About a fortnight ago MTN mobile money and absa bank published their 2024 results, on the same day in the newspapers.
Absa formerly Barclays, has been in Uganda
since before independence while MTN mobile money will make 15 years this year.
But the banking services MoKash will make only nine years, later this year.
The interesting thing about the numbers is that MTN Momo, last year with after tax profits of sh250b was more profitable than absa – sh177b. A trend that we obviously missed, because in the previous year MTN Momo was already more profitable than absa with net profits of sh202b as compared to the bank’s sh146b...
Even more interesting is that MTN
momo did this with a smaller asset base of sh1.6trillion versus sh5.4trillion
for absa. While absa’s return for its share holders, about 21 percent beats
that of the mobile money provider – 15 percent how long before even this number
is flipped the other way?
When the history of Uganda is
written this overhauling of the banking sector by fintech will be an interesting
one to study.
But the effect is not only on the
banks, the whole economy is being reconfigured around the relentless march of
the fintechs, led MTN and Airtel’s mobile money platforms.
From 2005 to 2015, the telecom
sector laid the groundwork for digital inclusion, predominantly through mobile
voice services. But the real transformation began in the next decade, from 2015
to 2025, when mobile data and fintech services surged to the forefront,
redefining Uganda’s digital landscape.
Between 2005 and 2015, Uganda’s
telecom sector was at a turning point. The mobile phone revolution was in full
swing, and mobile voice services were rapidly growing, with the subscriber base
expanding from just a few hundred thousand to over 10 million by 2010.
This surge was driven by the
affordability of handsets, falling tariffs, and increased competition between
mobile operators.
By 2015, the number of mobile
subscriptions had reached an estimated 17 million, a clear indicator that
Uganda was becoming a mobile-first society.
But while voice services dominated
the telecom scene in the first decade, mobile data and mobile money were still
in their infancy. Data services were beginning to gain traction, thanks to the
advent of 3G networks and the proliferation of affordable smartphones. By the end of 2015, mobile internet subscriptions were still relatively low
compared to voice services. Only about 5 million Ugandans were using mobile
internet, a far cry from the mobile voice subscriber base. The usage was mainly
confined to the urban centers, with rural areas lagging behind in terms of
internet penetration.
Mobile financial services, began to
make their mark starting around 2010, with MTN Mobile Money and Airtel Money
leading the charge. While still in the early stages, these services offered
basic mobile money transfer capabilities, allowing users to send and receive
money via their phones. By 2015, mobile money services had registered around 10
million users, signaling a growing appetite for financial inclusion among the
unbanked. However, profitability from mobile money remained limited, with many
telecom companies still focused on expanding their user bases and network
coverage.
Fast forward to the period from 2015
to 2025, and telecom services in Uganda have gone through a seismic shift.
While mobile voice services continued to grow, the pace slowed as the market
became increasingly saturated. By 2020, Uganda’s mobile subscriber base had
crossed the 23 million mark. But voice services are no longer the golden goose
they once were. Instead, the real growth story is in mobile data and mobile
money.
Mobile data, in particular, saw explosive growth with the introduction of 4G networks, allowing Ugandans to enjoy faster internet speeds and access data-driven services. This year mobile data subscriptions are expected to exceed 15 million, a huge leap from the 5 million recorded in 2015. With more Ugandans relying on mobile devices for everything from entertainment to education to work, data has become a critical enabler of economic activity.
Mobile money subscriptions are
projected to exceed 20 million – MTN mobile money reported 13.8 million active
users, outstripping traditional banking services by a significant margin.
The profitability of mobile money services
has grown exponentially in lockstep with rising subscribers. Industry players
expect that mobile money could account for up to 40% of revenue for major
telecom operators in Uganda, a sharp increase from the minimal contributions
seen in the earlier period.
The mobile money revolution has been
such that, more than before 2015, telecom services have become central to
Uganda’s economic engine. The sector has become a major driver of financial
inclusion, spurring economic activity, enabling access to digital services, and
providing new opportunities for business growth as handsets have gone from
being luxury items to indispensable tools of everyday life.
In 2005–2015, mobile voice was the star, with data and mobile money services just beginning to take off. By 2015–2025, the narrative had shifted dramatically, with mobile data and mobile money leading the charge in terms of growth and profitability. MTN reported in 2022 that for the first time revenues from voice had fallen below 50 percent of total revenues.
The banks have not been left behind
with all beefing up their online presence, but clearly the momentum from mobile
money and the fintechs is irresistible and forcing a rethink in the financial
sector.