Ugandans to trade in gov’t securities via mobile money platforms

By George Mangula

Ugandans will be able to buy government securities through a mobile money platform in a move by government to become less dependent on commercial banks and institutional investors as it borrows to fund projects. Government securities are treasury bills and bonds which are debt papers issued to finance its expenditure or regulate money supply.

The government said in a statement on Tuesday in Kampala that trading in its securities via mobile money platforms as approved by Cabinet on Monday this week would boost savings and investment among ordinary Ugandans as well as drive economic growth.

Ugandans will now be able to directly buy government debt. Uganda is following the footsteps of Kenya which launched the same measure in 2017. Uganda will also open the market up to its Diaspora.

Mobile money allows subscribers to transfer money and make payments for services and products via their mobile phones and has developed rapidly in Africa, where it is now widely used.

About 23.6 million people subscribe to mobile money platforms out of an estimated 41 million.

MTN Uganda and Bharti Airtel Uganda are likely to be the most beneficiaries as they have most subscribers. Uganda has traditionally auctioned its treasury bills and bonds through bids submitted by commercial banks who act as primary dealers and the government expects the mobile money plan to cut its cost of borrowing.

“Widening the scope of investors reduces the dependence on a few players such as commercial banks, offshore players and institutional investors which tend to bid highly in the auctions given that Government has limited choice,” it said.

Government’s need for credit has seen public debt reach 41.5 percent of gross domestic product (GDP) as of June, 2018.

The Bank of Uganda, the country’s central bank, said last year that its debt stock including credit agreed but not yet disbursed had reached 50 percent of GDP.