a parto regular nancial support While emergency helpwas the second most common reason or sending/receiving remittances (see Figure 20), the proportiono households transerring money or emergencieswas ar behind the proportion o households makingroutine transers This is not unexpected because, ingeneral, emergency situations are less requent thanroutine expenditures

Figure 18. Top three reasons or choosing a

delivery method or sending/receiving the last three

remittances

SafeConvenientEasy

Remittances sent Remittances received

30%31%

14%

19%17%

22%



Figure 19. Top three reasons or choosing a deliverymethod or sending/receiving remittances (based on

last three remittances)



ConvenientSafeEasyFastConvenientEasy

M-money account (any type) Hand-delivery (by friend or by self)

33%

30%

21%

24%

19%18%

47 N=1,058

Figure 20. Top three reasons or the last three cash

remittances sent and received, by type o delivery

method



School feeEmergency helpRegular support

M-money account (any type) Hand-delivery (by friend or by self)

44%47%

10%

16%14%

21%

Evenwhencompareddirectly,thepreferencesforusing an m-money account (any type) and hand-delivery (by sel or by riend) or sending or receivingthe last three remittances closely ollowed the patterndescribed above: the majority used a specic deliverymethod because it was either easy or convenient


24/36


Although,generally,thetopreasonsforsendingandreceiving remittances or households using m-moneyaccounts and those using hand-delivery are the same,it appears that households using hand-delivery areslightly more likely to send/receive money or emer-gency help: 21 percent versus 16 percent o householdsthat used m-money to deliver remittances

cmm up f pt t

t t up48

As might be expected, relatives (includ-

ing parents and children49) living in di-

erent households were the most requent

counterparties in remittance-related activi-

ties. In addition, riends and acquaintances

seemed to engage in remittance-based lend-ing schemes.

Whenlookedatindependently,householdsthathand-delivered their remittances were more likely to cir-culate remittances within their close amily: childrenpermanently living away were sending money to theirparents or parents were sending money to childrentemporarily living away (or study or work)

Incontrast,householdsthatusedm-moneyto

deliver remittances appear to circulate money amongextended amily and riends or acquaintances,

although remittances between parents and childrenliving away permanently or temporarily were alsoamong the top three types o money exchanges

Virtually all recent remittances sent or received

were domestic: Only 1 percent o households

reported receiving or sending international

remittances; o those households, there were

more receiving remittances rom abroad than

sending money internationally.

Distance-relatedpatternsforremittancessentandreceived varied by the type o delivery method Forexample, households using m-money were more likelythan households using other methods o money deliv-ery to send or receive money rom counterparts morethan 200 km away Contrary to that, the majority ohouseholds sending or receiving remittances by busor via hand-delivery were within a 499 km radius otheir respective senders or recipients More than 25percent ventured urther than 50 km rom their hometo deliver remittances using a boda-boda as did thoseusing hand-delivery methods

Figure 21. The top three groups o remittance recipients and senders among those who used hand-delivery

o remittances


Other relativepermanently living away

Friend, peer,acquaintance

Child permanentlyliving away

Child temporarilyliving away


Parent permanentlyliving away

Remittances recipients Remittances senders

26%

18%16%

30%

22%20%

48 The remittances recipients question is asked o those who sent remit-

tances The remittances senders question is asked o those who received

remittances

49 In this case, the word child represents the sender or recipients relation to

the head o the household and not the age o the person


25/36

InterMedia 25

Figure 22. The top three groups o remittance recipients and senders among those who used an m-money

account to deliver remittances


Figure 23. Distance to remittance recipients, by type o delivery (question asked o remittance senders, last

three remittances sent)

Figure 24. Distance rom remittance sender, by type o delivery (question asked o remittance recipients, last

three remittances received)



