MTN has announced a strategic move to separate its mobile money operations from its main telecom business, establishing MTN Mobile Money Uganda Limited as a distinct entity.
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This decision aligns with the requirements of the National Payment Systems (NPS) Act, 2020, which mandates the segregation of telecommunication services from financial operations to enhance regulation and security of mobile money services.
The National Payment Systems Act, which came into effect in September 2020, was designed to streamline the financial sector by ensuring that mobile money operations are conducted under a regulated and secure framework.
This places the regulation of mobile money services under the jurisdiction of the Bank of Uganda rather than the Uganda Communications Commission.
The Act also necessitates that telecom companies form new subsidiaries specifically for their mobile money services, a requirement that MTN has now fulfilled.
MTN's mobile money services, now managed by MTN Mobile Money Uganda Limited, will handle all financial transactions, including money transfers, payments, and other related services.
Meanwhile, MTN Uganda will continue to operate its core telecommunications services, focusing on infrastructure and network services for its subscribers and licensed operators.
The new regulatory framework is expected to enhance the overall effectiveness and integrity of Uganda's payment systems. By separating mobile money operations from telecom services, the Bank of Uganda aims to ensure better oversight, reduce risks, and promote transparency in the financial sector.
The regulation also aims to support the deepening of a cashless economy, a goal that the Central Bank of Uganda has been pursuing for several years.
The separation of mobile money services is also anticipated to open up new investment opportunities within Uganda and beyond. With clearer regulatory guidelines and a dedicated entity for mobile money, MTN Mobile Money Uganda Limited can attract investments and forge partnerships that were previously challenging under the combined telecom and financial operations model.
This move is expected to create a clearer growth trajectory for the mobile money sector, which has been a significant revenue generator for telecom companies.
The National Payment Systems Act includes a provision requiring telecom companies to list at least 20% of their shares on the Uganda Securities Exchange. This requirement is intended to increase transparency and provide investors with more confidence in the financial operations of these companies.
MTN Uganda is already in the process of complying with this listing requirement, which will further solidify its market presence and attract additional capital.
One of the primary benefits of this regulatory change is the enhanced security of customer deposits. Under this framework, mobile money companies are required to deposit a certain amount of money with the Deposit Protection Fund to protect subscriber deposits, similar to the protections offered to traditional bank accounts.
This measure is expected to increase consumer confidence in mobile money services and reduce the risk of financial losses due to operational failures or fraud.
MTN has assured its customers that there will be no disruption to the services they currently enjoy. The transition to MTN Mobile Money Uganda Limited is designed to be seamless, with all existing mobile money accounts and related data being transferred to the new entity.
Customers will continue to use their mobile money services as usual, with the added assurance of enhanced regulatory oversight and security.
By complying with the National Payment System Act, MTN is positioning itself to better serve its customers, attract new investments, and contribute to the growth of a secure and efficient digital economy.
The enhanced regulatory environment provided by the Bank of Uganda is expected to drive innovation and growth in the mobile money sector, ultimately benefiting consumers and the broader economy.
