By Moses Kaketo
In late 2015, Airtel Uganda was all set to launch a microlending and savings product. A tripartite deal was signed between Centenary Bank, Comza, and Airtel Uganda.
With the license from the Bank of Uganda to operate a financial institution, Centenary Bank was to manage the banking aspect. While Comza was to provide the finances, given her access to cheap capital from the World Bank. Airtel Uganda would provide the technology and the customer base.
The country’s number two telecom company went ahead to award Centenary Bank an Airtel-Money escrow account as a sign of appreciation, while the other local banks feared to venture into the unknown.
Testing the product was done and passed. Next was the launch. The marketing teams at Airtel were upbeat.
The service was set to boost Airtel in many ways: the micro-savings product is seen as a retention tool. When the subscriber has the option to start saving and borrowing using a given SIM card or line, the chances of dropping that line are very minimal. It also serves as a revenue stream. For example, MTN charges 9% monthly interest for Mokash loans; that’s some good money.
What a perfect innovation that never took off thanks to the disorganization at Airtel Uganda!
Typical of the unending top leadership changes at Airtel Uganda, the changes came before the product could be launched.
The new managing director, Tom Gutjhar, decided to fire nearly all thedirectors,s preferring to recruit those he thought would give him the results we wanted[ he was wrong]. This was a strategic mistake he would regret later.
It is no surprise that Mr. Gutjhar and his recruits had to be fired after one year in office.
Enter the Airtel microsavings and lending product.
Sources at Airtel Uganda told Newz Post that the handover process was not properly handled. Thus, the new directors at Airtel Uganda were to sail in sketchy water. Given Uganda’s telecom market, which is highly competitive coupled with very low customer loyalty,
For example, the new Airtel Money director, Paul Langlois, had to start from scratch as far as the Airtel Micro lending and saving product was concerned. Mr. Langlois did not know where to start. He tried here and there and failed miserably. That’s when Airtel decided to abandon the innovative product. As they say, the rest is history.
A year later, MTN Uganda, together with Commercial Bank of Africa, launched the same product under the Mokash brand. Five months after the launch, more than eight billion Uganda shillings had been raised through savings and more than four billion loans had been given out. Mokash Cash subscribers jumped to 1.5 million.
Speaking at the launch of the product in August 2016, CBA’s General Manager for New Business Ventures, Eric Murioki, noted: “Our projection is that MoKash will reach 40 percent of the current seven million MTN mobile money users within one year, 60 percent of users within two years, and 70 to 75 percent of users within three years.
On his part, the CBA’s Chief Executive Officer, Samuel Odeke, said their projection is to have a loan book of Ugx. 21 billion Shillings and a savings book of Ugx. 16 billion Shillings within a year.
After seeing MTN and CBA enjoying the fruits of MOkash, Airtel picked up the pieces and tested a similar product they were supposed to launch in 2015.
Tough times ahead.
Airtel Uganda finds itself at a crossroads. They have so many areas to grow and seem to lose focus.
They want to grow data, push Airtel Money to reach about five million subscribers, increase her current A, B+ customer base from 20 percent to about 40 percent, fix human resource issues, and above all, get out of Warid’s shadow.
also read: Is MTN Uganda on the verge of becoming a bank? Are Ugandan banks ready for this monster?
They are also seeking to reduce the churn rate. These areas are tricky considering the current market landscape. It remains to be seen whether they can achieve all this in real time.
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 or on Twitter: @mkaketo. LinkedIn:
also read: Why Airtel Uganda sacked Tom Gutjahr after one year in office
