Mobile Money Africa

MTN Rwanda plans to launch a mobile money transfer product. The South Africa-based telecom giant MTN will work together with the National Bank of Rwanda to ensure the service is both secure and convenient.

MTN predicts that the service will be successful with the Rwanda’s overwhelmingly under-banked majority. Currently, only 13.3% of Rwanda’s population of 9 million uses banking facilities. Often, bank transactions and money transfers include high charges in the already impoverished Rwanda.

The National Bank of Rwanda hopes that the transfer service will help boost Rwandan banking sector. Trough their cell phones, the service will enable MTN users transfer money among each other’s accounts, both locally and internationally, as well as buy airtime and pay their bills. MTN will also allow their subscribers to send money to non-members through a network of agents.

MTN has already begun a test run of the service and looks to release it by the end of 2009. MTN Rwanda is currently the largest mobile phone provider in Rwanda, with over 1.5 million users. It hopes to expand its customer base to 2 million by the end of 2009. The MTN Group money transfer system has already seen success in East Africa in Uganda and has also been piloted in Cameroon, Ghana, Cote d’Ivoire and Nigeria.

DAR ES SALAAM, Oct 29- Vodacom Tanzania, part of South Africa’s Vodacom Group, said on Thursday its M-Pesa money transfer service had attracted more than a million customers since its launch in April last year.
The company did not say in its statement how much money it had handled to date, but told Reuters it was transferring 17 billion shillings ($12.8 million) a month.

Vodacom Tanzania said it had about 2,000 M-Pesa agents working across the east African country. The money transfer service can also be used to pay utility bills and school fees.

Two other mobile firms operating in Tanzania — Zantel, majority owned by Dubai-based Emirates Telecommunications Corp (Etisalat), and Zain, part of Kuwait’s Zain — offer similar money transfer services on their networks.

Vodacom Tanzania has over 5.9 million subscribers, up from just over 5.4 million customers at the end of last year. It is 65 percent-owned by South Africa’s Vodacom and the rest is held by private Tanzanian investors.
The country of some 40 million people had 13 million mobile phone subscribers at the end of 2008.

Most Tanzanians, like many of their neighbours in Kenya’s rural areas, have little access to regular bank accounts, and M-Pesa services are seen as an easy way to send cash, especially from people in urban areas to those in the countryside.

An international forum on remittances to Africa has endorsed a series of recommendations to reduce transfer costs and exploit the potential of remittances as a development tool in the continent.

The Global Forum on Remittances, co-hosted by the International Fund for Agricultural Development (IFAD) and the African Development Bank (AfDB), which ended recently in Tunis, brought together more than 200 participants involved in the sending home of money by workers living abroad.

Financial institutions, development agencies, private banks, money transfer companies, telecoms operators, migrant diaspora groups and NGOs gathered in Tunis on 22-23 October.

At the closing session, the Forum participants called for, amongst others, the increased competition in a market dominated by two major money transfer groups, the empowerment of market actors, effective and efficient regulation, the adoption of new technologies and the expansion of access to financial services, especially in rural areas.

The forum also urged that more market actors, especially microfinance institutions, post offices and credit unions, be enabled to act as pay-out locations. This, according to the participants, would not only increase outreach to rural areas where people travel long distances to cash their money but would also make it possible to cross-sell other services and provide financial education.

At the G8 summit in L’Aquila in July, world leaders recognised the importance of remittances for development and pledged to reduce the cost of remittance by 50 percent in the next five years, by promoting a competitive environment and removing barriers. The G8 Working Group on Remittances is meeting in Rome next month.

Some 30 million Africans live abroad and remittance flows to and within the continent approached $40 billion, according to an IFAD report – Sending Money Home to Africa – which was presented at the event.

The report found that in four out of five African countries, governments restrict the type of financial institutions able to offer remittance services.

The number of payout locations across the entire African continent is the same as Mexico, which has only a tenth of Africa’s population, the report found.

