Short term task, long term improvement for digital financial services

When you buy a SIM card in Uganda, you give the mobile network operator (MNO) your name and contact details and your national ID number or, in the case of foreigners, a passport. This personal data is used to ensure the integrity of the customer data records of the MNO’s. Nothing new under the sun for some, but for others who don’t have a national ID, simply registering a SIM card can be a real challenge.

And now the Uganda Communications Commission (UCC) has asked all MNO’s to validate the customer records for all their SIM cards. Quite an exercise as more than 22 million SIM cards must be re-registered. Customers can register their number by visiting one of the customer service centers from the MNO’s with a copy of their National ID. Those who understand the dedicated USSD menu that has been created for this purpose, can also register by entering these details with use of the USSD on their phones.

However not everyone in the country has a national ID. The act empowering compulsory ID registration was passed in 2015 and only since then people have been required to have a National ID.

These two processes, the compulsory possession of a National ID and the validation of the SIM cards against this National ID are impacting the uptake of mobile financial services, and thus the pace of financial inclusion in Uganda.

“Agents and merchants, especially in rural areas, are affected”, says Phrase Lubega, General Manager Mobile Financial Services at MTN. “Smaller agents and merchants are allowed to register as individuals. And prior to the current verification exercise, people were allowed to register using other types of identification as well. This new regulation, overriding previous requirements, in combination with a very short time limit to comply, has led to the suspension of accounts.” Meaning that people in rural areas, who already have access to few agents, might have to look even further to use mobile financial services.

The new regulations are also impacting another group of people finding their way into Uganda: refugees from South Sudan. Currently over 900,000 people from South Sudan have fled to Uganda and are trying to rebuild their lives.

Together with MercyCorps and DanChurchAid, two International NGOs operating in refugee settlements in Northern Uganda, UNCDF is exploring ways to digitise cash-based interventions using mobile money. But for this to succeed, refugees should first be able to register a SIM card with some sort of ID document, as they cannot apply for a Ugandan National ID. The UCC however has allowed refugees to use their refugee cards administered by the Office of the Prime Minister to be a valid ID for registering a SIM card. Nevertheless some refugees have not yet obtained a refugee card and are thus not able to receive these cash based interventions on their mobile phones.

This same issue is preventing a substantial number of the tea workers around Fort Portal from receiving their salaries via mobile money. Many of the tea workers employed on the tea estates are from Uganda’s neighbouring countries, such as Rwanda and the Democratic Republic of Congo. As immigrants they can not apply for Ugandan National IDs and most of them don’t have a passport of their country of origin. Therefore quite a number of these migrant workers have already seen their SIM card suspended. And can’t apply for digital payments.

Shortly after talking to Phrase Lubega, president Museveni agreed that the SIM verification exercise needed to be extended by an extra three months. Extra time to ensure long term benefits for both the customers and MNOs. The registration of numbers safeguards better integrity of the MNOs customer data records. And reliable records will impact financial inclusion as this data can be used in for instance credit check-offs, allowing easier access to savings and loans.

Improvements that in long run will also positively impact MM4P Uganda activities. In the meanwhile a wide range of stakeholders are searching for ways to enable people in the country without a National ID to still sign up for digital financial services.