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NCBA bank, MTN partner on swift mobile loans

Charlotte Matsiko, NCBA Digital Bank - Portfolio Manager, Miriam Olimu - MTN Momo, Digital Communications Manager (Right) hand over cash prize to the winner, Godfrey Wanambwa

Charlotte Matsiko, NCBA Digital Bank - Portfolio Manager, Miriam Olimu - MTN Momo, Digital Communications Manager (Right) hand over cash prize to the winner, Godfrey Wanambwa

NCBA Bank Uganda has partnered with MTN Uganda to launch a new mobile loan initiative dubbed; 'Mo Money with More Mokash' campaign.

The campaign is aimed at empowering individuals with better access to micro-loans and savings. The partnership is the latest development in the growing trend of mobile phone lending in Uganda, a concept first realized in 2016 when the Commercial Bank of Africa (CBA) partnered with MTN to launch the 'MoKash' product.

In recent years, several banks in Uganda have introduced stand-alone products where bank loans are processed online via computers or mobile phones, with the phone serving as a channel to process the credit and receive the money from the bank.

Miriam Olimi, digital communications manager at MTN Uganda noted that a good repayment history facilitates greater access to unsecured micro loans, enabling the borrowers to have more access to cash through the Mokash digital loan product.

“When customers repay their loans promptly, it not only improves their creditworthiness but also enables them to access more substantial and quick unsecured loans."

She said that the initiative is designed to foster a culture of timely loan repayments, adding that when customers pay back their loans, it increases the number of people who can equally and easily access credit whenever they have the need. It should be noted that the type of loans offered online and via mobile phones are usually unsecured, in smaller amounts, and payable over shorter periods.

However, they often carry higher interest rates compared to conventional loans. Charlotte Matsiko, NCBA digital bank-portfolio manager said, “Although the campaign was intended to encourage repayment of loans, the majority of the Mokash customers were repaying their loans on time...About 80 per cent are paying well although a few are struggling to repay, and this campaign is designed to motivate them to meet their obligations," she said.

"Digital credit now holds the same weight as traditional bank loans since it's registered on the CRB. Defaulting can significantly hinder one's ability to obtain credit elsewhere," she added.

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