Mobile Money Africa

Joseph Arinaitwe
Head eBanking
UBA Bank – Uganda

How do You describe Mobile Money in Uganda and the uptake?
In Uganda Mobile is about one half years old with MTN leading the pack followed by Zain (ZAP ,this has since been acquired Bharti Airtel) and M-sente (Uganda Telecom).We are expecting Warid Telecom to shake up the Mobile Money market with the coming of age of the long awaited partnership with Obopay.Currently MTN has about I million MM customers moving about $22 million worth of MM volumes per month.

Share with Africans the role of UBA Bank in the emerging mobilemoney landscape in Uganda?
Our role really has been to embrace and promote the birth of Mobile Money in this market be it through a bank led Mobile money product(U-Pasha) or through supporting a Telco led model. Either way we have led the space and its now clear the much craved for convergence between Banks and Telco to offer premium financial service is now a reality in Uganda. The same will happen in territories where UBA is present all over Africa. The days of expensive brick and mortar branches will soon be a model of the past.

What was the strong compelling reason why a leading Bank like UBA will take interest in mobile financial services?

Given that we started our operations Green field, MM presents us an opportunity to migrate those MM customers into full/proper banked customers, there by creating a large customer base over relatively short period time.Pls note that whereas bank accounts in Uganda have stagnated at about 3million (even with banks growing to 22) the number of Mobile phone users has rocketed to almost 10 million in the last 10 years. Mobile Money presents the bridge to tap into this lucrative market.

UBA Uganda as the first commercial Bank to explore such partnership,what influenced the decision?
Same as above, but secondly to stamp our authority as leader in the Mobile Money space and lock UBA in the mind of the Mobile Money consumer when it comes to matters Mobile Money. Thirdly we also realized that apart from growing our customer base,MM provides an additional income stream from cash in and cash out services.

The spread and benefit of the UBA Bank agent network in Uganda. Benefits are basically threefold:-

o As a bank we constantly have Money and therefore we can guarantee service as we will always have sufficient transactional float, the lifeline of the MM service.
o We have plans of extending Cash out services to be done on all our ATMs there by turning all our ATMs into agents that will be able to provide service 24/7 to any MM customer (all they need is the right pin!).
o As a bank, customer service comes naturally and therefore you can’t get a better partner for service than a Bank.
o When it comes to Managing Antimoney laundering risks and KYC issues Banks do it better.

Since the agreement signing,Have You opened the doors to mobile money Customers in Uganda already? Yes our doors opened on the Ist July and we so far moved close to $100,000 worth of volumes. With Increased awareness we are confident the numbers will only grow.

In Years to come,Should we expect a borderless Agent network in the East Africa Region or across Countries where UBA Group operates?Yes, plans are underway to have a Mobile Money platform for UBA to be deployed in all countries in Africa where UBA is present. The network should will also carter for Africans in the Diaspora wishing to send money back home to their loved ones.

How would You describe the MTN / UBA agreement and what it means for
the unbanked in Uganda?
This partnership has changed the landscape of Banking in Uganda, it answers the call of millions of Ugandans who hitherto could not afford or simply shunned the rigorous process of opening and maintaining a formal account. For us at UBA this partnership is going to boost micro savings as people will now be able to keep e-money on their phones and by so doing will financially liberate the masses. MM is the next black oil of Africa…watch this space.

Visa Inc. has announced its intention to invest £6.6 million in London-based mobile banking and payments service provider Monitise plc to increase its stake to 14.4%. Earlier the company has announced that the existing agreement with Monitise was prolonged to 2015.

Last June Visa invested $13 million in the company by signing a 5-year strategic agreement called “Global Alliance Agreement”. Under the agreement Monitise was to develop technology to provide SMS alerts and secure payments to 2 billion clients of Visa worldwide.

During the last 2 years Visa has partnered with a number of financial institutions, mobile network operators and technology providers in order to smoothen and commercialize the mobile banking services for an enhanced consumer-base across the globe. The company believes that such partnerships will help to popularize the company service and to provide access to online payment services to more people worldwide.

