There’s a revolution going on here in Africa. It’s not televised – but it’s transmitting across nearly a billion mobile phones across the continent. Africa has experienced the fastest growth in cell phone subscribers in the world. From the savannahs to shanty towns, the safaris to the swamps, it has become the world’s second most connected region by mobile subscriptions. Even though two thirds of Africans may continue to live in extreme poverty, almost every African man or woman has access to a mobile phone.
It’s wonderful that MTN and Cell C and Vodaphone and Airtel are making it easier for us to communicate across countries and with the diaspora. But what’s truly revolutionary is when these mobile networks allow us to leapfrog beyond some of our greatest development challenges. One of our own portfolio companies in Uganda, CHIMS, is a perfect example.
In Uganda, there is only one bank branch for every 100,000 people. This is a major obstacle for not only building businesses but for families to build their personal asset base. CHIMS Enterprises is an MTN Mobile Money franchise that aims to help fill this gap. The MTN mobile money centres allow customers to transfer money through mobile phones, even without a bank account. It also allows users to pay for utilities and services as well as make withdrawals from participating Bank ATMs. What is truly remarkable is the relative speed, ease and minimal cost involved in making transactions, while the ability to transact at any MMC (and they are quite many) frees the clients from restrictions to brick and mortar branches of traditional banking hence making this a trulyconvenient facility.
GroFin’s first engagement with the entrepreneurs Norman and Fiona Mutekanga was in 2005, when they were availed a US$257,630 facility to finance the establishment of an owner operated petroleum station. Their second engagement, with CHIMS, helped get the company off the ground with a US$ 198,020 investment for the establishment of (17) mobile money centres [MMCs]. As the business grew, GroFin extended another US$ 356,227 to open more MMCs and invest in equipment and vehicles for the head office. A total of 35 new MMCs were established through GroFin funding, making CHIMS the largest MM dealer in the country. Today, the company has 113 MMCs and is helping to drive a mobile money revolution in Uganda.
The socio-economic ramifications are significant. The company has created 116 new jobs and now employs 160 people, of which 44% are women. More importantly, it helps tens of thousands of Ugandans access financial services, many of them for the first time ever. Of the 38,500 estimated monthly users, an estimated 65% are from the base of the pyramid and thus would be excluded from conventional bank coverage.
Will MMCs like Chims evolve to replace local banks in the future? For low-income populations in Uganda, they have already assumed this role. In addressing an under-served population, they uncovered a vast untapped market. Today, MTN Uganda indicates that there have been 11.8 million mobile transactions since its launch in 2009, and US$ 400 million transferred through MTN mobile money by May 2013.