Child permanentlyliving away




Child temporarilyliving away


Remittances recipients Remittances senders

24%21%

18%

31%

22%

12%

Abroad200+ km50-199.9 km10-49.9 km2-9.9 kmLess than 2 km

M-money account Hand-delivery (by self or by friend) Bus/boda-boda delivery

3%

11%

6%

23%27%

17%

25%

30%

49%

28%

23% 21%

1% 1%

19%

8% 7%

Abroad200+ km50-199.9 km10-49.9km2-9.9kmLess than 2 km

M-money account Hand-delivery (by self or by friend) Bus/boda-boda delivery

4%

10%

5%

18%20% 21% 20%

35%

48%

30%26%

8%

2% 1%

27%

8%

16%

2%


26/36


sending and receiving PaTTerns in The PasT six

MonThs: non-reMiTTance PayMenTs or ForMal

PayMenTs

The non-remittance payment market ap-

pears to oer an opportunity or m-money

expansion or two reasons. Virtually allhouseholds that made or accepted a pay-

ment in the past six months50 were deal-

ing with cash as opposed to ood or other

goods. In addition, the most common send-

ers or recipients o payments were govern-

ment agencies and private businesses, which

potentially could be partners with MNOs to

reduce payment-associated costs and stimu-

late broader use o m-money.

Ofthemostrecentnon-remittancepaymentssentbyhouseholds,51 two-thirds did so in order to pay a ee,tax or ne (collectively one response option) and aquarter paid a non-ee consumption bill As expected,school and utility companies were the main recipientso payments

Ofthehouseholdswhoreceivedapaymentinthepastsix months,52 a majority cited wages; other choices

were payments or goods and benets The top threepayees were employers, institutional buyers o goods,and the government

Householdsreceivingpaymentswerelikelytoreceivethose rom three institutions as opposed to one ortwo Households sending payments sent them to oneor two institutions on average

50 N=748

51 N=638

52 N=201

Figure 25. The top three reasons or payments sent

and received in the past six months



BenefitsPaymentfor goods

WagesRepaya debt

Pay anon-fee

bill

Pay a bill(tax, fine

or fee)

Payments sent Payments received

24%

72%

6%4%

17%

71%

Figure 26. The top three groups o payment

recipients and senders



Institutionalbuyers of

goods

GovernmentEmployerPrivateperson

Utilitycompany

School

Payment recipients Payment senders

8%

77%

19%

6%

19%

47%


27/36

InterMedia 27

Payments via m-money are rare. Only 5 per-

cent53 o all households that sent or received

payments in the past six months chose any

type o m-money account to send or receive

a payment. Hand-delivery and direct deposit

to a bank are the most common methods odelivering payments.

Ofthehouseholdsthatusedanytypeofm-moneyaccount to send a payment,54 one-hal sent money toa school and about a third sent a payment to a privateperson Among the recipients o the payments whoused m-money,55 almost all received money rom theiremployers

Basedontheamountsandcostsofthelastthreepay-ments reported by the respondents, m-money hasthe highest associated costs Making payments via abank is less expensive, and respondents use a bank tosend and receive airly large amounts o money Othe three general types o delivery or non-remittancepayments, hand-delivery is the most attractive: it hasthe lowest associated costs and can be used or largepayments

Figure 27. Costs o sending/receiving non-remittance payments and amounts sent using selected delivery

methods

Delivery method

Last three non-remittance payments (aggregate amount) made/accepted

% o householdsusing this method

Amount sent/received (median)Cost o sending money reported

by respondents (median)56

UGX $ UGX $

Hand-delivery (by self or by friend) 76 100,000 39.84 1 0

Direct deposit into a bank account 21 275,000 109.56 3,250 1.29

M-money delivery via any type ofaccount (any provider)

5 106,750 42.53 5,000 1.99

53 N=41

54 N=34

55 N=10

56 Cost o delivery includes sender ees or delivering non-remittance

payments

MechanisMs For hoUsehold savings

in The PasT six MonThs

Eighty-nine percent o all households save

money in some orm. About hal o house-

holds with registered m-money users save by

storing money on their m-money accounts.