mpesa

The US will leverage her technology by importing innovations from Africa as part of the Obama Administration’s bid to strengthen relations with the continent.
Citing the M-Pesa evolution, US Under Secretary of State for Public Diplomacy and Public Affairs Judith McHale said her country’s economy could benefit by importing the revolutionary mobile money transfer system from Kenya.
“We do not have such a system in America and we could import it to make it part of our national payment system,” said Ms McHale.
M-Pesa is run by Kenya’s largest mobile phone service provider, Safaricom, as a platform to send and receive money by its subscribers using their handsets. The technology is a first in the world.
Ms McHale spoke on Friday after paying a courtesy call to the Nairobi Stock Exchange. She is on an official visit to the country.
In return, America will support local universities and colleges by initiating an exchange programme between her institutions and those in Kenya. And instead of going the traditional way of exchange programmes of moving people, the proposed exchange will also leverage on technology.
“We appreciate that it is a limit in the number of people we can move to America from Kenya and America to Kenya. We thus want to use technology to link universities and colleges so that they can share knowledge,” she added.
On increased trade, she said, the Obama Administration is keen to see African countries focusing on serving home markets and thus supporting governments to address challenges of lack of links within the continent.
“We know there are impediments to more intra-continent trade in terms of communication and infrastructure. We want to encourage African governments to address these impediments,” said Ms McHale.
Appointed in President Obama’s Cabinet in May last year, Ms McHale’s duties are aimed at helping the American administration strengthen its relations with the rest of the world.
She is the former president and chief executive of Discovery Communication, which runs the Discovery Channel popular for airing documentaries on science, technology, adventure and nature news in over 170 countries.

Mr I. Ofori Quaye, Ho Branch Manager, Barclays Bank, has called on financial institutions to get Ghanaians accustomed to “cashless money transactions”.

He conceded though that various modules of electronic banking and other arrangements were going on, the volumes were not at par with the size of the Ghanaian economy.

Mr Quaye was speaking at a durbar in Ho to formally welcome the “MTN Mobile Money Train” to the Volta Region.

The MTN adopted the “MTN Money Transfer Train” marketing gimmick to hype the then novelty money transfer scheme using the cell which was launched in July last year.
The MTN, the largest mobile telephone communication market share holder in Ghana, is in the transfer scheme with the collaboration of nine banks.

Mr Wilson Aganya, Zenith Bank Ho, Branch Manager, said the MTN Money transfer scheme was fluid and would “add value to those who patronize it”.

Nii Adotey Mingle, Mobile Money Senior Manager, said privacy was assured in the transactions. He said the scheme’s competitive strength was that the service provider had posts spread throughout the country, which were accessible at the convenience of the customer.

Colonel Cyril Necku (rtd), Deputy Volta Regional Minister, said the scheme’s accessibility to rural people was commendable.

Abdul Majeed Rufai, MTN Mobile Money Transfer Implementation Controller said registration under the scheme covers the customer under the National Communication Authority’s Sim Card Registration policy.

Tables were pitched at the durbar grounds to register sim cards and educate customers on the MTN Money Transfer.

mpesa

vigilantkenyan

Have you heard of this incidents?? – better be safe than sorry!
This incident happened to a colleague recently.A bad experience indeed.
He received a call from someone claiming to be calling from
Safaricom.The caller was very composed.
The caller told him ‘thank you for being our loyal and valuable MPESA
customer.You recall we had initially given you a black Sim card but
changed to green”.He answered in the affirmative. The caller then went
ahead to tell him that Safaricom was running a reward promotion
scheme for their loyal MPESA customers and went ahead to ask him to
confirm his National ID number and year of birth.Unsuspecting, he
disclosed that information. Coincidentally his birth year was also his
Mpesa PIN No.
The guy posed for a while and asked him whether 19- – (say 1967) was
his year of birth .He again answered in the affirmative.

The caller then told him he would be sent Nokia 8230, but before then
he needed to dial *33*0000# ,which he did.He was then told not to
call or transact anything using his line for the next ten minutes as
they perfrom transactions, purportedly at Safaricom,facilitating the
process of receiving the Nokia 8230 set.He complied.He is asked about
his current location,which information he gives.

After 10 minutes he tried to call back the number to confirm status of
the alleged gift only for the following message to appear :”Barring
all outgoing calls activated for SMS services activated for all data
circuit async”.

After 15 minutes the wife calls him on his alternate line claiming
that some one had called her using his (husband”s ) safaricom line
telling her to send them Ksh.10,000 for his release from arrest.She is
baffled and hence decides to use alternate line,only to discover he is
safe and sound.

In the meantime the wife calls safaricom to block the line,but it was
too late,as all the money in his MPESA had been withdrawn.

What is apparent is that this line was blocked by the code he typed
,viz *33*0000#.

The question uppermost in mind is how it could be unblocked without
some form of connivance by Safaricom staff.He had a substantial amount
in his Mpesa account.Could these thugs be getting targeting lines-with
good balances through connivance with Safaricom staff.

It is unlikely Safaricom will admit culpability, but tujichunge
wenyewe.

Keep safe.

