Mobile Money Africa

Bankers from the Common Market for Eastern and Southern Africa (Comesa) are converging in Nairobi this month to discuss the mobile banking boom.

Banks are under siege by mobile operators who have ’stolen’ the initiative from them in mobile banking and by micro-finance institutions, who are leading the way.

The first decade of the new millennium has probably been the most traumatic ever for the international banking industry. The region’s mobile banking boom has opened up a wide range of new security threats for the industry.

This is why, all these dynamics provide a rich source of content for this year’s Banking & Mobile Money Comesa conference scheduled for February 24 to 25 at the Kenyatta International Conference Centre.

The conference organised under the theme: “Leadership through Innovation,” reflects the leading position the region has assumed in banking innovation particularly in mobile banking and money transfers. “The conference aims to inspire bankers and others in the financial services sector to achieve even greater levels of innovation,” a communique issued by AITEC AFRICA.

Over 80 international and local banking, micr-ofinance, mobile payment and data security experts will be making presentations in plenary and specialist track sessions, sharing their knowledge with colleagues from the region’s financial services sector.

The communication said: “Although Comesa nations escaped the worst of the international financial meltdown, there are important lessons to be learnt in terms of governance, security and credit management and these topics will be covered in the Risk Management track.”

Another major focus of the conference is mobile banking and over the two days of the conference, 13 innovators and practitioners in the region’s mobile money explosion will share their experiences in rolling out their services – as well as their visions for future development.
In Uganda, Standard Chartered Bank through its ‘M-Banking’ and Centenary Bank’s ‘Centeline’ are the institutions, which offer this facility through an innovation, which has worked well in quick transfer of money.

The Bill & Melinda Gates Foundation are expected to hold a breakfast briefing on the second day of the event, focussing on “Success factors in Mobile Banking”. Sean Moroney, Chairman of AITEC Africa, the organisers of the event, said: “We are delighted to have support from organisations like the Gates Foundation in our endeavour to provide a powerful educational platform for the banking sector, to inspire future innovation in banking and delivering improved services for clients and every level.”

In a bid to increase the penetration of banking services in Uganda, United Bank for Africa (UBA) is set to introduce a banking service that can facilitate transactions via mobile phones.

Mr Joseph Arinaitwe, the UBA Uganda head of Electronic Banking, said in an interview, that the bank will introduce a service that will enable any of their customers in possession of mobile phones, to access financial services offered by the bank, where Uganda’s telecommunication networks reach.

Mr Arinaitwe said the service will be unveiled within the next two to three months.

“We have already done the test and it works. We have also been approved by the Bank of Uganda to carry on the service,” he said.

He said the introduction of the electronic service, which is expected to be branded UBA Mobile Money, will make it unnecessary for the bank’s customers to visit the banking halls for service, unless they need hard cash.
The service will make it possible for UBA customers to convert hard cash on their personal or business accounts into electronic cash (e-cash), to be stored on their virtual accounts. They can then pay their utility bills to the respective service providers.

“What we are trying to do is make the whole banking process cashless. But when you need cash, you go to our agents or branch,” he said on Monday.

The bank will work in partnership with agents who will be authorised to give out cash to customers like the MTN Mobile Money and Zain’s Zap operations.

The innovation, which comes after a year of the banks research, will be in line with the rapid increase in mobile phone usage in Uganda. “Mobile phone penetration is growing and we feel that this should be the channel of banking for every person with a mobile phone,” he said.

EVELYN NJOROGE

The Heritage Insurance Company has consolidated its move into the retail segment by widening insurance premium pay options for people who are financially excluded to include the popular money transfer services M-Pesa and Zap.

The Insurance Company on Friday announced the new partnership with the two leading mobile network operators Safaricom and Zain that will see policy holders remit their insurance premiums and claims excess through M-Pesa and Zap services.

“The payment procedure is quick and easy to follow. On both platforms, a customer needs to go to the M-pesa or Zap option on their phones, select “pay bill” and enter business No.503000,” said Heritage Insurance Executive Director Joseph Kyungu.

For the account number, the customer will need to put their “policy/claim” number and then the amount payable.

The maximum amount for each transaction is Sh35,000 he said adding that clients with bigger payments than the set maximum can pay several times in portions of not more that Sh35,000 per transaction.

“We encourage our customers to reconfirm their policy numbers and also the premium payable before making their payments to minimize chances of being inconvenienced,” added Mr Kyungu.’

The new partnership, he said would go a long way in ensuring convenience and timely services to their customers.

