Nanfuka Harriet is Research Assistant, AppLab Money Incubator, and Joseph Bbirikadde is Programme Officer, AppLab Money Accelerator at Grameen Foundation Uganda.
At Grameen Foundation we always strive to learn more about the “why” in our work fields and all those linked to the work we do. To that effect, we recently had a trip to the Eastern part of Uganda to get knowledge and insight from Mobile money agents about their key reasons for investing in Mobile Money and the key determinants on how much float they hold compared to investment in other sources of income
The feedback agents gave us as key drivers for their consistent investment in mobile money is as follows:
- Mobile Money is considered a low risk business
- It is automated and reduces the opportunity for employee fraud. This further reduces risk in the business
- The business is easy to set up and run on a day to day business.
- Returns are easy to calculate and know due to generation of daily reports.
- The prestige associated with holding and exchanging money in the community.
To agents, low risk means minimal operational costs and losses. Little is invested to run day- to-day operations. Automation eases management and tracking of transactions which sustains most agents to run profitable outlets. Ease of entry and constant customer support visits help the agents a lot in optimising their day- to- day operations. The visits enable clarity and help on any arising issues being faced in the business. Agents are also driven by the fact that they are able to work through the figures to know how much profit they are making. It is possible for an agent to view his transaction report online daily if he/she wishes.
Micheal, an agent in Njeru pointed out that the feeling of holding and exchanging money makes him feel like a mini bank and very important. In small communities there is prestige associated with holding and exchanging money. He highlighted this as a key driver for him as an individual.
Due to experience, most agents are aware of the high and low days in the business and this determines a lot their float size at particular times. The following were noted:
- High deposits occur during school fees paying time. During this time, agents double up their float size to meet demand. This demand also escalates when children are sent back home by schools to pay up remaining fees.
- Harvesting periods also record high deposits
- Withdrawals are high on Friday’s and to a lesser extent Saturday and Sunday.
- From 25th – 30th of every month a mix of deposits and withdrawals is recorded.
- Monday’s record high deposits too.
During high the high deposit periods, agents double up their float size while during high withdrawal days they double up their cash.
On location, agents said that they tend to invest more float in outlets that are on busy streets and urban areas. Rural areas also tend to have more withdrawals than deposits. This is mainly due to remittances from urban relatives.
