When a mobile money account remains dormant for 15 months, the telecommunications company initiates a process to transfer the money on that account to Bank of Uganda.

This action is effected when the account holder is no longer actively using their mobile money account due to reasons such as death or relocation to another country.

As a result, Bank of Uganda is stuck with UGX69Bn of unclaimed funds from dormant accounts of several mobile money customers, with only about UGX300M having been paid out by the Central Bank, two years after it took over the regulation of mobile money platform in Uganda.

The revelation was made by Richard Byarugaba, Executive Director Finance (Bank of Uganda) while appearing before Parliament’s ICT Committee that is scrutinising a motion by Prof. Elijah Mushemeza (Sheema South) who decried the ‘complicated procedures’ laid out for individuals to access funds on dormant mobile money accounts, saying the bureaucratic process has left families of the deceased struggling to access these funds.

Byarugaba said that the enactment of the National Payments System Act 2020, streamlined this process in Section 57 and set a timeline of seven years within which any claimant can claim the funds from Bank of Uganda before it’s transferred to the consolidated fund.

What the Law States About Dormant Accounts 

Section 57 of the National Payments System Act 2020 outlines that an electronic money account that does not have a registered transaction for nine consecutive months shall be considered dormant and Telecoms are required in Section 57(2) to give notice to the customer at least one month before the elapse of the 9months period.

The Act in section 57(3) further mandates that Telecom at the expiry of the one month’s notice block the electronic money account and shall not permit further transactions until the account is reactivated by the customer and within five working days after blocking of the electronic money account, give notice to the customer that the electronic money account is blocked and provide instructions on the process of reactivation of the account.

The Act further provides in Section 57(5) that where the account is not reactivated within six months after it has been blocked, the electronic money issuer shall close the electronic money account and upon closure, the companies under Section 57(6) are required to transfer the balance of an electronic money account and identifying information to the central bank.

The National Payments Systems Act in section 57(7) mandates the Central Bank to refund any unclaimed balances to the account holder of an electronic money account or, if the account holder is dead, his or her legal representative, upon a request made within seven years after the dormant account is transferred to the central bank and after the 7years, Bank of Uganda is required to transfer the unclaimed balances to the Consolidated Fund.

Byarugaba in a media interview after meeting with the Committee explained the procedures to be followed to claim the funds in case a relative passes on a process that includes securing the letters of administration, that will be required when the claimant approaches the service centres to launch the claim with details of their phone number and national Identity card.

The Service Centres will provide the claimant with a form to fill out whose details will be verified with the service provider before the form is forwarded to the service provider headquarters and if the claim is made within 9 months, the Telecoms will pay the funds.  However, if the claim is launched after the money has been sent to the Bank of Uganda, the claimant will be required to go to Bank of Uganda, and after verification, the money will be sent back to the Telecom for payment to the claimer.

MPs react to mobile money claims procedures

Denis Ssekabira (Katikamu North) raised questions as to why the public has not been sensitized on these guidelines and procedures to be followed when claiming the funds and wondered if the Bank of Uganda was not withholding information deliberately.

“I think Government is doing it deliberately by not sensitizing Ugandans on the recovery processes of line and monies lost. I think so many people don’t keep records of their financial statements and their financial standings. What happens when one dies, the money dies with the bank and mobile money lines. It should be important to keep records and be transparent to their partners, spouses, and their family members and even their lawyers that once a tragedy happens, this money can be recovered, I think it is very unfortunate that Government hasn’t sensitized people on money dealings,” he said.

Robert Migadde (Buvuma Island) said that this money being held by the Bank of Uganda is a lot of money and proposed to have it lent out to the Government for public use so as it generates interest, although he said the interest generated from this transaction shouldn’t be given to the owners of the funds, but rather Bank of Uganda.

“We can’t say that the money should be used and not paid because the owners may later come up ask for the funds because there is a time limit. Government can borrow that money and if the owners appear they will receive the money, but the interest accrued won’t be theirs, but it will be given to Government. At the end of the day, money should be invested, so Government can use this money and when the owners show up, they can be refunded,” remarked Migadde.

He also encouraged Ugandans to make wills detailing which dependants should claim for these funds after their demise remarking,
“The problem we have is that most people don’t write their wills, we at times choose heirs but we don’t distribute our estates. Most times we distribute land and property, we don’t distribute cash at bank. And even us at the Parliamentary SACCO, we have some funds that we plan to take to Bank of Uganda that have been lying idle on the accounts with no claimants,” he added.

While reacting to Migadde’s proposal, Byarugaba said the will may not contain the actual balance of the funds on the account at the time of the demise of the individual but said the process can be better resolved through the Succession Act that provides for the estate administrator of the deceased person, who is the only individual telecoms can duly deal with in such transactions.
“You can’t put it in the will because… by the time you die, you don’t know how much money you will have on Mobile Money. You can put it in the will that this is my number, so and so should go and claim, but you see there [must] be letters of administration because you might be in the will and die before the person so there are letters of administration to confirm that you are the one,” said Byarugaba.

He also revealed that since the Act came into force, no funds have been sent to the consolidated fund and the only expected time for this to happen will be in 2027 because currently, Bank of Uganda is tracking the funds being sent to the Central Bank by telecoms.

Glance into Mobile Money transactions in Uganda

The development comes at the time the Bank of Uganda 2022 Annual report indicated that mobile money transaction values significantly increased from UGX113.38Trn in June 2021 to UGX156Trn in June 2022, while the transaction volumes also increased by from 3.9 billion transactions to 4.8 billion transactions over the same period.

Similarly, the report also noted, that the number of registered mobile money accounts as of 30th June 2022 was 38.5 million up from 31.4 million in June 2021. Bank of Uganda also revealed that statistics continue to show a strong preference for low-value transactions with an average transaction value of UGX31,000 recorded and these low-value transactions remain dominant accounting for 92.6% of the transaction volume in the band of (UGX0 – UGX50,000).

The Central Bank also revealed that in October 2021 Africell voluntarily closed its operations in Uganda and the Company successfully exited from the delivery of mobile money services in partnership with Stanbic Bank and completed payments to Africell Money’s subscribers. The residual unclaimed balances amounting to UGX69.7 million were submitted to Bank of Uganda.