“Heritage Insurance boasts a huge client base from different regions of the country and with this solution; our customers can access our services at their convenience. However, Heritage insurance agents, brokers and staff will still be accessible to our customers whenever they need assistance,” the director added.

This partnership comes in the wake of yet another technology driven solution from Heritage Insurance that enables travel agencies to apply for travel insurance online.

Heritage Insurance operates five branches including; Eldoret, Nanyuki, Naivasha, Mombasa and the head office based in Nairobi.

MTN Rwanda has made a soft launch of the Mobile Money service transfer, being the first operator to introduce the service in the country.

Yvonne Manzi Makolo the company’s Senior Marketing Executive said that clients are already using the service and that the commercial launch is set for next week.

Makolo said that the service is available to every MTN subscriber.

“The service will help our subscribers to send money to anyone in Rwanda, withdraw cash at any authorised MTN Mobile Money agent and also buy MTN airtime anytime,” Makolo stated.

To activate for the service, a customer has to visit any MTN Service Centre or authorised MTN Mobile Money agent.

“For the upgraded service, a client has to visit one of our agents for a SIM card that is Mobile Money enabled with a present original and a photocopy of your ID or your passport for the agent to do a full registration process,” Makolo explained.

She also revealed that with the introduction of the service, it will help the operator to increase of its subscriber base.

Micro Finance Institutions (MFI) have said that agency banking will not cripple their industry but will strengthen it if proper regulations are put in place.

Speaking while receiving Sh9.6 million sponsorship for the Africa-Middle East Micro Finance Summit to be held in April from software company Craft Silicon, Lydia Koros of the Association of Micro Credit Institutions in Kenya said the new branchless banking regulation would increase the number of the unbanked population in the rural areas.

“The industry right now is thinking of going into branchless banking, because that is the only way to reach the poorest of the poor in the villages in the country. Many micro finance institutions are now able to get into the heart of the slum area without requiring to have a branch, just through a point of sale device,” she said.

Craft Silicon CEO Kamal Budhabhatti said the micro finance sector would help alleviate poverty.

“In conjunction with the Vision 2030 that the government has, I think it is very important to play this role in poverty alleviation that the micro finance sector does by giving out the loans to the poor people which helps them to grow and at the end of the day helps the growth of the country and achieve Vision 2030.”

Budhabhatti said that Craft Silicon is increasingly sensitive to the needs of the MFI industry and is on the edge of providing appropriate innovative technologies for the country.

The 2006 Nobel Peace Prize winner Professor Muhammad Yunus is expected to be the chief guest during the summit. The summit will offer opportunities to micro credit practitioners to demonstrate through a series of events that microfinance has the capacity to reach the poor and provide a solution to alleviate poverty.

The Finance Act 2009 became operational at the beginning of January, and an amendment was made to the Banking Act to enable use of third party agents by banks.

Banks will therefore be able to leverage on additional cost effective distribution channels to offer financial services.

The National Financial Access Survey of 2009 shows that 32 percent of Kenya’s bankable population remains totally outside the orbit of financial services and many more being served by the informal financial system.

Justus Lyatuu

Warid Telecom will this year unveil its mobile phone money transfer service in Uganda.

Mr George Shine, Warid Telecom’s head of marketing, said work on the service is in its final stages.

“We have evaluated this venture [mobile money services] and we are ready to take it on this year. We have set aside the resources and we have the technical team ready. What is remaining is getting the licences,” Mr Shine told journalists in Kampala on Monday although he could not readily disclose the amount of money injected in the venture.

Warid’s entry will bring to three the number of mobile money service providers in the country after MTN’s Mobile Money and Zain’s Zap money transfer services, which were unveiled last year.

Like any other telecommunication company in East Africa, competition is the greatest asset that is driving the industry and this has led to innovation and creativity.
Warid Telecom currently has a customer base of two million subscribers, according Mr Danish Hussain, the chief technical officer.

It’s entry into the mobile money industry is likely to push competition in the telecom industry a notch higher as it competes for a share of the money transfer market.

In a related development, Warid Telecom has opened up a new customer service centre in a bid to serve its customers more efficiently.

“Our Jinja Road branch serves roughly 650 people per day and we want to reduce the pressure on our workers and our customer’s time of waiting. This new branch is expected to handle up-to 200 customers per day,” Mr Hussain said at the opening of the Clement Hill Road-based branch on Monday.

The project is anticipated to start operation immediately.
Essar Group recently acquired a 51 per cent equity for about $160 million, in Dhabi Group’s Warid Telecom operations in Uganda and Congo.

