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Censorship of Mobile Money in Uganda: Why Bitcoin Matters

2 weeks ago, on February 18, Uganda, a 241,038 km2 country in East Africa went to the polls for presidential and parliamentary elections. Yoweri museveni, the incumbent, president since 29 January 1986, is characterised by mainstream media as dictatorial, authoritarian and exerting his influence by force.

“On election day, Ugandans woke up to no social media and no mobile money services. Nearly 20 million mobile money users were unable to access the service for at least two-and-half days.”

The government, through a state directive, had ordered the shutdown of key mobile money service without any public notice, effectively imposing a censorship on money for 3 days.

Mobile money is a centrally issued money that runs on a SIM toolkit application. It is pegged to the local currency 1:1 and run by Telecommunications companies. It is a big deal in East Africa, where, close to 100 million people use it everyday. Over the years, it has evolved from more than just cash transfers to include savings, payment of utility bills (such as water, rent and electricity), shopping, receiving dividends, diaspora remittances and paying government taxes. The East African says

“Consumers in Kenya, Uganda, Rwanda and Tanzania last year transacted $45.75 billion through their mobile phones — translating into 32 per cent of their combined GDP”

While sensationalist media and freedom activists harped on expression and communication, a gravely similar less talked about censorship was taking place, in the form of money. Money, is equally a means of communication.

According to the daily monitor, the instructive came from the UCC (Uganda Communications Authority). MTN Uganda, one of the largest telecommunications company, took to twitter:

The UCC has directed MTN to disable all Social Media & Mobile Money services due to a threat to Public Order & Safety.”

The banal oft-cited “national security reasons” and“in order to avert imminent attack (sic) by terrorist groups.” were rehashed by Mr Godfrey Mutabazi, the executive director Uganda Communications Commission (UCC).

This happened at an interesting time, when governments and Central banks around the world are subtly waging a crackdown on cash, like the European Central bank considering scrapping the 500 euro note. The endgame is to have all monies in digital form, thus, effectively impose monetary policy like negative interest rates, bank bail ins, and confiscation by force. Censorship of money is a reality today, and will only exacerbate as cashless edges closer to the norm. Uganda’s case is a snippet of how this is happening in far off East Africa, where, mobile money is used by over 70% of the region’s population.

The state of affairs is dire

“Kenya, Uganda, Rwanda and South Sudan are seeking to link the SIM card registration system with their national identification (ID) databases.”

Uganda’s next door neighbour, Kenya, is mandating banks and Telcos to authenticate their customer data and SIM cards using the Integrated Population Registration System (IPRS) platform; a single one stop shop for personal information and biometric for both locals and foreigners.

In East Africa, there is a fine line between money services and communications. Mobile money is by no means cash, cash is a bearer instrument not tied to identity. Yet, the difference is increasingly blurred for hawkers in Mogadishu, not yet aware of the fickleness of their cellphone money.

Quartz quoted Dhublawe Ibrahim Aden “If someone has to buy my shoes and bungles [necklaces] then he has to pay me through my cellphone. I don’t accept cash money from clients.

Since 2009, we now have Bitcoin, a censorship resistant digital asset that also functions like money – peer to peer digital cash. We have an option when government’s overreach.

This overarching theme recurs and reinforce bitcoin’s role. Like in Cyprus in 2013 when price traded at $253 per BTC as the European Union moved to seize banks assets and threatened to impose a tax haircut. In 2015 capital controls imposed on Greece, fueled speculation, driving up price to $316. Even today, China’s devaluing Yuan is tied to rumours of bitcoin as a means to evade capital controls.

Bitcoin is the VPN Tor of money, secure censorship proof communication lines, that carry the voices of the oppressed when the state acts against its people. Therefore, it not too far fetched to think at some point in time, bitcoin would serve a similar role in bypassing capital controls in countries in East Africa like Uganda and Kenya, where, the opposition informed supporters on how to bypass the social media blockage.

Amama Mbabazi, a 66-year-old lawyer who was one of incumbents closest advisers for 30 years, sent messages on both Twitter and Facebook suggesting supporters used “Tunnelbear VPN”.

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Already, in Kenya, Bitcoin is taking off in peer to peer markets. Here, mobile money is even more widely adopted than Uganda; all the banks are hooked into Mpesa as a payment gateway. Users often complain of Mpesa downtimes, delayed transactions and a monopolistic dominant Telcos. For whatever reason, if this system was down for a significant duration of time – whether by censorship or technical reason, bitcoin would come up as an alternative.

One comment

  1. I’m both surprised and happy that you’ve highlighted what happened and continues to happen in Uganda with the mobile money situation. I live and work in Uganda, running a business that hinges on mobile money payments, and we were hit really hard by what the government did a couple of weeks back. I’m actively exploring the possibility of intergrating bitcoin in our business, and generally introducing bitcoin as an alternative payment method for businesses and individuals here. Its a ripe and ready market for bitcoin!

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