The caller identified himself as Alex Omondi(Of course fake name) and
called using 0720 464 777

It is safer to tell this caller to call back in a while whilst you
check with Safaricom customer care by dialing 100 from your Safaricom
line or 020 4272100 from land line or any other line. Do not carry out
any instructions on phone without firm confirmation that you are doing
the right thing.

Saul Butera

As the country strives to increase the number of bank users, Rwandatel is now set to unveil its ‘Mobile Money’ service, partnering with the Bank of Kigali (BK) as the receiving bank.

The ‘mobile money’ service enables one to make a financial transaction using a mobile phone or any mobile device with SIM card technology.

During an exclusive interview with the Business Times, Rwandatel’s Chief Commercial Officer (CCO), Francis Egbuson revealed that Rwandatel is finalising paper documents with the regulator, the National Bank of Rwanda (NBR).

“We are planning to launch the service in the fourth quarter (Q4) of the year and we are very confident the service will be a success as we are taking lessons from our sister company, Uganda Telecom (UTL),” Egbuson said.

The operator will invest Rwf900 million in developing the service and the officials say that the service will be much easier to use and they believe it will attract a wide range of clients.

Libya African Investments Portfolio (LAP), the investment arm of the Libyan Government which owns 80 percent of Rwandatel is set to invest $94 million (Rwf53.6 billion) this year.

Egbuson said the money will be invested in upgrading the network, GSM sites, Fibre optic and in the Worldwide Interoperability for Microwave Access (Wimax) technology which the operator said is in the piloting phase and will be unveiled in the next 30 days.

Wimax is a telecommunications protocol that provides fixed and fully mobile Internet access. The current WiMAX revision provides up to 40 Mbit/s with the IEEE 802.16m update expected offer up to 1 Gbit/s fixed speeds.

However, Egbuson said that the issue is not to unveil the technology but its to provide and deliver what is made of the technology.

Rwandatel’s service comes at a time when the country’s leading operator by market share, MTN Rwanda, launched the service recently.

By Ilya Khrennikov and Eric Ombok

Equity Bank of Kenya, Kenya’s largest provider of small loans, plans to more than double the number of accountholders this year after forming a partnership with Safaricom Ltd., East Africa’s biggest mobile-network operator.

“This is providing an opportunity to open at least 5 million new accounts by the end of the year,” Chief Executive Officer James Mwangi said in an interview in Moscow today.

Safaricom and Equity Bank announced on May 18 an initiative where Kenyans will be able to open bank accounts through Safaricom’s mobile money-transfer service known as MPESA.

Branded Mkesho, the new service will allow Equity Bank, which has 4.5 million customers, to transform Safaricom’s more than 18,000 MPESA sales agents into mobile-banking agents. MPESA has almost 10 million customers, Pauline Vaughn, who runs the service, said June 23.

Equity Bank also plans to start a mortgage-lending unit and will allocate $200 million to the project, Mwangi said.

The bank owns 25 percent of Housing Finance Co., Kenya’s only publicly traded mortgage company. Housing Finance has doubled lending to 16 billion shillings ($195.8 million) since it began its partnership with Equity in July 2007. Equity Bank will continue issuing mortgages through Housing Finance even after it begins providing such loans directly, Mwangi said.

“We now would be able to do both,” Mwangi said.

Competition in the mobile money transfer business is heating up with the entry of a new money transfer system which allows transactions across Safaricom, Yu, Orange and Zain.

MobilePay, the information technology company behind the Tangaza brand, joins Safaricom’s M-Pesa, Zain’s Zap and Essar Telecom’s yu cash, as the mobile phone becomes the main force in bridging the banking divide.

The firm is carrying out a nationwide agent recruitment drive for entrepreneurs to help it expand go countryside.

“We are launching the system countrywide and those who will join will be able to take deposits and also carry out withdrawal transactions through a trust account in Kenya Commercial Bank,” Mr Quentin Savage, a manager at Tangaza, said.

Recently Diaspora Investment Management Ltd secured a stake in Community Development Systems Ltd, the holding company that owns Tangaza.

According to Mr Savage, the diaspora has endured high costs of remittances from existing international money transfer companies and banks, and the system, while enabling Kenyans to perform local transactions, will assist those abroad to send money back home.

In future, Tangaza will allow dealers to convert into agent bankers once all statutory obligations are met for individual banks and after the Central Bank of Kenya allows them to carry out cash deposits and withdrawals.

Mr Stephen Mwaura, the head of payments at the Central Bank of Kenya on Tuesday confirmed that Tangaza has been licensed to perform money transfer business.

“We want to enhance efficiency. We are doing this through increasing competition with the entry of more players,” said Mr Mwaura.