Theproportionofhouseholdsthatsavemoneyishighregardless o the households demographic character-istics or m-money status A hiding place (or a cash-box) is the most popular way to store money

Asidefromahidingplace,householdswithregis-tered m-money users tend to store money on theirm-money account or in institutionalized savingsinstruments (bank accounts, stocks or pension unds)



28/36


It is important to note that households only saveon an m-money account i the household ownsthe account; or example, only households withregistered m-money users are likely to actively usem-money to store their savings while householdswith non-registered users do so only occasionally

Householdswithnon-registeredusersandnonuserso m-money lean toward the use o community-levelsavings instruments to store their money, includingSACCO, a community burial society, or a merry-go-round They also tend to save with a third party, suchas riends, neighbors or shopkeepers

Financial inclUsion landscaPe: insUrance

and loan acTiviTies

M-money is yet to become part o the lend-

ing and insurance sector. Currently, 0.1 per-

cent o all households that have insurance57

and 3 percent o households that have taken

(but have not paid o) a loan58 use any type

o m-money account to transer money,

including credits and payments.

Sixty-twoofthe3,000participatinghouseholds(2percent) reported having any type o insurance inthe past six months; o those, 52 households had one

57 N=62

58 N=259

Figure 28. Savings instrument used by households, by type o m-money user in the household


insurance policy and 10 had between two and ourinsurance policies Thirty-three households reportedhaving car insurance; loan insurance and social secu-rity shared second place, reported by 10 householdseach

Householdsloanactivitiesarelimited.Only9percento participating households owe outstanding debt orhave paid o debt in the last six months; 2 percent othe households gave loans to somebody else

Loan-relatedactivitiesmostlyhappenatthecommu-nity level More specically, three in our borrowinghouseholds received a loan rom a person or entity

in their village or town In addition, SACCO, ROSCA(merry-go-round) and a riend are the top three lend-ers Considering the proximity o money-lendingindividuals and community organizations, it is notsurprising that in-person pickup and delivery are themost requent ways o getting a loan and making pay-ments

Householdsthathaveanunpaidloanarelikelytoberural, unbanked, have no m-money users and livebelow the poverty line In contrast, households thatown insurance are more likely to be urban, banked,

living above the poverty line, and to have registeredm-money users

M-money accountWith a financial institutionVillage level savingsWith another personHiding place


55%

63%69%

12% 16% 11%

43%40% 39%

48%

3%

29%

13%

49%

1%


29/36

InterMedia 29

Figure 29. The patterns o loan-related activities


Figure 30. Demographic characteristics o households with insurance

Figure 31. Demographic characteristics o households with an unpaid loan

Source: FITS study o households (HH) in Uganda, February-March 2012 and n=3,000. For detailed bases see Appendix A.


Urban, 55% Registered m-money userin HH, 56%

Banked, 76% Above poverty line, 53%

Rural, 89% Nonuser of m-moneyin HH, 72%

Unbanked, 74% Below poverty line, 77%

Top Three Lenders

Friend, 24%SACCO, 23%ROSCA (merry-go-round), 21%

Top Three Lender Locations

This village/town, 71%This district, 21%This region, 3%

Top Three Methods to Deliver Loanand Loan Payments

In person 86%Bank deposit, 9%M-money (any account) 3%


30/36


Only one-quarter o households that experi-

enced a negative fnancial shock59 in the pre-vious six months received remittances and

gits to help them cope with a loss. The most

common ways to address a negative shock

were to spend cash savings and to decrease

various types o expenditures.

Sixty-twopercentofallsurveyedhouseholdsexpe-rienced at least one nancial shock in the past sixmonths60 Among the top three shocks, unspeciedillness o a household member was reported mostrequently (49 percent o the surveyed households)ollowed by drought and/or food (11 percent o allhouseholds) and crop disease and pests (10 percent)

Aslimmajorityofthehouseholdsthatreportednan-cial shocks (57 percent) experienced only one shockduring the time period covered, while the remainderreported two or more shocks, with ve householdsreporting six dierent shocks between August 2011and February 2012

