Mobile money continues to drive financial inclusion to the lowest ends of the spectrum. Soon, you will be able to invest in treasury bills, using a mobile money account. This is a good chance for anyone to earn interest from their mobile money savings.
There are a number of people who use the mobile money platform to save money. However, this money is subject to withdraw charges and mobile money tax. Therefore, one can never get the same amount they deposited. Pretty annoying, but not for so long with this new development.
In another move that aims to improve financial inclusion in Uganda, the Cabinet has approved a the use of mobile money for investing in treasury bills and bonds. Registered users with mobile money accounts will be able to invest in government securities on either individual or group basis.
Treasury bills are one of the instruments that are used by Government to borrow money from the public. They are used to borrow money for short periods that do not exceed one year. Currently, the government borrows money through treasury bills from three specific periods, that is, 91, 182, or 364 days.
How to invest in treasury bills using mobile money in Uganda
- A Mobile Money subscriber opens access account with Bank of Uganda after complying with Know Your Customer(KYC) requirements.
- They must provide two passport-size photographs and a photocopy of national ID to open an account.U
- Upon account opening, they can then proceed to transact in government securities.
However, the government is still drafting guidelines that would enable subscribers to invest in government securities as “Unit Trusts”.
Benefits of ability to invest in treasury bill using mobile money.
- It will encourage savings and investment among Ugandans. This is because treasury bills come with guaranteed interest (yeah, everyone feels safer when they are sure)..
- Will open a window for the Diaspora to invest and earn a good return at home and enhancing private sector credit as government securities have high collateral value against borrowing.
What are the expected interest rates for Mobile money treasury bills?
When a Mobile money user invests UGX 100,000, they can earn an interest of between 10% to 18% on the securities whose ripening period ranges from 90 days, half-a-year to full year. This means they can earn anywhere between UGX 10,000-UGX 18,000 interest after 3 months, over and above what commercial banks offer.
However, to earn more money, a mobile money user will have to invest more in treasury bills.