Professional Documents
Culture Documents
INSTITUTIONS IN UGANDA
BY
Hidaya
REG NO:
FEBRUARY 2015
Table of Contents
ABSTRACT................................................................................................................................. 1
CHAPTER ONE........................................................................................................................... 2
1.0 Introduction............................................................................................................................
1.1 Background of the Study........................................................................................................
1.2 Problem statement.................................................................................................................
1.3 Research Objectives..............................................................................................................
1.4 Research Questions..............................................................................................................
1.5 Significance of the study........................................................................................................
1.6 Scope of the study.................................................................................................................
CHAPTER TWO.......................................................................................................................... 4
LITERATURE REVIEW................................................................................................................4
2.0 Introduction............................................................................................................................
2.1 Cost Control..........................................................................................................................
2.2 Cost Control Applications.......................................................................................................
2.3 Control Reports......................................................................................................................
2.4 Standards..............................................................................................................................
2.5 The Role of Accounting..........................................................................................................
2.6 Data Collection......................................................................................................................
2.7 Budget and Control Administration.........................................................................................
2.8 Strategic Cost Control............................................................................................................
2.9 Summary...............................................................................................................................
CHAPTER THREE.................................................................................................................... 10
METHODOLOGY...................................................................................................................... 10
3.0 Introduction........................................................................................................................ 10
3.1 Study Design....................................................................................................................... 10
3.2 Data Collection....................................................................................................................
3.6 Research Methods...............................................................................................................
3.7
REFERENCES:......................................................................................................................... 12
ABSTRACT
Financial institutions have been in the process of significant transformation. The
force behind the transformation of these institutions is innovation in information
technology. Information and communication technology is at the Centre of this global
change curve of mobile and internet banking in Uganda. Rapid development of
information technology has made banking tasks more efficient and cheaper.
This study sought to determine the effect of mobile money specifically MTN mobile
money services on performance of financial institutions in Uganda specifically
Centenary Bank. Where the survey will be conducted on this financial institution in
Kampala Main branch. The study also sought to identify the extent of use of mobile
and internet banking in financial institutions.
CHAPTER ONE
1.0 Introduction
This chapter will peruse through the background of the study, the problem
statement, objectives of the study, general objectives and specific, research
question, the scope of the study and the importance of the study.
1.2 Background of the Study
Financial Institutions Inclusion with mobile money services, which is the process
of ensuring access to appropriate financial products and services at an affordable
cost to the underprivileged and low income groups has become a key pillar of
development policy in a number of developing countries. The driver of this as a
salient feature in development policy was the recognition by national and
multinational bodies that exclusive development was not sustainable. For
instance, the former United Nations (UN) Secretary General Kofi Annan observed
on December 29, 2003 that The stark reality is that most people in the world still
lack access to sustainable financial services, whether it is saving, credit, or
insurance. The great challenge before us is to address the constraints that
exclude people from full participation in the financial sector together; we can
and must build inclusive financial sectors that help people improve their lives.
Consequently, a number of monetary authorities and finance ministries across
the world have sought to address this imbalance. Different approaches have
been used across the globe because Financial Exclusion (FE) is a result of a
myriad of factors ranging from attitude through to infrastructural limitations. Some
of the approaches that have been used across the globe include microfinance
arrangements; moral suasion to urge financial institutions to embrace
commitment to financial development; regulatory frameworks that require
commercial banks to open up a rural branch for every branches opened; and
utilization of Information Communication Technology (ICT) to reduce costs
associated with financial service delivery.
