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Banking on mobile innovation
Reception dishes in a telecommunication centre in the Côte d’Ivoire AFP/Getty Images
New technology, combined with the high levels of mobile phone ownership in Africa, are allowing customers to access the financial system for the first time. Wendy Atkins reports
Mobile operators in Africa are revolutionising the way consumers and businesses interact. This is proving a challenge for the regulators, who are having to combine the needs of new players entering the payments space with those of the consumers who have previously been excluded from the financial system.
Mobile payments innovation is thriving throughout the continent, and with good reason. As VJ Dela Selormey, director of the banking supervision department at the Bank of Ghana, points out, while only 4m of Ghana’s 24m population are banked, 50 percent have a mobile phone, making the technology a key channel for deploying basic transaction services. This is reflected across Africa, with the roll call of schemes either operating or in the pipeline growing every quarter. Services from the continent’s big hitters – such as the hugely popular Vodafone-backed M-Pesa system in Kenya and its less successful relative in neighbouring Tanzania, Orange’s mobile money scheme in parts of West Africa, Zain’s Zap offering and MTN’s mobile money programme – are all changing the way people make payments.
Insiders say Kenya’s M-Pesa scheme took off thanks to market conditions favouring dominant mobile operator Safaricom, a Vodafone subsidiary, but Claire Alexandre, who advises on financial services regulation at Vodafone Group Services, believes credit should also go to the regulators. She says they “took to heart the financial inclusion objectives of the scheme” and “accepted things could be done slightly differently without compromising public policy objectives of customer protection and systemic stability”.
“To us the issue was how were people transferring money before the new technology came to the table?” says Stephen Mwaura Nduati, head of the national payments system at the Central Bank of Kenya. “Was it regulated? What risks did they encounter? Was the technology going to increase or decrease the risks? This new technology was going to enhance efficiency and safety, so it was logical to say ‘yes’.”
Orange launched its Orange Money service in the Ivory Coast in December 2008 and according to Mung-Ki Woo, head of the firm’s Payments & Contactless Services, this will go live in Senegal and Mali by the end of 2009.
Fundamo – the technology supplier for the group-wide rollout of MTN’s mobile money offering – says it has deployed the technology in 12 of the 23 countries scheduled for roll out in just over a year. Chris Gabriel, chief executive of Zain Africa, is equally bullish about prospects for its Zap service. He declines to comment on rumours the firm may sell its African operations, saying that it is a matter for shareholders. But he adds: “We’re going full steam ahead with our plans. We’ve had full rollout in Kenya, Tanzania and Uganda, and are on track to have the bulk of our operations fully Zap-operational by the end of the third quarter and everything complete by the end of the fourth quarter of 2009.”
