This blog is written by Phil Levin and Gunnar Camner
The mobile industry in Uganda is one of the most competitive in Africa, with six players vying for market share in a country of 35 million. Price wars are rampant and promotions are fierce. Multiple-SIM ownership is common with 43% having relationships with multiple operators. [1]
Into this competitive market, Warid launched the Warid Pesa mobile money service in January of this year. The challenge facing Warid: How to drive mobile money usage amongst a customer base that might not always have your SIM card in their phone.
Warid made the bold and innovative decision of allowing customers to access Warid Pesa even if they do not own a Warid line. Users can send an SMS to a set code through any operator and receive an IVR call-back to do the Warid Pesa transaction. To offset the cost of the IVR call-back, transactions through this channel are priced at a premium to those through a Warid SIM. Already, more than 10% of Warid Pesa subscribers access the service from the SIMs of other operators.
By allowing off-network access, is Warid losing out on the oft-promoted GSM loyalty and churn benefits associated with mobile money? Warid is relying on two factors to offset foregoing this loyalty benefit. The first is the direct revenue associated with additional users on the Warid Pesa service (who may not want to leave their existing mobile operator, but prefer Warid Pesa to other Ugandan mobile money services). The second might be the competitive differentiation and overall brand benefit associated with providing a convenient and consumer-friendly service. Will these factors eventually outweigh any loss of loyalty? We at MMU will be curious to follow the story.
It should also be noted that this move by Warid represents an “opening” of a previously closed mobile money system. Warid has disaggregated its service from the channel of delivery, providing more customer convenience and linkages to other operators. This is one data point in an increasing trend of MNOs working to create a more interlinked financial ecosystem.
Warid Pesa tariff poster: Note differential pricing for Warid customers and non-Warid customers
[1] “Mobile Money Use in Uganda: A Preliminary Study” by Ali Ndiwalana, Olga Morawczynski, and Oliver Popov (https://www.gsma.com/solutions-and-impact/connectivity-for-good/mobile-for-development/wp-content/uploads/2012/06/m4dmobilemoney.pdf), with additional survey data supplied by the authors.