5 ms·

Getting Money out of Uganda

30 points by tosbourn 12y ago

chewbacca182 12y ago
Bitcoin might be the answer
- 0x006A 12y ago
  http://www.newsbtc.com/2014/05/22/bitcoin-uganda-mans-one-way-exchange-bitcoins/ http://www.newsbtc.com/2014/05/22/bitcoin-uganda-mans-one-wa... ... So – a rather unfortunate situation indeed, but hopefully with time, another person in Ronald’s vicinity will be willing to exchange his bitcoins. Until then, it looks like MoneyGram it is.
- tosbourn 12y ago
  I had considered bitcoin, but until it is way more easy to use for non-tech folk I don't think it is much of an option. The services I have seen that make it easy for the non-tech have required American bank accounts.
  - eru 12y ago
    You could take Ugandan currency, and make a big announcement somewhere that you are willing to buy bitcoin with it. Some enterprising person will come up with a way to deliver. (Though the sister comment about going via neighbouring Kenya seems more down-to-earth.)
- exelius 12y ago
  Bitcoin is only an answer if there is a liquid market between Bitcoin and the Ugandan currency.
- IkmoIkmo 12y ago
  It may be later this year or the one after. There's no real market in Uganda for bitcoin right now. If you hustle long enough you'll surely find someone looking to buy or sell, a local businessman or expat for example. But nothing structural. But Bitpesa has been pretty successful in neighbouring Kenya with a bitcoin remittance product, and has started to provide bitcoin liquidity because of it in Kenya. This means that already, if you'd have approached Bitpesa in the past months from Uganda, that it's likely quite easy to have procured bitcoin from them as Kenya-Uganda money transfer isn't the hardest thing in the world. (fun fact, Kenya's MPesa actually has a pretty significant presence in Uganda, too, and Bitpesa uses MPesa for their payouts) These bitcoins can easily be sold in most OECD countries particularly North America & Europe, but actually all continents nowadays to a large extent with the exception of Africa. But Bitpesa recently announced more official plans to move into new markets like Ghana, but also including Uganda. So bitcoin is a possible solution, although not necessarily as quick & easy as it can be, and likely will start to become, in the next few years as companies like Bitpesa expand and encourage other enterprises to follow suit.
  - tosbourn 12y ago
    Thanks for this – I will look into this a bit more.
kephra 12y ago
Hawala حوالة could be an option, if you know wealthy Jewish or Muslim in your country. They certainly do business, and know how to transfer money.
- jalayir 12y ago
  But it's illegal... in most countries hawala is illegal, and prosecuted under various money laundering laws.
  - xtrumanx 12y ago
    That's most definitely not true. I know a hawala company that has offices in several western nations like the U.K. and Australia and they're not operating illegally to my knowledge. They essentially work like Western Union and simply operate in markets Western Union does not serve.
    - ptaipale 12y ago
      Might still be illegal in Uganda. Enforcement of bans or regulation can be erratic of course. (Hawala is apparently completely illegal in India and Pakistan).
- tosbourn 12y ago
  This sentence sounds very wrong to me.
exelius 12y ago
My guess is that this situation is not an accident. Corrupt officials in many African countries make a lot of money off of their citizens by denying them access to international commerce unless they go through the right intermediary (usually a relative of the corrupt official). Hence the 35% markup the author mentions -- if there was anything resembling a free market, the markup would be lower. This markup effectively functions as a tariff targeting multinational companies: you can bring money into the country easily, but if you want to remove it, you have to pay. And the money likely goes right back into the hands of the bureaucrats and their relatives. There are many places in this world where laws are used simply as tools to maintain the wealth of the ruling class. If you come up with a business that tries to disrupt their order, they will simply invent some tax evasion charges and seize your assets. You'll probably lose because the judge is also a distant relative who is in on the entire scheme.
- tosbourn 12y ago
  Quite possibly – I haven't looked into the reasons.
- walshemj 12y ago
  That is why I was told that the Postmaster general was a plum job in third world countries it gave you direct access to the telecoms interconnect fees and why for the longest time it was so expensive to call those countries.
ChuckMcM 12y ago
To be honest I was thinking this was the punch line to something that started "Dearest Person; I run a very successful website in <far away place> and have accumulated <very large number> of dollars which I cannot get out of the country without your help ..." However, since that wasn't the case, is it simply that countries without a developed banking system have issues? I would expect the normal path here would be to establish an account with a bank in the country, build enough local infrastructure to allow for transactions to and from that bank, and also for wiring money from that bank to other banks that are closer to you.
- nowarninglabel 12y ago
  Correct. We work in Uganda without problem doing wire transfers for funds in/out. There is nothing particularly problematic about this for Uganda unlike some countries we work on.
  - tosbourn 12y ago
    Did you have to physically be there to open the account or were you able to do it all online/over the phone?
    - nowarninglabel 12y ago
      We have folks on the ground, so yes physically there.
- tosbourn 12y ago
  This is interesting – I hadn't considered opening up a bank account there, this is something I may look into, thanks!
aresant 12y ago
I recently had lunch with a guy that set up telecom networks in ex-soviet bloc countries in the years following the fall of the Berlin Wall. He worked with American / Euro companies and interfaced with the hard-scrabble governments that were in the power tug-of-war at the time. One of the most complicated tasks he ran into was moving money in-and-out of the countries, largely due to currency de-stabilization. His solution was to buy hundreds-of-tons of grapes in the local currency, and then transport the grapes to Greece where they could be exchanged for international currency. This was in the early 1990s, fairly recent history, but it still baffles me that these sort of problems still exist at the scale that they do.
- tosbourn 12y ago
  New business – Country Moving Grapes as a Service.
pakled_engineer 12y ago
You get a business or corporate account with Ecobank and then collect payments with it. They even do teller implant services so you can open a storefront in Kampala and they will staff it with somebody who can collect payments in person to deposit to your Africa wide account which you later can then SWIFT wire transfer anywhere you want. Another method is simply become your own XpressMoney or RIA agent (avoid WU), and then instead of having to physically go check for funds you can load up your agent account and immediately see the funds are there. There are plenty of large European payment gateways that have local African payment methods like cash bank deposits you can use but some of them take a month to settle payments. You could also roll your own voucher type system. Various traders in Uganda buy vouchers from you then resell them p2p so the money never leaves your bank account while changing hands all over Africa. The customer enters a PIN to split the voucher or deposit it to their betting account. This requires a competent crypto engineer obviously. Could even use your own centrally mined alt-cryptocurrency. Or you could partner with storefont money changers with a lot of branches in Uganda to accept money on your behalf (like selling PIN codes) that way they already have all the local licenses and satisfy ID requirements for payments in/out and your company only handles business to business payments eliminating all kinds of problems with regulators. Edit: there's also World Bank publications you can read to discover easier money transfer corridors like Masterlink which is a Uganda->UK service http://www.amazon.com/dp/0821384309 http://www.amazon.com/dp/0821384309 or USAID publications http://solutionscenter.nethope.org/assets/collaterals/Uganda_Market_Assessment_and_Case_Studies_Final.pdf http://solutionscenter.nethope.org/assets/collaterals/Uganda... You can also ask your embassy in Uganda for a financial report telling them you need information on the local banking and money transfer systems. I did this for Kenya and received a very detailed pdf with exact fees of each service, bank recommendations for trading ect.
- tosbourn 12y ago
  Oh wow – this is very informative, thank you so much.