Ofhouseholdsaffectedbyanancialshock,10per-cent experienced a positive shock (gained money as aresult o the shock), and 81 percent experienced a neg-ative shock (needed money to respond to the shock)Twenty-seven percent o households aected by anancial shock also experienced no nancial impactrom the shock

Veryfewhouseholdssentorreceivedremittancesasa part o their response to a nancial shock O thehouseholds that gained money as a result o a shock, 61

2 percent sent gits or remittances Among thoseaected by a negative shock,62 25 percent received gitsor money rom their relatives and riends

hoUseholds Financial shocksand resPonses To shocks

59 N=1,514

60 N=1,861

61 N=191

62 N=1,514

Figure 32. Top 10 most requent fnancial shocks



Illness of ahousehold member

Drought, floods

Crop disease, pests

Livestock died

Birth in thehousehold

Death of ahousehold member

Theft, robbery,burglary, assault

Accidental injury

New job

Fire, house destroyedor damaged

Inheritance

Failure or lossof business

Violent injury

Loss of employment

Spouse separation 0.3%

1%

1%

1%

10%

11%

49%

1%

1%

2%

4%

4%

5%

6%

10%

% of all households in the sample


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InterMedia 31

Themostcommonresponsetoanegativenancialshock was to deplete the households cash savings,ollowed by a decrease in non-essential expenditures(those not related to ood and transportation) Thepattern was almost identical or all types o nega-tive shocks Similarly, the top three most requentresponses to positive shocks were identical across di-

erent types o shocks: the majority rst increasedspending on healthcare ollowed by an increase in sav-ings and non-essential expenditures

Householdswithnon-registeredm-moneyusersthatexperienced a negative nancial shock were somewhatmore likely than other households to receive remit-tances to help them respond to a shock However,households with no m-money users also were some-what less likely to report a nancial shock; thereore, itis possible those households might be underreporting

their nancial hardships

Figure 33. Mentioned among top three most requent responses to a given type o fnancial shock


Received gifts from family and friends

Decreased other expenditures

Spent cash savings

Increased other expenditures

Increased savings

Increased expenditure on healthcare



Spent cash savings



Spent cash savings

All HHs affected by a shock HHs affected by a negative shock HHs affected by a positive shock Illness in a HH

25%

28%

27%

30%

45%

20%

55%

46%

22%

22%

24%

48%


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TherstwaveoftheFITShouseholdsurveyinUgandademonstrates the local market has high potential ormobile money (m-money) expansion, including reach-

ing bottom-o-pyramid populations This conclu-sion is based on mobile phone access and SIM-cardownership, and high awareness o the services amongnonusers o m-money However, an incomplete under-standing o the services and the shortage o well-qual-ied and well-equipped agents hamper the uptake om-money services in the country

Inbothruralandurbanareas,householdswithreg-istered m-money accounts are likely to use a greaternumber o nancial services At the same time, house-holds that require an agents assistance to perorma transaction are more likely (than those makingtransactions by themselves) to experience a numbero diculties with m-money, including agent-relatedproblems, and higher travel and transaction costsUrging non-registered users to sign-up or m-moneyaccounts might promote healthier user experiencesand encourage users to explore services beyond trans-erring money

Currently,m-moneyismostlyusedforsending/receiving regular remittances and, to a lesser extent,

or sending/receiving emergency help A third-partysm-money account (that o a riend, relative, neigh-bor or other acquaintance) is used by 6 percent ohouseholds or delivering remittances Since riendsrecommendations are also one o the key drivers om-money registration, riends, whose accounts arerequently used by other people or remittances, mightbecome eective advocates or m-money

Althoughonly9percentofhouseholdscurrentlysavewith an m-money account, the service seems to twell with households existing savings routines Hal

o households with registered m-money users alreadyuse their m-money account to store money Interest-

conclUsions and recoMMendaTions

ingly, rural and urban users choose a method o savingthat works best or them: the ormer deposit moneyin the account while the latter store money sent by

somebody else Among the registered users who donot currently store money on their m-money account,some might use m-money or savings i they can beconvinced that m-money could be used as a bank