Innovations in ICT have revolutionaries the financial sector resulting in novel
delivery channels for financial products and services such as Automated Teller
Machines (ATMs), cell phone banking, PC banking, and internet banking (Ahmad,
2006). These developments leveraged against ICT are termed as electronic
banking (e-banking) which is a subcomponent of electronic commerce (ecommerce). E-banking has been very instrumental in improving the quality of 3
service individuals with bank accounts receive from their financial institutions as
well as lowering the costs of transactions. For example an electronic withdrawal
of cash across the ATM costs between 5 US cents to 25 US cents in a Ugandan
commercial bank compared to over-the counter withdrawals that cost between
US$ 1.00 to US$ 2.00 per transaction. The individuals with bank accounts
continue to enjoy the benefits associated with e-banking but the poorest of the
poor who cannot open up bank accounts remain excluded. As a result, the lack of
banking services has forced many people in the developing countries to rely on
an often insecure cash based economy. The desire by many developing
countries governments to increase access to financial services as a tool of
enhancing savings mobilization to reduce poverty has seen a number of solutions
emerge. Apart from the traditional solution of microfinance, use of mobile phones
to access financial services has been proposed and adopted as a means of
expanding financial services to the poorest of the poor.
The adoption of the mobile phone as a means of accessing financial services has
been driven by the growing number of low income earners who own cellular
phones, the pre-paid billing system sensitive to users incomes and improving
technology. The number of cellular phone subscribers in Uganda has risen from
3000
in
December
1996
to
8,200,000
in
December
2008
(Uganda
In this paper, the potential role that can be played by mobile money services
(MMS) using cellular telephony to foster financial inclusion is explored. A
thorough understanding of the role can help policy makers design appropriate
policies to integrate the mobile payments (m-payments) into the national and
regional integrated payment systems as well as devise mechanisms for reaching
the under- and un-banked citizens. In addition, it opens up opportunities for
government to minimize transaction expenditures, embezzlement, and fraud
when paying large groups of civil servants like primary school teachers.
1.2 Problem statement.
Financial Institution inclusion with mobile money services which is a key
component of social inclusion and consequently a necessary ingredient for
fostering inclusive growth remains a major concern of government authorities
and a major hindrance to economic development. While Ugandas financial
sector has experienced a profound transformation since 2000, the financial
industry remains shallow and a large proportion of Ugandas population remains
unbanked. Generally, financial depth measured as a ratio of broad money (M2)
to GDP is low. The ratio increased from 11.2 percent in 1995 to 20.7 percent in
2008 (WDI and GDF 2010). In addition, financial intermediation is low playing a
limited role in the provision of funds for development finance and dominated by
commercial banks (Mugume, 2008). The advent of the cellular phone and the
appropriate underlying technology that has enabled transmission of money
provides Ugandans with an opportunity to be integrated into the financial sector.
and with this research, the researcher seeks to explore the potential mobile
money services can play in enhancing financial Institutions development in
Uganda. Specifically, it addresses issues regarding services provided by the
MMS, transaction charges, registered customers, number and volume of
transactions,
stakeholders,
user
interfaces
and
security,
institutional
Uganda.
prove
of
the
success
and
growth
associated
with
the
Finally, the study adds to the existing literature, and is a valuable tool for
students, academicians, institutions, corporate managers and individuals who
want to learn more about mobile and internet banking.
1.6 Scope of the study.
Since, the bounders of Money in financial organizations are not easily drawn;
this study is concerned primarily with those aspects on effects of MTN mobile
money to the development of financial instituitions which are immediately tied-up
with financial performance as direct and those that relate to the component
inputs which together make the transaction safe and healthy as indirect
regulation will be the coverage.
CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction.
This chapter seeks to explore in depth the concept and mobile money banking
through a review of the various theories as well as empirical studies.
2.1 Financial Inclusion
Access to affordable financial services is linked with overcoming poverty,
reducing income disparities and increasing economic growth.
Despite our
payments, mobile banking, and digital identities makes it easier and less
expensive for people to use financial services, while increasing financial security.
More than one billion underserved people in middle and low-income countries
have access to a mobile phone, providing existing infrastructure that can be used
to sustainably offer financial services such as payments, transfers, insurance,
savings and credit.
This thereby provides an opportunity with mobile money services to create
greater financial inclusion through which to increase economic prosperity for all
people, but especially low-income households with microenterprises.
