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The East African : Apr 27th 2015
The EastAfrican BUSINESS APRIL 25 - MAY 1, 2015 Mobile money account penetration in SubSaharan Africa Adults with an account (percentage) 2014 0-4 5-9 10-19 20-29 30-100 No GSMA MMu services No data available Note: “No GSMA MMU services” Indicates the absence of mobile money account services included in the GSMA MMU database. Source: Global Findex database. IBRD 40563 | April 2015 MOBILE MONEY SERVICES IN THE REGION There are 24 mobile money service providers across the EAC, all of which were launched following the success of Safaricom’s M-Pesa — launched in Kenya in March 2007. Kenya has 25.4 million mobile money subscribers who transact on six main platforms — Safaricom’s MPesa, Airtel Money, yuCash, Orange Money, MobiKash and Tangaza Pesa — backed by a network of more than 127,000 agents, according to the latest data from the Central Bank of Kenya. Uganda has a similar number of mobile money providers, namely: countries have a significant share making the payments digitally — either directly from an account at a financial institution or through a mobile phone,” said the World Bank report. The rare exception is Kenya, where 58 per cent of respondents in a survey said they made the payments digitally, with 37 per cent using a banking institution; 14 per cent using mobile money platforms such as Safaricom’s M-Karo; while a further seven per cent used both a mobile and a financial institution. The World Bank further reckons that payments for the sale of farm products, especially in EAC agriculture-based economies, offer another key p≥ojects be effected,” he said. According to the analyst, Tanzania was aiming for a benchmark rating of at least BB that both Kenya and Ghana achieved, adding that the rating is good especially on factors related to risks involved. The country started the process of floating a Eurobond in 2008 but the plans were postponed due to the global financial crisis. The process was restarted four years later and the government had planned to issue the Eurobond during the 2012/13 financial year. Ghana became the first African country to issue a $750 million 10-year Eurobond in 2007. In East Africa, Rwanda became the first country to raise money through a Eurobond for the amount of $400 million last year followed by Kenya, which recently raised $2 billion. through mobile phones, while in Uganda 13 per cent said they were paid proceeds from the sale of their grains, milk, vegetables and fruits through mobile or bank accounts. Bank of Uganda Governor Em- manuel Tumusiime-Mutebile said mobile banking has already had a major impact on broadening access to basic financial services in East Africa and is now morphing into a payment platform. “We envisage that mobile money will become an integral part of the national payment system. The BoU Act is being amended to include powers for the central bank to regulate and supervise the payment systems,” Mr Mutebile told a parliamentary committee in Kampala last month. Utility payments Kenya is ranked among the top MTN, Airtel, Uganda Telecom, Orange, MobiCash and Eeezy Money — with a total subscriber base of more than 18 million. In Tanzania, there are about 9.8 million mobile cash customers who use four mobile money channels — Vodacom’s M-Pesa, Tigo Pesa, Airtel Money and Zantel’s EzyPesa. Rwanda has three mobile money platforms: MTN, Airtel and Tigo. Burundi has five providers — Leo, Ecocash, Smart Telecom, Tempo Africell and state-owned Onamob Mobicash. economies that make utility payments such as electricity, rent, water and pay-TV through digital platforms — mostly mobile cash. More than half of Kenyan house- holds or 55 per cent reported paying utility bills in the past year using mobile money. In Nigeria, by contrast, 80 per cent of adults paying utility bills reported doing so only in cash, the World Bank report said. The survey also advocates shift- ing domestic remittance payments from cash and over-the-counter transactions into an account as an avenue for increasing account ownership and financial inclusion. The World Bank notes that M-Pe- opportunity for increasing account ownership among the unbanked. “Digital payments for the sale of agricultural products have particularly taken off in Kenya, Tanzania and Uganda,” said the report, attributing the practice to the widespread use of mobile money in the region. In Kenya, 30 per cent of adults reported receiving payments for farm-produce through mobile money accounts — including six per cent who also received payments through a financial institution while only seven per cent received cash solely through a bank. In Tanzania, 23 per cent of farmers said they received payments sa started off by offering domestic remittances, especially for the urban working class sending money to their rural dependants — opening a new frontier in mobile money, which has now grown into a payments and banking service. The global survey has identified affordability, bulky documentation, the need for capital to set up payments infrastructure and lack of consumer education as among the key barriers to accessing financial services. However, the continued growth of mobile money should not be seen as a threat to conventional banking, the World Bank said. “Mobile money accounts are not a threat to traditional banking; they are a complement,” said Dr Klapper, calling for innovation and collaboration between telcos and banks in developing new financial products. 