By Moses Kaketo
All is not well at Wave Uganda, also known as Wave Mobile Money (WMM) Uganda. Launched last year, the company that provides digital money services—cash deposits, withdrawal, and peer-to-peer and business payments came with a brag.
One year later, the company is facing a number of challenges which threaten its growth.
Recently, the company fired 340 employees, leaving only 160. The restructuring came after an audit that, among other things, found a lot of wastage. There was also duplication of roles as well as cases of fraud. Some staff did not have the right qualifications.
One example of wastage: the company has been hiring cars from its staff to go to the field at a cost of Ugx. 350.000 (U$95) per car, per day- plus free fuel card. Sounds a lot of money!
Let’s assume they were hiring at least 10 cars per day; that translates to UGX. 3.5m ($945) spent on cars daily or UGX. 70 million per month – that translates to UGX. 420 million in half a year. Our assumption is that the company hired the cars for 20 days in a month.
The restructuring comes at a time when the company is struggling to make an impact in the market. The two main players—MTN-Uganda and Airtel—account for 21 million of Uganda’s 28 million mobile money subscribers.
Other telecom like Orange, Africell, Warid Telecom, Vodafone, and Smart struggled to make inroads in the market and had to cease operations. The closure of these telecoms: must also be working against Wave Money. They need a lot of explaining that they are here for good.
The restructuring at Wave Money also follows a spate of fraud at the young company. For example, recently on employee [names withheld] allegedly stole UGX. 300m, which is not small change for a one-year-old company.
The company also faces a host of other challenges.
Available information indicates a good number of staff at Wave Money are ex-MTN-Uganda and Airtel staff. There are also reports that some of these employees were sacked over fraud. We could not independently verify these claims.
However, the company has, in the recent past, been hit by fraud. The staff, in some cases, deal with agents to organize fictitious deals. Unlike MTN-Uganda and Airtel, which have the capacity, means, and experience to detect fraud cases, Wave is still in the learning zone.
Wave Uganda, did not respond to our mail when we reached out to them. [see attached questions we sent to them below]
What is Wave’s USP?
Market experts agree that Wave’s zero withdrawal fees or low charges for money transfers may not be enough to sway users.
MTN-Uganda and Airtel are well grounded in terms of reach and spread. Their mobile money is simple and well known. Using the app and USSD.
The two telecom giants have also invested heavily in building their agent networks across the country. MTN-Uganda, as the market leader, has over 120,000 mobile money agents and roughly 8.5 million active 30-day mobile money subscribers. Airtel follows with almost similar numbers.
Wave is trying to open up outlets nationwide. However, they still have a long way to go. The Wave agents we talked to reported very low to no transactions.
One of Wave’s customers dealing in fast-moving consumer goods had this to say: “I have been a Wave Money customer for over four months now, but I have never had any of my business partners ask me to pay them via Wave Money. I do lots of transactions daily for Airtel, MTN.”
He adds, “Wave still has a lot to do.” Having people subscribe to our network is good, but not enough. These people must transact’’
Equity, Centenary Bank rollout
In the recent past, Equity and Centenary banks have launched massive agent bank rollouts. The two strong brands offer similar or even better products and services than Wave.
The agent banking model works in such a way that a commercial bank appoints a third party (an agent) to transact business on its behalf instead of visiting a nearby ATM or branch. The agent could be a petrol station, a retail or hardware shop, a supermarket, a pharmacy, or a consumer goods distributor.
The wave also largely depends on data. Unfortunately, data penetration in Uganda is still low. Most Ugandans still own phones with no internet.
For users without a smartphone, Wave provides a free QR card to transact with an agent. Again, the telecoms, mainly Airtel and MTN, own the networks. They can easily play games just in case they see too much activity from Wave. Network disruptions is enough for customers to churn the network.
Analysts also believe Wave entered the market at a time when the economy is bad. When everything seems to be upside down, inflation is high, people have no income to spend. Recently, the company raised $200 million in a Series A round from investors, pushing its valuation to well over USD1.7 billion. Sequoia Heritage, a subsidiary of Sequoia Capital, led the round with the participation of Founders Fund, Stripe, and Ribbit Capital.
This money will have to be paid back at some point. With very low business, Wave shareholders may think twice before investing more money in Uganda.
MTN’s fighter brand is ready for launch
The rising cellular and internet penetration rates have made mobile phones the banks of the future. Teleco’s know the future is in mobile money and data.
MTN Uganda created MTN Mobile Money Uganda Limited, which runs its mobile money or electronic financial services, while Airtel formed Airtel Mobile Commerce Uganda Limited. The results show MoMo Company is doing well and growing very fast. MTN is not prepared to have any brand eat into their cash cow. Wave must be ready for a real fight.
Highly placed sources told Newz post that MTN through her partners, it is in advanced stages of launching a fighter brand to counter Wave In Uganda.
Manda: will allow customers to, among others: send money for free, withdraw money at a very low cost, make free calls and use free data.
The brand, with the tagline “Kolesa,” will be heavily advertised. Manda customers will be allowed to transact with MTN agents across the country. — Is Wave ready for this?
Hopefully, Wave is aware of this plot. Sources have it that competition has emissaries at Wave—therefore they get reliable and timely information about Wave’s transactions, plans, and moves. Taken together, the wave is encircled.
MTN – EzeeMoney Battles: This is not the first time MTN is taking on upcoming companies. In early 2013, there was this promising, fast-growing company- EzeeMoney Uganda Limited offering financial services using the Airtel and MTN platforms.
With the growing numbers, MTN felt threatened. EzeeMoney sued MTN for sabotaging its business, and won, with the Commercial court rewarding it with UGX 2.3bn in damages.
The case was time-consuming for the young startup with fewer staff and too much work on their plate. At the end of the two-or three-year court battle, EzeeMoney pulled back.
Today, it’s as if it never existed. A senior EzeeMoney official told the Newz Post that it is not easy to fight a well-established company. They can allocate some staff to simply disorganize you, shifting focus from business to a court case. By the time the court decides the case, it’s too late for you to reorganize yourself and pick up where you left off.
Part two: How fraud & poor strategy is failing Wave Uganda- coming soon
About the author: The writer is a marketing and distribution expert. He sees business in everything. He loves writing business news, reviews, and analyses. Reach him on +256782507579 or Twitter: @mkaketo LinkedIn: Moses Kaketo