Duncombe and Heeks (2002) find that poor rural entrepreneurs rely heavily on
informal, social and local information systems. While highly appropriate in many
ways, these systems can also be constrained and insular. Greater access to
shared telephone services can help break this insularity. Additionally, Duncombe
(2007) finds the poor may benefit more from ICT if it is applied to strengthen a
broader range of social and political assets and if it is use to build more effective
structures and processes that favor the poor. Subsequently, Donner (2007) finds
mobile phone use by micro-entrepreneurs in Kigali, Rwanda enables new
business contacts and amplifies existing social relationships.
Summarizing 14
research studies for micro and small enterprises (MSEs) Donner (2010) finds
mobile phone use alone even without the payment services helps many MSEs
become more productive through improvements in sales, marketing and
procurement processes. Consequently, there is an opportunity to investigate the
marginal impact of mobile money on low-income household enterprises in the
least developed countries, which as the literature shows traditionally have not
had access to such transformative technology.
2.3 Effects of Mobile Money
Although mobile money literature is still limited, initial empirical evidence
indicates that using a mobile money account brings positive returns to individuals.
A market-level analysis conducted y Mbiti and Weil (2011) found the introduction
of M-PESA in Kenya led to significant decreases in the prices of money transfer
competitors. Additionally, they found an increase in the frequency of receiving
remittances, which the authors conclude over-time has contributed toward
financial inclusion in the country (Mbiti and Weil, 2011, Jack and Suri, 2011). In
Mozambique, Batista and Vicente (2013) find evidence that the marginal
willingness to remit was increased by the availability of mobile money. They also
observed substitution effects of mobile money for traditional alternatives for both
savings and remittances. In Niger, Aker et al (2011) look at the effects of using
mobile money accounts for delivery of cash transfers versus traditional methods.
Specifically, they find mobile money reduced the overall transaction costs of
recipients, while offering an increase in freedom, flexibility, and privacy. A
qualitative pilot study conducted in rural Cambodia by Vong et al (2012) identify
benefits of time, security and convenience for micro-entrepreneurs who use
mobile money services in rural areas. From this literature, the expectation is that
micro-entrepreneurs would benefit positively from the use of mobile money.
2.4 Savings Opportunity
Conflicting evidence available today has created an outstanding debate as to
whether individuals save more or not through the use of mobile money.
According to the study by Jack and Suri (2011) 71% of all households indicate
saving money at home, under the mattress. Moreover, they find three quarters
(75%) of households that are M-PESA users report also using their mobile money
account to save.
important saving instrument and 90% say it is one of three most important
vehicles for saving.
Data collected in Tanzania from 3,000 households indicates 90% of mobile
money users without a bank account report using their mobile account to save or
store money in the last six months.
From a small pilot study in Uganda, the results indicate that across users,
regardless of their balances (low, medium, or high), the primary purpose to save
in their mobile money accounts is for emergencies.
Despite these user claims, Mbiti and Weil (2011) find in Kenya from analyzing
aggregate data reported to the Central Bank that M-PESA customers dont
appear to actually be using the mobile money account for storing value. They
calculate a low value of average holdings at a point in time to be about US$3
(203 KSH). Additionally, they conduct an analysis of stored value and deduced
that customers must have high time discount rates, since holding funds in the
account to minimize usage fees would be advantageous.
The
women also shared their desire to use the mobile money account to save
specifically to start an income generating activity for greater reliability of income
and freedom. Interestingly, initial evidence from Aker et al (2011) suggests that
users of mobile money receiving the same amount of cash as non-users diversify
their diets more and produce a more diverse basked of agricultural goods. These
are important areas for further research, especially as it relates to individual and
household decisions of income generation through farming or other business
activities.
2.6 Social Networks & Risk Sharing
As found by Marcel Fafchamps (1992) and many other researchers, informal
solidarity networks provide an important means by which individuals and
households share risk. Access to affordable money transfer services has been
shown to have an effect on these social networks.
Morawczynski (2009)
(2011a) also find M-PESA users have correspondingly larger shares of their
remittance portfolios linked to other relatives and friends, suggesting broader
social networks. In a subsequent paper, Jack and Suri (2014) explore more
concretely the means by which mobile money effects social networks through
individuals
and
household
sharing
of
risk.
The
authors
introduce
are even more evident for the bottom three quintiles of the income distribution.