According to World Bank report 2009, Kenyans abroad sent home over Sh52 billion ($650 million), that places it only second to Nigeria on the continent.

However, this huge volume of remittances has been transacted painfully under huge costs in transfer fees.

Banks and corporations have been partnering with mobile phone firms to extent financial services to the unbanked and also ease payment of bills.

The recent move by Central Bank to release the guidelines on agent banking – officially paving way for commercial banks and financial institutions to hire non banking institution as their agents – is expected to drive growth of money transfer business.

Saul Butera

Banque Populaire Du Rwanda (bpr), the Largest Bank By Branch Network in the Country, is Set to Roll out Mobile Banking by the end of August.

The new product will enable the bank’s clients to access banking and financial services using a mobile phone.

BPR’s CEO, Ben Kalkman, said that the ongoing pilot phase is showing positive results.

“The service will enable BPR’s clients to transfer, send and receive money from different places around the country in partnership with MTN Rwanda,” Kalkman said.

Mobile Banking has been successful in many parts of the world where there is minimal infrastructure development such as remote and rural areas.

The service is also very popular in countries where not many people use bank accounts. Banks expect the move to attract more clients.

Kalkman added that the Bank is in the process of linking up all their 188 branches to one network by 2011. BPR has attributed limited access to internet and electricity as the reason why their branches are not interconnected electronically.

“We cannot connect more branches than what Rwandatel and MTN (Internet service Providers) can deliver and the alternatives like satellite links are too expensive,” Kalkman said.

He added that four more branches have, this year, been linked to the same network, bringing the total number to 28.

BPR is yet to release its 2009 financial statement and according to Kalkman, the fact that data processing is done manually means that, a lot of time is required.

Netherlands based RABOBANK holds 35 percent of equity in BPR while the former cooperative members own 65 percent.

Mpesa

Safaricom Ltd., Kenya’s biggest mobile-phone operator, said full-year profit jumped 44 percent as revenue from data services including MPESA, its mobile money- transfer service, increased.

Net income climbed to 15.15 billion shillings ($190 million) in the 12 months through March from 10.5 billion shillings a year earlier, the Nairobi-based company said in a statement on its website today. Sales jumped 19 percent to 83.96 billion shillings.

Data revenue increased 72.8 percent to account for 18.7 of overall revenue compared to 12.9 a year earlier. The number of MPESA users rose to 9.48 million from 6.48 million, with person- to-person transactions during the year to March 2010 being 28.59 billion shillings, the statement said.

Safaricom was expected to report net income of 13.8 billion shillings for the year through March, according to a median estimate of seven analysts surveyed by Bloomberg.

Safaricom, 40 percent-owned by Vodafone Plc, began trading its stock in June 2008 to become the largest company by value on the Nairobi Stock Exchange. It competes with Telkom Kenya Ltd., a joint venture between France Telecom SA and the Kenyan government, Kuwait-based Zain and Essar Telecom Kenya Ltd.

“New products like M-Kesho bode well for them,” Ewart Salins, regional chief executive officer of African Alliance Securities Ltd., said in an interview.

M-Kesho

Introduced May 18, M-Kesho, which means “mobile tomorrow” in Swahili, is a mobile phone-based bank-account service that will enable Equity Bank Ltd., Kenya’s biggest lender by bank accounts, to use Safaricom’s more than 17,500 MPESA agents as mobile-banking agents.

Kenya decided not to implement revised rules on competition in the nation’s telecommunications industry, Communications Minister Bitange Ndemo said today. This is “really good news for Safaricom,” Salins said. The regulations stipulated that customer promotions and price increases or reductions could only be introduced with the Communications Commission’s approval.

Safaricom’s operating profit margin increased to 26.9 percent from 22.9 percent.

“You are looking at a company with successful strategy and innovation,” Judd Murigi, head of research at Nairobi-based CFC Stanbic Financial Services Ltd. said in an interview in Nairobi today. “There is better management of margins. The company has weathered the tough competition.”

Customers

Safaricom’s customer numbers increased 18 percent to 15.79 million in the year. Market share declined to 78.3 percent from 79.1 percent a year earlier, the company said.

Capital expenditure in the year to March 31 was 17.43 billion shillings and will be increased to 23 billion shillings in the next financial year, Chris Tiffin, the chief finance officer, said today.

Safaricom, which received regulatory approval to sell bonds worth 12 billion shillings last October, will sell a second tranche this year, Tiffin said. In October, the company sold bonds worth 5 billion shillings.

“We will more than likely be targeting quarter three of this calendar year,” he said.

Safaricom shares gained as much as 5.6 percent before trading 0.9 percent lower at 5.35 shillings by 11:22 a.m.