Airtel Money separates from Airtel Uganda to meet regulatory requirements

by | Jun 23, 2021

Airtel Uganda has announced the separation of Airtel Money from its Telecom business on Tuesday, 22nd June 2021. This means the phone-based service has been transferred to its affiliate, Airtel Mobile Commerce Uganda Limited (AMC Uganda).

This separation follows Uganda’s National Payment Systems (NPS) Act, 2020, passed on 4th September 2020.  The regulation was announced in an official newspaper on 5th March 2021.

Per Section 9 of the Act, the Bank of Uganda announced the issuance of two licences to AMC Uganda on May 24, 2021.

The first licence is a Payment Service Provider — Class A Licence, Number PSP 01/21 — which authorises the company to offer electronic Airtel Money services.

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The second licence is a Payment System Operator Licence — (Electronic Money Systems), Number PSO 01/21 — which authorises AMC Uganda to operate a payment platform (Airtel Money).

Thus, in Uganda, AMC will conduct all Airtel Money services while partnering with and through the licensed telecommunications network of Airtel Uganda.

The separation will result in the migration or sharing of the Airtel Money accounts and related information with the new company.

Moreover, Airtel Uganda will now focus on the operations of telecommunication infrastructure and the offering of telecommunications services to its network subscribers and licensed operators.

Recall that in 2015, a commercial High Court ruled against five telcos — MTN, Warid, Uganda Telecom, Airtel, and Africell — operating mobile money in Uganda, saying that mobile money operations were illegal.

The pronouncement followed a petition by Abdu Kantunu, a Bugweri County Member of Parliament, to have mobile money regulated under the Financial Institutions Act of Uganda.

The reason was that the companies were registered as telcos and not as financial institutions, which means the Bank of Uganda did not license them.

Following this recent separation, AMC Uganda is now regulated and supervised by the Bank of Uganda.

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Reportedly, the Ugandan government intends to enhance financial inclusion, especially for the rural population, via access to financial service by separating telecommunication services from financial services.

While customers may be worried about the new change, Manoj Murali, Managing Director, Airtel Uganda, assured customers that the split doesn’t change their services. 

He clarified that the affiliate company, AMC Uganda, will provide Airtel Money services to registered subscribers of Airtel Uganda with the same terms and conditions.

Similarly, MTN Uganda promised to hand over its financial services and change its name from MTN MoMo to MTN Uganda Limited on June 1, 2021. It also assured customers that financial and telecommunication services would be normal following the separation.

This seems like a common practice in a few African countries. 

In 2015, Ghana broke-up its telecommunication services from financial services, ensuring that all institutions offering the latter are regulated under the Banking Act, 2004 (Act 673).

Also, Kenya Information and Communication (Amendment) Bill 2019 could force its telecom operators in Kenya to separate financial services from telecom services if approved.

In 2020, the Central Bank of Nigeria (CBN) reportedly sent a circular to telecom companies, among other non-financial institutions, to apply for licences to become payment banks. 

This involves setting up a separate company and depositing a minimum capital of $13 million (₦5.3 billion). Only 9mobile and Glo have been granted a licence, while Airtel and MTN are yet to.

Writer. Tech enthusiast.

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