43 Mobile money is not the only game in town COMMENTARY BY MONDATO While mobile money has played an extremely important role in reducing levels of financial exclusion, it remains a niche product.” that measures financial inclusion levels in a number of countries right across the world. This was the first update to the L original 2011 Findex, so the results were eagerly anticipated by those interested in the impact that different models of mobile money are having on access to financial services in developing economies. The headline figures were pretty impressive: By the World Bank’s estimates, between 2011 and 2014 some 700 million adults worldwide gained access to financial services, which represented a 20 per cent drop in the numbers of unbanked people. The downside is recognition of the scale of the problem that remains: There are still over two billion adults who do not have an account and find themselves financially excluded. And while mobile money has played an extremely important role in reducing levels of financial exclusion, it remains a niche product. Significant regional variations can be observed: Globally only two per cent of adults have a mobile money account, but in sub-Saharan Africa this figure rises to 12 per cent. There now exist five countries, all in sub-Saharan Africa, where more of the population has a mobile money account than an account at a financial institution: Somalia, Uganda, Tanzania, Zimbabwe, and Cote d’Ivoire. In a further eight African coun- tries, more than 10 per cent of the population has mobile money accounts (and almost half of this number only had a mobile money account). Nevertheless, to put the numbers in context, even this latter figure — those who possess only a mobile money account — represents fewer than 30 million people, or about 15 per cent of the global total who are no longer financially excluded (though whether they are “relevantly banked” remains to be seen). It is likely that we will hear much A gas plant in Songosongo. The government plans to use the funds for infrastructure projects, particularly in the gas sector. Pic: File about this African quintet of countries where mobile wallets are more prevalent than bank accounts (this is something of a corrective to the 2014 GSMA State of the Industry report, which, using IMF Financial Access Survey data, put that figure at 16 countries). With so much attention being paid to mobile money, it is perhaps understandable that we occasionally overlook the strides towards greater financial inclusion ast week, the World Bank released the second wave of its Global Findex, the results of a global survey being made in other areas, particularly the role of traditional financial institutions. But the absence of mo- bile money’s juggernaut — Kenya — reminds us that while a good soundbite, this statistic actually tells us very little, other than that these countries had very high levels of financial exclu- sion to begin with. It doesn’t tell us much about what has happened in the interim, and we may need to remind ourselves that, for many people, having an account at a formal financial institution and having a mobile money account may amount to the same thing, or at least involve the same financial institution. The examples of Kenya and Tan- zania, two neighbouring countries whose mobile money markets are very different yet both very buoyant serve to illustrate this point. Even three years ago, Kenya had almost double the sub-Saharan Africa average percentage of adults with a bank account: 42 per cent versus 24 per cent. And while that latter number has grown across the region to 29 per cent in 2014, Kenya has similarly powered ahead, and now stands as one of only four countries on the African continent in which more than half the population (55 per cent) has an account at a formal financial institution (the others being Algeria, South Africa and Namibia; Botswana comes very close, with over 49 per cent). Tanzania, by way of contrast, has actually gone backwards relative to the regional average, in terms of numbers of accounts at a formal financial institution: 17.3 per cent of Tanzanians had an account in 2011, and this has crept up slightly in the intervening period to 19 per cent. And while it is impressive that one out of every three Tanzanian adults has a mobile money account, the country still lags behind Kenya, where it is estimated that 58 per cent of those aged 15 and above have a mobile money account. There remains a great deal of da- ta to be parsed and analysed in the coming weeks and months. What this first glance reveals, however, is that even in the financial inclusion and mobile money space, it is easy to fall into the trap of talking about “Africa,” when regional and national differences are so large as to leave the word devoid of any explanatory value. And while “mobile” clearly holds huge potential for the entire continent, its effects are being felt very differently, even in neighbouring countries. Moreover, these numbers also serve as a gentle reminder that mobile money is not the only game in town. Mondato is a boutique management consultancy specialising in strategic, commercial and operational support for the mobile finance and commerce industry.
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