Hence, mobile money appears to increase the effective size of, and number of
active participants in risk sharing networks, seemingly without exacerbating
information, monitoring and commitment costs. The benefits of lower transaction
costs of mobile money appear to be sufficiently large enough to offset any
incompleteness of insurance that would otherwise arise from information or
commitment problems within solidarity networks. Given the strong benefits in
social networks from the use of mobile money, especially the bottom quintiles,
similar advantages are also expected among microenterprise networks.
2.7 Technology Adoption Profiles of Mobile Money Users
While there were earlier deployments of mobile money in other countries, the
launch of MPESA by Safaricom in Kenya in 2007 experienced the fastest uptake
with nearly 15 million users in five years (as of January 2012). Using data from
the Kenya FinAccess survey data in 2006 and 2009, which included 4,000
households, Mbiti and Weil (2011) find that active early adopters of M-PESA are
likely to be urban, educated, banked and affluent confirming this profile of early
adopters. Jack and Suri (2011a) conducted a panel study on M-PESA mobile
money surveying 2,000 households across the country in 2008 and 2010. They
also found the user profile of early adopters to be more literate, with higher levels
of education and wealth, bank accounts, urban dwellers, and a slight male bias.
In the follow-up survey by Jack and Suri (2011a) find with time the demographics
of Kenyan users begins to shift. According to Moores innovation adoption model,
which stratifies users as innovators, early adopters, early majority, late majority
and laggards (Moore 1991) this is naturally expected. Jack and Suri (2011a) find
in Kenya the early majority is proving to be more balanced between men and
women, with increased uptake from the rural areas and those with less education
and less well off. In both rounds they find lack of mobile phone cited as the
primary reason for not using the service, which suggests that many of the
individuals who adopted M-PESA between the two rounds were those who
already owned mobile phones. Collectively, these results indicate that with time
this technology innovation will be adopted more broadly by the population
encompassing the late majority users and eventually the laggard users.
As seen, the mobile money literature thus far has focused on the initial effects of
usage regarding adoption, financial inclusion, savings, risk sharing, and
consumption smoothing.
CHAPTER THREE
METHODOLOGY
3.0 Introduction
This study is designed to find out the effects of MTN Mobile money to financial
Institution development case study of Centenary Bank, Uganda (Kampala). This
goal cannot be achieved unless the research work is orderly, imaginative,
logical and accurate.
Hence, this chapter is associated with the research method used in carrying out
the work. The pertinent pointed here is that it helps to know which method is
appropriate for the project.
3.1 Research Design
Therefore, on the basis of this study, the research design to be used for collecting
the required information is the survey analysis on the basis of self-administered
questionnaire, interview and personal observation. The primary and secondary
data are source of information on the effects of
employees, and customers of the MTN mobile Company plus centenary bank.
Employee, For the purpose of this study, the actual population or aggregate is
thirty four (40) holders.
REFERENCES:
Amin, H., Baba, R., and Muhammad, Z.M. 2009. An Analysis of Mobile Banking
Acceptance by
Malaysian Customers. Sunway Academic Journal 14: 1-12.
Duncombe, R. 2009. Assessing the potential for Mobile Payments in Africa:
Approaches and
Evidence from Uganda. Development Informatics Working Paper Series Paper No.
41. Centre
for Development Informatics, Institute for Development Policy and Management,
University of
Manchester.
Ernst and Young 2010. Mobile Money: An Overview for Global Telecommunication
Operators.
Grail Research 2010. Mobile Payment Opportunity in the Middle East and Africa
(MEA)
Region. February 2010.
Jenkins, B. 2008. Developing Mobile Money Ecosystems. Washington, DC: IFC and
theHarvard Kennedy School.
McMurray, A. 2009. Mobile Financial Services: extending the Reach of Financial
Services through Mobile Payment Systems. FDC Nai Sema Occasional Paper series
No. 1 2009.
Morawczynski, O. and Pickens, M. 2009. Poor People using Mobile Financial
Services:
Observations on Customer Usage and impact from M-PESA. Washington, DC:
Consultative Group to Assist the Poor (CGAP).