As the newly instituted lockdown takes shape, Prime Minister Robinah Nabbanja has announced that Ugandans would receive Covid-19 relief through mobile money. Citizens will be given relief to manage the pandemic through cash sent via mobile money and not door-to-door food distribution as it was done previously.
The money will prioritize the most vulnerable people to create ways for them to manage the pandemic. This is the first time the government will be offering help sent directly to its citizens.
Also read: The unique opportunities for mobile money agents in Uganda
Who will get the covid-19 relief and how?
As the covid-19 pandemic ravages Ugandans, many are fighting another pandemic and one that has existed for generations longer, poverty. The covid-19 virus has called for tight restrictions in different countries worldwide in order to curb the spread of the virus, leaving them in some of the worst crises they’ve ever seen.
Uganda now officially enters into a new second lockdown this year as announced by the President over the weekend. Barely recovering from the effects of the first lockdown, the country enters into another total lockdown amidst a surge in covid cases nationwide.
Apparently, the relief is directed to the vulnerable poor who can not fend for themselves in times like these. According to the Prime Minister, mobile money vouchers will be sent to local leaders who will then distribute these to the vulnerable poor in their communities. These will then have to go to mobile money agents who will process the withdrawal process and translation into cash.
It is yet to be clear when the vouchers will be distributed, but reports indicate that a supplementary budget will have to be passed by Parliament to cater for these.
The growth of mobile money in Uganda
The use of financial technology has grown exponentially over the years cited as one of the most effective ways for people to carry out transactions today. Due to lower costs and easy access, many Ugandans have shown a preference for mobile money services compared to traditional banking.
In 2020, despite the hard economic crisis, mobile money hit a number of milestones as it surpassed the billion mark recording over 954 million transactions according to the UCC market performance report. Among the transactions including deposits, mobile money to bank transfers, merchant payments and many more.
Along with the high number of transactions was a record number of subscribers that increased from the previous year to 30.7 million according to Bank of Uganda statistics. This can partly be attributed to the effort by telecom companies like MTN and Airtel to remove mobile money charges so as to make it more affordable for customers.
Read also: MTN reduces Mobile Money withdrawal fees
As people look towards the government for relief during these tough times, it is not yet certain how effective this initiative for government to give cash through mobile money will be. The most asked question since the Prime Minister’s announcement was how the government will identify the vulnerable with phone numbers and what will be done for those without phones to receive this money.
Telecom companies on the other hand have given tremendous support since the onset of the pandemic by making donations, removing charges for mobile money transactions, providing more affordable data bundles and zero rates for education websites. By collaborating with government, these telecom companies could be seen providing the same support for mobile money.
A challenging mobile money alternative
However one of the existing challenges with mobile money remains the tax that was introduced in July 2018. Received with a lot of resistance, the mobile money tax in Uganda sent waves of frustration through the public as many deemed it unfair. Mobile money charges surged making it quite expensive for people to carry out their transactions through means they had come to depend on heavily.
Following a cabinet meeting, the tax was reduced from 1% to 0.5% which would only be levied on withdrawals excluding deposits and transfers as earlier passed by Parliament that year.
Reactions from people on social media express uncertainty as to how this initiative by the government is expected to work seeing that the food distribution did not work as many have never received government aid to this day.
Other people on the other hand believe it will work citing its success in Kenya.
Read more: Mobile money transactions in Uganda increased by 25% in 2020
Read more: How mobile money masked Ugandans against covid-19