Overview:
Under the new arrangement, any attempt to send money to a wallet linked to an unpaid digital loan will be automatically rejected, with both the sender and recipient notified of the reason.
Kampala — Uganda’s major mobile money operators have begun sharing information on digital loan defaulters, closing a long-standing loophole that allowed borrowers to evade repayment by switching telecom networks.
MTN Mobile Money Uganda and Airtel Money Uganda say they are now collaborating to instantly flag loan defaulters across platforms, a move that will block deposits into defaulting wallets regardless of the network used.
Under the new arrangement, any attempt to send money to a wallet linked to an unpaid digital loan will be automatically rejected, with both the sender and recipient notified of the reason.
MTN Mobile Money chief executive Richard Yego said the initiative is aimed at restoring discipline in mobile lending, which he described as one of the most vulnerable segments of Uganda’s drive toward a cashless economy.
“For a long time, borrowers would default on one network, switch SIM cards, open a wallet elsewhere, and continue borrowing,” Yego said. “That loophole is now closing.”
Previously, defaulting borrowers could keep their indebted wallets empty by diverting income to other networks or asking friends and relatives to avoid sending money to the defaulting line, leaving lenders unable to recover loans.
The collaboration comes as mobile lending expands rapidly. Uganda has about 36 million active mobile money subscribers out of roughly 40 million mobile phone users. MTN alone serves 14.1 million mobile money customers from a total subscriber base of 23.5 million.
According to Yego, the number of mobile money borrowers has jumped from 3.5 million to 8 million this year, driven by products such as MoMo Advance. Over the same period, the value of mobile loans doubled from Shs1.4 trillion to Shs2.8 trillion.
He said operators are optimistic about recovering the full value of loans issued this year as controls on defaulters tighten.
However, Yego noted that high transaction costs remain a major obstacle to wider adoption of digital financial services. He pointed to the 0.5 percent tax on mobile money withdrawals introduced in the 2018/2019 financial year, which triggered a sharp decline in high-value transactions, particularly those above Shs500,000.
Mobile money operators are now proposing that the tax be retained as government revenue but spread across the payment value chain instead of being concentrated on withdrawals alone.
Yego said withdrawing cash from a bank remains significantly cheaper than withdrawing from a mobile wallet through an agent, a gap that has distorted consumer behaviour and discouraged seamless movement between banks and mobile money platforms.
Discussions with government are ongoing to reduce the tax burden and share it between banks and mobile money operators, a move Yego believes would restore consumer choice while protecting public revenue.
Data from MTN shows that only about 200,000 of its 14.1 million mobile money users regularly transfer funds from wallets to bank accounts, while about 800,000 move money from banks into mobile wallets — figures Yego described as worrying for a country seeking to reduce cash use.
Relief may come from the long-awaited National Payments Switch, expected to be operational before the end of 2026, according to Bank of Uganda Governor Michael Atingi-Ego. The system is intended to lower cross-network transaction costs by enabling deeper integration between payment platforms.
In the meantime, telecom firms say they are already collaborating to reduce cross-network charges and exploring ways to extend similar efficiencies to banks.
The industry has also faced public backlash over newly introduced fees on deposits made into wallets not registered in the depositor’s name. Operators say the charges were introduced after changes to agent commission structures left agents earning nothing on third-party deposits.
Yego said the fees also serve a regulatory purpose, helping to curb money laundering by ensuring that all parties to a transaction can be traced.
For millions of Ugandans who rely on mobile money for borrowing, saving and payments, the new measures mark a significant shift — one that could strengthen trust in digital lending, even as debates over costs and access persist.