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Can Wave Mobile Money end MTN, Airtel dominance on Uganda’s market?

KAMPALA — E-commerce platform Wave Mobile Money, a startup with a big footprint in several francophone countries, was in 2021 licensed by Bank of Uganda to operate financial services in the country.

The new entrant, whose ambition is Africa-wide, hopes to tap into a market that processed transactions worth $46 Billion in 2020, a 23% increase from 2019, according to the GSM Association’s latest report on the industry.

Mobile money adoption is growing at a strong pace in Uganda. In an underdeveloped financial infrastructure in the country with a large number of people having no formal bank account, the mobile money market in Uganda leverages the ubiquity of mobile phones and the convenience offered by the service to the consumers, industry experts say.

Wave’s intention to launch in Uganda and Kenya suggests new competition for MTN Uganda, and for Airtel’s Airtel Money—the country’s flagship mobile money juggernaut.

Since the launch of Mobile Money services in Uganda in 2009, MTN has been a leader in this domain, starting from USSD-led mobile money 1.0 to smartphone-led mobile money 2.0 with the introduction of the MTN MoMo app.

However, there has been growing concern from some sections of the public that due to lack of competition, the existing mobile money services are no longer affordable to the common man, which the charges increasing now and again.

Therefore, many view the coming of Wave as good competition to MTN Mobile Money and Airtel Mobile Money.

So what special thing is Wave bringing onto the Ugandan market?

Wave bills itself as being similar to PayPal in terms of offering easy money transfer between peers, but it works with mobile money accounts instead of bank accounts.

Customers visit physical agent posts to make deposits and withdrawals without a fee, or use a smartphone app with a flat 1% cut of the money being sent.

In a tweet, Wave explains that users can pay for utility bills such as electricity, water, and pay TV free of charge using the Wave Mobile Money Platform.

With both MTN MoMo and Wave, customers can withdraw or deposit money and pay utility bills without the use of the internet or offline.

Wave mobile money uses a QR code on a card for offline access.

Customers without a smartphone are registered and given a card with a QR code which they can use to deposit and withdraw money from their Wave accounts.

“We are so excited about our expansion in Uganda. Our mission remains the same, build an inclusive and affordable financial network for all everywhere,” Wave tweeted recently.

The startup recently poached MultiChoice Uganda head of marketing Collin Asiimwe to lead its marketing team.

Wave’s billion-dollar valuation makes it Africa’s newest unicorn—the first from Francophone Africa—and the third startup to reach the mark in 2021, following Flutterwave, and OPay.

Sequoia Heritage, a subsidiary of Sequoia Capital, led the round with the participation of Founders Fund, Stripe, and Ribbit Capital. Wave’s other investors include Partech Africa, and Sam Altman, the CEO of Y Combinator.

The roll call of investors suggests an appreciation for mobile money’s potential in Africa.

In Cote d’Ivoire, for example, mobile money has grown from being used by 30% of the population in 2016 to 83% in 2021.

In 2020, East Africa had more active mobile money accounts (94 million) than West Africa (47 million) but the latter had more live services (70) than the former (57).

In Uganda, mobile money transactions hit the one billion mark in 2021, translating into an average of 15 transactions per active mobile money account every month.

Under the National Payment System Act 2020, and guided by the National Payment System Implementing Regulations, Bank of Uganda last year separated mobile money services from telecom services.

Since then, it has licenced 14 companies to offer financial services. They include Airtel Mobile Commerce Uganda, MTN Mobile Money Uganda, Interswitch, Pegasus, Micropay and Wave.

Furthermore, the following companies were granted Payment System Operators, Payment Service Providers and Issuers of Payment Instruments permits. They are Chipper Technologies, Future Link Technologies EzeeMoney, Guiness Tech and Agent Banking Corporation.

Commercial banks such as Stanbic Bank Uganda are now officially e-money providers.

With more companies coming on board, Ugandans can expect improved access to financial services.

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