SAFARICOM has closed illegal Mpesa agency business in Uganda, forcing many Kenyans living there and regional businessmen to revert to use of expensive money transfer services offered by banks.
Mpesa traders in Uganda said their Safaricom agent lines were blocked on Monday disabling deposits and withdrawal transactions for clients most of whom are Kenyan students and workers.
"Insiders say they want to overhaul the way Mpesa is done in Uganda but I don't know how they will do that," said an Mpesa agent in Kampala.
Safaricom does not officially operate Mpesa business in Uganda and any such business transacted there is illegal though conducted openly.
"Most of the Mpesa shops in Uganda are just a small desk within other business premises," said a Kenyan working in Kampala.
She said Mpesa is popular even among Ugandans as it offeres better cash transfer rates within the region compared to banks.
"Their (agents) exchange rate is usually better than the banks if I want to deposit, I give him the cash in Uganda shillings and then we negotiate how much he will deposit in my Mpesa account then they take a 'commission' from the amount," she said.
Mpesa customers in Uganda said the agents normally charge between one and four per cent of the value of the transaction on top of the normal Safaricom tariffs. This, the users said, was still cheaper compared to exchange rates given by banks and some forex bureaus.
Safaricom did not divulge details of how many 'agents' operating from Uganda had been shut down.
“Safaricom does not offer Mpesa services in Uganda. Mpesa is licensed by the Central Bank of Kenya; all our agents and customers are expected to transact and use the service within the country," the Safaricom corporate affairs director Stephen Chege told the Star in an email response.
Vodafone which is Safaricom's largest shareholder has links with Vodacom which last year launched operations in Uganda. The latest closure of illegal Safaricom Mpesa trade in Uganda after years of operation could be a move to set the stage for partnerships with Vodafone to officially launch Mpesa services tin the country.
In 2009, Safaricom made another crackdown on illegal Mpesa business in Uganda, cutting out thousands of Kenyan students and workers from accessing money sent from Kenya.
In March, Safaricom teamed up with Vodacom Tanzania to launch Mpesa services in that country.