MTN MOKASH: Your reputation counts for much
KAMPALA, AUGUST 11 – Nobody will ask you to fill a form, attach a land title or motor registration card to borrow from MTN Uganda and Commercial Bank of Africa’s savings and loan platform MOKASH. And the transaction takes place in the discreet and sterile environment of technology.
How much an individual subscriber qualifies to borrow on MTN MOKASH, boils down to the kind of reputational profile one builds with the system based on frequency and volume of transactions across the MTN product offering and credit history on the platform. Settling loan obligations in time and frequent savings help in building the systems trust for you. Paying in time qualifies one for a credit upgrade while default limits the amount you qualify to borrow.
Customers who subscribe on the Mobile telecom network and have mobile money accounts that have been active for the past 6 months qualify to borrow to a maximum of Ush 1 million at a one off facilitation fee equivalent to 9 percent of the borrowed funds for a period of 30 days. Loans can be rolled over one more time for 30 days and payments can be made in installments over the course of that period.
Savings will attract an annualised interest rate between 2 and 5 percent. Savings balances of up to Ushs 300,000 will earn interest at 2 percent, 300,000-800,000 three percent; 800,000 to 1.6 million 4 percent and five percent for balances above 1.6 million. Though calculated on daily balances, interest earned will be paid quarterly.
For CBA, MOKASH transforms a financial institution that until now had only two branches into the bank with the largest footprint in Uganda since each of MTN’s 60,000 mobile money agents is essentially a branch of the bank.
It is understood that CBA had wanted to enter the market with more aggressive offerings such as interest on earnings ranging from 9-12percent and higher loan limits but were restrained by the Bank of Uganda which feared the potential disruption and associated unknowns this could cause to the banking sector. CBA will now have to move at a lower tempo and revisions to the savings rate and credit limit are expected to come after the first six months of operation. Other credit tiers will also be introduced for group savings, businessmen and mobile money agents.