The combined value of Warid Uganda and Congo is estimated to be $318 million.

Kenya Wednesday made a big leap into the world of electronic commerce with the conclusion of a deal for an online payment portal that allows consumers to buy goods from the internet in local currency using credit and debit cards.

I&M Bank unveiled plans to establish the electronic payment platform in partnership with the global financial services provider Visa card, removing one of the major obstacles to the growth of e-commerce in the country.

The e-payment portal is the first in East Africa and is expected to relieve recipients of online payments of the trouble of engaging offshore electronic gateways to receive money. Besides raising the cost of online transactions, use of offshore gateways to settle payments made locally also means the businesses cannot immediately receive the cash and often incur heavy losses in the event of exchange rate fluctuations.

It also forces local consumers to make special arrangements to pay for goods online – a process that has proved more time consuming than walking to a shop for a simple cash transaction. Millions of Kenyan consumers have instead turned to the use of mobile money in the consumer goods market, opening a robust revenue stream for companies such as Safaricom and Zain.

Jump-starting electronic commerce has been a niggling issue for financial and internet service providers, a challenge that has inspired innovation and the introduction of new products.

Analysts said last year’s enactment of the Kenya Communications Act, which allowed e-commerce, has become the main driver of growth in the sub-sector.

Local financial institutions have been reluctant to establish electronic payment gateways curbing the growth of e-commerce in the country and giving Kenya the distintion of having one of the lowest levels of electronic transactions in the world.

Low uptake of e-commerce in the country is also thought to be a stumbling block to growth in key sectors such as tourism, where the internet is the main platform for transactions.

I&M launched the electronic payment gateway after it acquired an e-commerce licence from Visa International, making it the first bank in Eastern Africa to offer the service.

Apart from removing the many bottlenecks that have prevented Kenyan consumers from buying goods through the internet, availability of a local electronic payment gateway should help e-commerce merchants such as airlines, tour and travel companies, and utility service providers expand their sales globally at significantly reduced transaction costs.

Mr Arun Mathur, the chief executive of I&M Bank, said the gateway opens yet another business opportunity for web site developers to earn additional revenue by helping potential online traders establish online platforms that can use I&M’s system to receive payments.

“Many of these traders have been looking for ways of using technologies to expand their businesses but have been constrained by the scarcity and high cost of online payment gateways,” he said.

I&M did not, however, give details on its charges but promised they would be much lower than those levied by offshore service providers.

Users of the system will have to open a payment and settlement account with I&M Bank or opt for transfer services.

Initially, the service is expected to become an attractive proposition for the four million credit and debit card holders tying its growth to increased use of plastic money in Kenya.

Kenyan merchants have lost billions of shillings worth of business deals in the global market because of their inability to accept online payments. Electronic commerce is expected to get a further boost beginning later this year when the government is expected to launch a five-year plan that aims to place the public sector on an online transactions mode.

The plan is expected to begin with the establishment of an electronic market for public procurement that will see government departments and state firms buy goods and services online.

In the private sector, e-commerce is particularly expected to benefit industries that depend on foreign supplies such as cars and tourism.

“The fact that most used car dealers are based abroad offers providers of e-payment solutions a huge opportunity for growth,” said Dr Bitange Ndemo, the Information permanent secretary. Kenya is a major importer of Japanese used cars, taking in 30,000 units in the first nine months of 2009 according to the Kenya National Bureau of Statistics.

In tourism, the application of the technology has enabled the players to offer new and flexible services that are cost- competitive and convenient to consumers such as on-line booking of airline tickets, hotels and transfer services.

Mr Gerson Musimi, the managing director of Tamarind Group, said that although the company has been using the internet to market its services, it could not offer complete e-commerce solutions because of lack of a local electronic payment system.

Online sales have been one of the few sectors that recorded growth last year as the world sunk into a recession. Travel is the number one selling commodity online that generates more than $110 billion annually in sales said e-tourism Africa chief executive Damian Cook.

The launch of two undersea fibre optic cables in Kenya last year has boosted e-commerce through increased broadband capacity and greater online access at reduced costs.

A recent study by Forrester, eMarketer, and IDC, global e-commerce is set to continue growing steadily in the next five years. The value of e-commerce sales is expected to reach $711 billion by the end of this year, growing at a compounded annual growth rate of 19 per cent.

In Africa, e-commerce has been growing in the past five years though shackled by poor infrastructure and low internet literacy.

Some of the companies that are now offering e-commerce are Mamamikes. Kalahari, Vuma an online Kenyan based business selling music by local Kenyan artists and a number of hospitality providers.