Limiteduptakeofm-money,aswellaslimiteduseofservices beyond remittances, might be related to anincomplete understanding o the services among bothregistered users and nonusers: 61 percent o registeredusers o MTN m-money and 78 percent o nonus-ers o any m-money services believe that m-money isor sending/receiving money only In this light, mediaas a leading source o inormation about m-money(especially TV in urban areas and radio in rural areas),might be helpul in educating users and nonusersabout various uses and benets o the services

Aninsufcientnumberofm-moneyagents,incon-sistent quality o their customer service and agentslow liquidity have emerged as serious impediments touptake and more requent use o m-money

Close to hal o nonusers never tried mobile money

because they cannot nd an agent in their area;the absence o an agent was also cited by registeredMTN users as one o the main reasons or ailure tomake a transaction A wider network o m-moneyagents might help promote mobile money uptake byimproving both user and nonuser experiences withthe services

It may be useul to encourage users to send ormaleedback on their interactions with agents: our inve registered MTN m-money users report at leastone instance o poor perormance by an agent since

they signed up or the services Timely consumereedback might help improve agents perormance


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InterMedia 33

aPPendix aindividUal bases For rePorT FigUres

Figure 1. Percent o Ugandan households who own a

mobile phone and SIM card by subregionBase: Num-ber o households in the subregion: Acholi, n=150; Central1, n=520; Central 2, n=370; East Central, n=330; Elgonk,n=230; Karamoja, n=70; Lango, n=170; South Western,n=430; Teso, n=190; West Nile, n=180; Western, n=360

Figure 2. Mobile phone access, SIM-card ownership andm-money adoption rate by households demographiccharacteristicsBase: All households, n=3,000; ruralhouseholds, n=2,600; unbanked households, n=2,491; con-sumption below $2 a day, n= 2,380; consumption $2-$4 aday, n= 422; consumption above $4 a day, n= 198

Figure 3. Percent o Ugandan households with m-moneyusers and registered users by subregionBase: Numbero households in the subregion: Acholi, n=150; Central1, n=520; Central 2, n=370; East Central, n=330; Elgonk,n=230; Karamoja, n=70; Lango, n=170; South Western,n=430; Teso, n=190; West Nile, n=180; Western, n=360

Figure 4. Median monthly spending on various essen-tialsBase: All households, n=3,000

Figure 5. Comparative overview o urban and rural lie-stylesBase: Rural households, n=2,600; urban house-holds, n=400

Figure 6. Access to mobile technologies and servicesamong selected members o households by demographiccharacteristicsBase: Males, n=1,460; emales, n= 1,537;adults 15-34, n=1,803; adults 35-54, n= 789; adults 55+, n=405; adults with no ormal education, n=594; adults withprimary education, n=1,416; adults with secondary educa-tion, n=859; adults with post-secondary education, n=128;consumption below $2 a day, n= 2,380; consumption $2-$4a day, n= 422; consumption above $4 a day, n= 198

Figure 7. Market share o mobile phone communica-tion service providers among households with at leastone m-money user_Base: Households with at least onem-money user, n=616

Figure 8. How did MTN m-money registered users frstlearn about the services?Base: MTN m-money regis-tered users, n=462

Figure 9. From which media platorm did MTN m-money

registered users frst learn about the services?Base:Urban MTN m-money registered users, n=163; rural MTNm-money registered users, n=299

Figure 10. Users opinions o MTN m-money servicesBase: MTN m-money registered users, n=462

Figure 11. The top three problems with MTN m-moneyagents by regionBase: MTN m-money registered users,who experienced at least one problem with an m-moneyagent in each region: Central, n=227; Eastern, n=95; West-ern, n=75; Northern, n=30

Figure 12. Factors involved in the most recent m-moneytransaction by urban/rural userBase: Urban MTNm-money registered users, n=163; rural MTN m-moneyregistered users n=299

