Chairperson of the Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) Abdul Katuntu has revealed that a special committee involving members of the ICT committee, Finance Committee and his committee has been set up to investigate the operations of mobile money services in Uganda.
Katuntu said on Tuesday that there is a need for a regulated mobile money sector since its portfolio is bigger than all the commercial banks combined.
He said that Mobile Money is a financial service and all financial services must be regulated by Bank of Uganda, stressing that any institution providing a financial service should get a license – which isn’t the case with Mobile money.
“These telecom companies were never licensed as financial institutions, their license was limited to transmit data and voice, they have instead turned their business to more of financial institutions yet there is no law to that effect,” Katuntu said.
He sighted a number of risks that are involved with such transactions that are not regulated by the Central Bank which include among others loss of money in case one dies.
The Director Commercial Banking, Benedict Sekabira had earlier told the committee that telecom companies hold flot accounts in commercial banks which explains why all mobile money agents must have accounts with the banks.
However members of the committee were not convinced, including the Vice Chairperson Anita Among who said the ordinary Ugandan still relies on telcos for the safety of their money.
Katuntu noted that the introduction of the money lending services has made it worse adding that the telecom companies are now working as SACCOS and microfinance institutions.
“The idea of saying that this is a business of commercial banks isn’t correct because the agreement between the banks and the telecom companies has a disclaimer that any liability arising out of the business is for the telecom company.”
Sekabira responded; “We know that the interest charged is very high but this is not a property of the telecom companies, the interest are high since it involves lending to unknown people.”