30 points by tosbourn 12y ago

chewbacca182 12y ago

Bitcoin might be the answer

0x006A 12y ago
http://www.newsbtc.com/2014/05/22/bitcoin-uganda-mans-one-way-exchange-bitcoins/ http://www.newsbtc.com/2014/05/22/bitcoin-uganda-mans-one-wa... ... So – a rather unfortunate situation indeed, but hopefully with time, another person in Ronald’s vicinity will be willing to exchange his bitcoins. Until then, it looks like MoneyGram it is.
tosbourn 12y ago
I had considered bitcoin, but until it is way more easy to use for non-tech folk I don't think it is much of an option. The services I have seen that make it easy for the non-tech have required American bank accounts.
- eru 12y ago
  You could take Ugandan currency, and make a big announcement somewhere that you are willing to buy bitcoin with it. Some enterprising person will come up with a way to deliver. (Though the sister comment about going via neighbouring Kenya seems more down-to-earth.)
exelius 12y ago
Bitcoin is only an answer if there is a liquid market between Bitcoin and the Ugandan currency.
IkmoIkmo 12y ago
It may be later this year or the one after. There's no real market in Uganda for bitcoin right now. If you hustle long enough you'll surely find someone looking to buy or sell, a local businessman or expat for example. But nothing structural. But Bitpesa has been pretty successful in neighbouring Kenya with a bitcoin remittance product, and has started to provide bitcoin liquidity because of it in Kenya. This means that already, if you'd have approached Bitpesa in the past months from Uganda, that it's likely quite easy to have procured bitcoin from them as Kenya-Uganda money transfer isn't the hardest thing in the world. (fun fact, Kenya's MPesa actually has a pretty significant presence in Uganda, too, and Bitpesa uses MPesa for their payouts) These bitcoins can easily be sold in most OECD countries particularly North America & Europe, but actually all continents nowadays to a large extent with the exception of Africa. But Bitpesa recently announced more official plans to move into new markets like Ghana, but also including Uganda. So bitcoin is a possible solution, although not necessarily as quick & easy as it can be, and likely will start to become, in the next few years as companies like Bitpesa expand and encourage other enterprises to follow suit.
- tosbourn 12y ago
  Thanks for this – I will look into this a bit more.

kephra 12y ago

Hawala حوالة could be an option, if you know wealthy Jewish or Muslim in your country. They certainly do business, and know how to transfer money.

