Central Bank governor wants mobile money business regulated

By Moses Walubiri

The Central Bank governor ,Tumusiime Mutebile, has conceded that there is need for a law to streamline the bank’s supervisory role over mobile money services operated by telecom companies.

Currently, mobile money operations – an e-money financial service that has 18 million registered users in Uganda – has no clear law regulating it. BoU relies on its 2013 regulations about the business to keep tabs on it.

However, these regulations, according to the executive director of supervision at BoU, Justine Bagyenda, have no legal effect. The Central Bank recently wrote to the Solicitor General, seeking legal opinion over the matter.

“I definitely agree that there is need for a law to strengthen supervision in this area. I perfectly agree with you on this issue because you have raised pertinent concerns,” Mutebile said yesterday during a meeting with lawmakers on the information and communication technology committee.

MTN Corporation Secretary Anthony Katamba, welcomed Mutebile’s suggestion.

“All financial and quasi financial services in Uganda are regulated by BoU. If the governor says there is need for a law to properly regulate the sector, we cannot say otherwise,” Katamba said.

According to BoU data covering the last quarter of 2014, mobile money transactions had a monthly total value of sh2.1 trillion.

Bagyenda had earlier told MPs that since money transmission is a regulated business under the Financial

Institutions Act, the Central Bank monitors mobile money operators through issuance of clearance.

“Mobile money operators have partnerships with licensed financial institutions. It is these financial institutions that apply for clearance from BoU after carrying out due diligence on mobile money operators,” Bagyenda said.

“Believe me, the risks in this business are there but they are minimal,” Bagyenda added, admitting that BoU does not directly supervise mobile money operators.

MPs Vicente Bagiire, James Kabajo, Mariam Nalubega and Barnabas Tinkasiimire contended that the absence of a clear law regulating the industry leaves it prone to abuse.

Bagiire pointed out that BoU’s inability to track suspicious transactions on individual accounts of registered mobile money customers leaves the system prone to abuse by money launderers or terrorists.

The lawmakers also noted that absence of a law providing for regulation by BoU has seen mobile money operators get away with questionable conduct like failing to instantly deposit money to beneficiaries or retaining money that remains unclaimed for.

“In Kenya, the law has provided a trust fund where this kind of money can be deposited instead of operators unfairly retaining money that does not belong to them.
This can be done here,” Bagiire said.

Last year, Bugweri County MP, Abdu Katuntu sued MTN – one of the five licensed operators – urging that the telecom company’s mobile money transactions are not premised on any legal framework.

The committee wants the Bank of Uganda Act to be amended to explicitly provide for supervision or enactment of a new law to cater for a rapidly evolving sector.

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