Members of Parliament expressed discomfort with the new move by MTN to start taking savings and lending money to Ugandans.
The MPs also raised issue over consumer protection from services offered by telecom companies.
This week mobile telephone giant MTN announced that it would partner with Bank of Africa to offer financial loans through its mobile money services.
Bulamogi County legislator Kenneth Lubogo on Wednesday raised on a matter of national importance citing MOKash advertisement by MTN Telecom Company inviting Ugandans to start saving and take loan.
The MP said that MTN has about 9 million subscribers and that if these people borrow at an interest rate of 9 percent per month set by the telecom company, it would translate into 108 percent per year.
MP Lubogo questioned whether MTN had become a financial institution to start taking savings from Ugandans.
He proposed that the new product by MTN be suspended until government comes out clearly on how the transactions are going to be made and the safety of people.
David Bahati, the state minister for planning told MPs that MTN-Uganda has a license through the Uganda Communications Commission (UCC) to provide mobile phone services and internet.
He however noted that MTN had no license to do banking services but that Bank of Uganda gave the company together with Bank of Africa permission to lend to Ugandans through the MOKash product.
The minister’s response was not well received by MPs. Katerera County MP Atwibu Katoto noted that the telecom company was already making a lot of money from Uganda through unnecessary charges on mobile money, airtime and data bundles.
Joseph Ssewungu, the Kalungu West MP said that even Ugandans selling MTN’s airtime get peanuts. He questioned where Bank of Uganda got the authority to okay the MOKash product without the approval of parliament.
Elijah Okupa, the Kasilo County MP cited a need for parliament to put in place a law on mobile money.
Onesmus Twinamasiko, the Bugangaizi East MP expressed disappointment in the Bank of Uganda questioning how the bank could okay MTN to lend money at a high interest rate of 9 percent per month.
State minister for planning, David Bahati agreed with the MPs that the 9 percent interest rate is a bit suspicious and that he is to come back to parliament on Thursday about the matter. He also pledges to address parliament bout the legal framework under which the MTN MOCash is operating.
Bahati also told MPs that the ICT revolution that is to enable financial inclusion and increase the country’s domestic savings is inevitable and that parliament should embrace it.
On whether there are some revenues being lost by government in the mobile companies, Bahati said that this was possible and that it is the reason why government is purchasing an intelligence machine to know exactly how much the telecom companies are making.
Frank Tumwebaze, the minister of Information, Communication and Technology also pledged to present a statement on the regulatory framework of telecoms.
Tumwebaze also clarified on MTN’s new MOKash service that was launched on Tuesday.