jalayir 12y ago
But it's illegal... in most countries hawala is illegal, and prosecuted under various money laundering laws.
- xtrumanx 12y ago
  That's most definitely not true. I know a hawala company that has offices in several western nations like the U.K. and Australia and they're not operating illegally to my knowledge. They essentially work like Western Union and simply operate in markets Western Union does not serve.
  - ptaipale 12y ago
    Might still be illegal in Uganda. Enforcement of bans or regulation can be erratic of course. (Hawala is apparently completely illegal in India and Pakistan).
tosbourn 12y ago
This sentence sounds very wrong to me.

exelius 12y ago

My guess is that this situation is not an accident. Corrupt officials in many African countries make a lot of money off of their citizens by denying them access to international commerce unless they go through the right intermediary (usually a relative of the corrupt official). Hence the 35% markup the author mentions -- if there was anything resembling a free market, the markup would be lower. This markup effectively functions as a tariff targeting multinational companies: you can bring money into the country easily, but if you want to remove it, you have to pay. And the money likely goes right back into the hands of the bureaucrats and their relatives. There are many places in this world where laws are used simply as tools to maintain the wealth of the ruling class. If you come up with a business that tries to disrupt their order, they will simply invent some tax evasion charges and seize your assets. You'll probably lose because the judge is also a distant relative who is in on the entire scheme.

tosbourn 12y ago
Quite possibly – I haven't looked into the reasons.
walshemj 12y ago
That is why I was told that the Postmaster general was a plum job in third world countries it gave you direct access to the telecoms interconnect fees and why for the longest time it was so expensive to call those countries.

ChuckMcM 12y ago

To be honest I was thinking this was the punch line to something that started "Dearest Person; I run a very successful website in <far away place> and have accumulated <very large number> of dollars which I cannot get out of the country without your help ..." However, since that wasn't the case, is it simply that countries without a developed banking system have issues? I would expect the normal path here would be to establish an account with a bank in the country, build enough local infrastructure to allow for transactions to and from that bank, and also for wiring money from that bank to other banks that are closer to you.

nowarninglabel 12y ago
Correct. We work in Uganda without problem doing wire transfers for funds in/out. There is nothing particularly problematic about this for Uganda unlike some countries we work on.
- tosbourn 12y ago
  Did you have to physically be there to open the account or were you able to do it all online/over the phone?
  - nowarninglabel 12y ago
    We have folks on the ground, so yes physically there.
tosbourn 12y ago
This is interesting – I hadn't considered opening up a bank account there, this is something I may look into, thanks!

aresant 12y ago

I recently had lunch with a guy that set up telecom networks in ex-soviet bloc countries in the years following the fall of the Berlin Wall. He worked with American / Euro companies and interfaced with the hard-scrabble governments that were in the power tug-of-war at the time. One of the most complicated tasks he ran into was moving money in-and-out of the countries, largely due to currency de-stabilization. His solution was to buy hundreds-of-tons of grapes in the local currency, and then transport the grapes to Greece where they could be exchanged for international currency. This was in the early 1990s, fairly recent history, but it still baffles me that these sort of problems still exist at the scale that they do.

tosbourn 12y ago
New business – Country Moving Grapes as a Service.

pakled_engineer 12y ago

You get a business or corporate account with Ecobank and then collect payments with it. They even do teller implant services so you can open a storefront in Kampala and they will staff it with somebody who can collect payments in person to deposit to your Africa wide account which you later can then SWIFT wire transfer anywhere you want. Another method is simply become your own XpressMoney or RIA agent (avoid WU), and then instead of having to physically go check for funds you can load up your agent account and immediately see the funds are there. There are plenty of large European payment gateways that have local African payment methods like cash bank deposits you can use but some of them take a month to settle payments. You could also roll your own voucher type system. Various traders in Uganda buy vouchers from you then resell them p2p so the money never leaves your bank account while changing hands all over Africa. The customer enters a PIN to split the voucher or deposit it to their betting account. This requires a competent crypto engineer obviously. Could even use your own centrally mined alt-cryptocurrency. Or you could partner with storefont money changers with a lot of branches in Uganda to accept money on your behalf (like selling PIN codes) that way they already have all the local licenses and satisfy ID requirements for payments in/out and your company only handles business to business payments eliminating all kinds of problems with regulators. Edit: there's also World Bank publications you can read to discover easier money transfer corridors like Masterlink which is a Uganda->UK service http://www.amazon.com/dp/0821384309 http://www.amazon.com/dp/0821384309 or USAID publications http://solutionscenter.nethope.org/assets/collaterals/Uganda_Market_Assessment_and_Case_Studies_Final.pdf http://solutionscenter.nethope.org/assets/collaterals/Uganda... You can also ask your embassy in Uganda for a financial report telling them you need information on the local banking and money transfer systems. I did this for Kenya and received a very detailed pdf with exact fees of each service, bank recommendations for trading ect.

tosbourn 12y ago
Oh wow – this is very informative, thank you so much.