Figure 13. Households fnancial activities in the past sixmonthsBase: Registered m-money user in the house-hold, n=477; non-registered m-money user in the house-hold n=139; no m-money user in the household, n=2,384

Figure 14. Remittances sent or received in the past sixmonthsBase: Households that sent or received remit-tances in the past six months: registered m-money user inthe household, n=332; non-registered m-money user in t1he household, n=63; no m-money user in the household,n=663

Figure 15. Three most common methods o sendingremittances in the past six months by type o m-moneyuser in the householdBase: Households that sent remit-tances in the past six months: registered m-money user inthe household, n=246; non-registered m-money user inthe household, n=34; no m-money user in the household,n=432

Figure 16. Three most common methods o receivingremittances in the past six months by type o m-moneyuser in the householdBase: Households that receivedremittances in the past six months: registered m-moneyuser in the household, n=198; non-registered m-moneyuser in the household, n=42; no m-money user in thehousehold, n=387


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Figure 17. Costs o sending/receiving remittances usingvarious delivery methodsBase: Households that sent orreceived remittances in the past six months, n=1,058

Figure 18. Top three reasons or choosing a deliverymethod or sending/receiving the last three remit-tancesBase: Households that sent or received remit-

tances in the past six months, n=1,058

Figure 19. Top three reasons or choosing a deliverymethod or sending/receiving remittances (based on lastthree remittances)Base: Households that chose a spe-cic method to deliver the last three remittances: used anm-money account to send or receive remittances, n=318;used hand-delivery (by sel or by riend) to send or receiveremittances, n=420

Figure 20. Top three reasons or the last three cash remit-tances sent and received, by type o delivery methodBase: Households that chose a specic method to deliverthe last three remittances: used an m-money account tosend or receive remittances, n=318; used hand-delivery (bysel or by riend) to send or receive remittances, n=420

Figure 21. The top three groups o remittance recipientsand senders among those who used hand-delivery oremittancesBase: Households that used hand-delivery(by sel or by riend) to send or receive remittances, n=420

Figure 22. The top three groups o remittance recipientsand senders among those who used an m-money accountto deliver remittancesBase: Households that used an

m-money account to send or receive remittances, n=318

Figure 23. Distance to remittance recipients, by type odelivery (question asked o remittance senders, last threeremittances sent)Base: Households that chose a spe-cic method to send the last three remittances: used anm-money account to send remittances, n=181; used hand-delivery (by sel or by riend) to send remittances, n=246;used bus/boda-boda delivery to send remittances, n= 46

Figure 24. Distance to remittance sender, by type o deliv-ery (question asked o remittance recipients, last three

remittances received)Base: Households that chose aspecic method to receive the last three remittances: usedan m-money account to receive remittances, n=200; usedhand-delivery (by sel or by riend) to receive remittances,n=181; used bus/boda-boda delivery to receive remittances,n=57

Figure 25. The top three reasons or payments sent andreceived in the past six monthsBase: Households thatsent payments in the past six months, n=638; householdsthat received payments in the past six months, n=201

Figure 26. The top three groups o payment recipientsand sendersBase: Households that were payment send-

ers in the past six months, n= 638; households that werepayment recipients in the past six months, n=201

Figure 27. Costs o sending/receiving non-remittancepayments and amounts sent using selected deliverymethodsBase: Households that sent or received non-remittance payments in the past six months, n=748

Figure 28. Savings instrument used by households, bytype o m-money user in the householdBase: House-holds that reported making savings in the past six months:registered m-money user in the household, n=459; non-registered m-money user in the household, n=130; nom-money user in the household, n=2,072

Figure 29. The patterns o loan-related activitiesBase:Households that have an unpaid loan or have paid o aloan in the past six months, n=259

Figure 30. Demographic characteristics o householdswith insuranceBase: Urban households, n=400; bankedhouseholds, n=509; households above poverty line (livingon $2 or more a day), n=620; households with registeredm-money users, n=477

Figure 31. Demographic characteristics o householdswith an unpaid loanBase: Rural households, n=2,600;unbanked households, n=2,491; households

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