Airtel Money Separates From Airtel Uganda To Meet Regulatory Requirements
Airtel Money separates from Airtel Uganda to meet regulatory requirements
Airtel Uganda announced on Tuesday, 22nd June 2021, the separation of Airtel Money from its Telecom business. This means that the company has transferred the phone-based service to its subsidiary, Airtel Mobile Commerce Uganda Limited (AMC Uganda).
This division is in accordance with Uganda's National Payment Systems (NPS) Act, 2020, which was enacted on 4th September 2020. On 5 March 2021, the regulation was published in an official newspaper.
The Bank of Uganda announced the issuance of two licences to AMC Uganda on May 24, 2021, pursuant to Section 9 of the Act.
The first licence is a Payment Service Provider — Class A Licence, PSP 01/21 — which enables the company to offer electronic Airtel Money services.
The second license is a Payment System Operator Licence (Electronic Money Systems), PSO 01/21, which authorizes AMC Uganda to operate a payment platform (Airtel Money).
Thus, AMC will conduct all Airtel Money services in Uganda in collaboration with and through Airtel Uganda's licensed telecommunications network.
As a result of the separation, Airtel Money accounts and associated information will be migrated or shared with the new company.
Additionally, Airtel Uganda's focus will now be on infrastructure operations and the provision of telecommunications services to its network subscribers and licensed operators.
Recall that in 2015, a commercial High Court ruled that five telcos — MTN, Warid, Uganda Telecom, Airtel, and Africell — were illegally operating mobile money in Uganda.
The announcement came in response to a petition filed by Abdu Kantunu, a Bugweri County Member of Parliament, to regulate mobile money under Uganda's Financial Institutions Act.
The reason for this was that the companies were registered as telcos rather than financial institutions, which meant they were not licensed by the Bank of Uganda.
AMC Uganda is now regulated and supervised by the Bank of Uganda as a result of this recent separation.
According to reports, the Ugandan government intends to increase financial inclusion, particularly among the rural population, by decoupling telecommunications and financial services.
While customers may be concerned about the new split, Manoj Murali, Managing Director of Airtel Uganda, assured them that the split will have no effect on their service.
He clarified that the affiliate company, AMC Uganda, will provide Airtel Money services on the same terms and conditions to registered Airtel Uganda subscribers.
Similarly, MTN Uganda committed on June 1, 2021, to transfer its financial services and change its name from MTN MoMo to MTN Uganda Limited. Additionally, it assured customers that financial and telecommunications services would continue to operate normally in the aftermath of the separation.
This appears to be a widespread practice in a number of African countries.
Ghana separated its telecommunications and financial services in 2015, ensuring that all institutions providing the latter are regulated under the 2004 Banking Act (Act 673).
In addition, if passed, the Kenya Information and Communication (Amendment) Bill 2019 will require Kenya's telecom operators to separate financial and telecom services.
In Conclusion
In 2020, the Central Bank of Nigeria (CBN) reportedly issued a circular inviting telecom companies and other non-financial institutions to apply for payment bank licenses.
This requires the formation of a separate company and the deposit of a minimum of $13 million (5.3 billion) in capital. Only 9mobile and Glo have received licenses, while Airtel and MTN are still awaiting approval.
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