Housing Finance has partnered with one of the leading Mobile Services operators – ZAIN – to provide its Money Transfer service ZAP accessed at the Mortage provider’s branches across the country.

Through the partnership agreement signed Tuesday, customers will now be able to load and withdraw funds from their Zap accounts through the Housing Finance branches countrywide.

Housing Finance becomes the first Financial services institution to come on board as a Zap Agent.

The Service has a network of more than 6,000 agents countrywide.

Housing Finance Managing Director, Mr. Frank Ireri said the agreement is part of the firm’s growth strategy, which is focused on steadily increasing its income from nontraditional business activities.

“Housing Finance will continue to expand its product lines and tap cross-selling opportunities for third party products to grow its non-interest income and boost profitability,” said Mr. Ireri.

In addition to fee income, Zap will also provide cross-selling opportunities, especially mortgage to customers coming though Housing Finance banking hall. The Zap relationship will also set the platform for agency banking.

“The agency banking bill has already been enacted into law and we are awaiting operationalisation.

Zain Kenya, Managing Director, Mr. Rene Meza said the firm is in the process of introducing new services under the partnership.

“We are also planning to fully integrate our systems to enable Housing Finance customers to enjoy full-time mobile banking services through Zap,” said Mr. Meza.

The Zain Kenya MD said Zap provides the most comprehensive and accessible package of mobile banking features which allows customers to use their mobile phone 24 hours a day to manage their bank accounts, pay for goods and services and settle their utility bills.

The service will be available in Housing Finance’s 10 branches situated around Nairobi (four branches), Mombasa, Kisumu, Eldoret, Nyeri, Thika and Nakuru.

Housing Finance recently launched a campaign to grow its retail banking through the launch of a new super saver account, known as CrossOver.

The product is envisioned to have features that will entice individuals to not only save but also start working towards buying a home.

More than Kshs 1 billion has been transferred through Zap since the service was launched in March last year.

The service boasts of 400,000 customers actively using the service.

Mobile Money Banking presents an opportunity for banks to grow their customer base by offering value-added, innovative services.

There is growing evidence that mobile money transfer has not only tapped the unbanked but also the affluent and financially relevant groups of the society.

The Nation.

Kenyans are set to get a fourth choice in mobile money transfer services, with the expected Orange branded product.

Telkom Kenya, the owners of the Orange brand, says it is only waiting for the Central Bank of Kenya’s approval before rolling out the product.
“The necessary documentation to facilitate the approval of the service by the (CBK) Governor has also been submitted and we are waiting for clearance,” Telkom Kenya chief executive officer, Mr Mickael Ghossein, told the Nation.
Orange, the country’s third mobile operator, is the only one that has not been offering the service among the four mobile telephone companies currently in operation.
Essar Kenya Ltd, which is the proprietor of the yu brand, launched its yuCash last month, joining a field long dominated by Safaricom’s M-Pesa and Zain Kenya’s Zap.
Mr Ghossein said launching the service, which is ready, is their key priority and is earmarked for unveiling in June.
The announcement comes a few days after CBK alluded to the applications in its recently released annual report for the Fiscal Year 2008/09.
“Numerous other service providers have approached the bank seeking permission to roll out mobile money transfer services and it is evaluating such applications on a case by case basis,” the industry regulator said.

Morris A ron

Central Bank of Kenya (CBK) has stepped up efforts to increase the number of people having access to banking services.

The financial market regulator launched a workshop to popularise agency banking concept at the beginning of the year.

The new model allows banks to open branches through third parties such as microfinance institutions (MFIs) and savings and credit co-operative societies (Saccos).

Speaking at the opening of the workshop, CBK Governor Professor Njuguna Ndungu said the new concept is expected to reduce the cost of offering banking services as financial institutions cut down expenses associated with having a physical branch.

“Finance Act, 2009 that became operational at the beginning of this month has amended the Banking Act to enable the use of third party agents by banks,” said professor Ndungu.

“Banks will be able to leverage on additional cost effective distribution channels to offer financial services.”

Physical office

Prior to the new regulations, banks were required to have a physical office in any area they intended to operate in — a fact that involved building or renting an office and hiring staff among other financial commitments — pushing up the cost of doing business.

Costs incurred by banks carrying out branch expansions are eventually passed down to the end consumer in the form of charges and fees for financial services.

The new branchless banking regulation is expected to increase the number of Kenyan population that is banked — who have normally accessed financial services through Saccos and MFIs without necessarily having a bank account.