The forum also urged that exclusivity agreements that hamper competition be discontinued, that standards and interoperability be encouraged, that remittances should not be subject to taxation and that ways be found to link rural areas in Africa with mobile phone and other non-cash technologies.

Shereen El Gazzar

Orascom’s Algerian unit is in talks with Algerian Central Bank.

Orascom Telecom Algeria, or Djezzy, a mobile operation owned by Orascom Telecom said that it is negotiating with the Algerian Central Bank to introduce mobile banking services, Egyptian daily Al Mal reports Wednesday, quoting Tamer Al Mahdi, Chief Executive Officer of Djezzy.

Al Mahdi also said that Orascom Telecom is considering an initial public offering, or IPO, for Djezzy in the Algerian Stock Exchange, the paper reports.

He also told the paper that Djezzy is considering applying for a voice over internet protocol, or VoIP, license in Algeria, since there is a possibility that the Algerian government will offer these licenses in the near future.

Claire Wanja

Kenya will host a three- day international symposium to discuss how the global financial crisis has affected microfinance institutions across continents starting Thursday this week.

The Meeting, which is organized by the MicroFinance Network (MFN) and hosted by Equity Bank, will bring together leading microfinance institutions from over 20 countries, who are members of the Network to share ideas, experiences, and innovative solutions to the challenges faced by the institutions in search of continuous growth and progress.

It is the first time a meeting by the MFN members will be taking place in Kenya.

The meeting, whose theme is “keeping Leadership in the Changing Environment”, will be officially opened by Finance Minister Uhuru Kenyatta at the Hilton Hotel, at 9.00 am.

“This conference comes at a time when microfinance institutions have taken a central role in poverty reduction, aimed at improving the living conditions of the majority rural poor, especially in emerging markets in Africa and Asia,” said Dr James Mwangi, the Equity Bank CEO and Managing Director.

Dr Mwangi said Microfinance was one of the most popular ways currently being used to fight global inequality and poverty, and members will be looking at models which are most effective in poverty alleviation.

The Microfinance Network is a global association of institutions committed to improving the quality of life of the poor through the provision of credit, savings instruments and other financial services.

The members of the Network believe in the establishment of sustainable and profitable institutions that operate on commercial principles and serve large volumes of clients who are not currently served by traditional financial institutions. .

Network members will also discuss the lessons learnt by microfinance institutions from the crisis, and also share strategies and forecasts for the coming year (2010)

During the conference, an update on the impact of the global financial crisis globally and by region will be discussed.

Obopay, a mobile payment company funded by Nokia, is announcing today that it is moving into online games so that you can buy items in social network games using your mobile phone.

Obopay is one of a number of startups that make it easy to pay for services with a mobile phone. Users can mobilize their credit or debit cards by linking them to a mobile phone number. They can then pay for services by giving their phone number and typing in a PIN code for security. Online merchants like it because it eliminates friction in payments.

So far, Obopay has focused on payments between people who have cell phones. It is also powering the new Nokia Money service which you can use to buy cell phone minutes, pay bills, or buy goods and services. Now, with today’s announcement, the company is adding payment for games on social networks such as Facebook. Obopay says there are lots of synergies between powering Nokia Money and handling mobile payments for games.

Although it is late to the games market, Obopay has a lot going for it. The company was founded in 2005. Its partners include Nokia, AT&T, Verizon Wireless and MasterCard. Today’s announcement extends Obopay payment system to let people use their phone numbers to make purchases inside games using a credit or debit card attached to the mobile number. The user enters the mobile phone number and their PIN number, without having to leave the game itself. On Facebook, for instance, the user doesn’t have to be redirected to another web site to make the payment. Normally, lots of transactions are abandoned if a user has to leave a web site.

With easier ways to pay, users will stay inside games longer, and that means better monetization for merchants. Obopay says that it has an advantage over rivals because the merchants also don’t have to give up a large percentage of their revenue to carriers who fulfill mobile payments via cell phone bills. The new Obopay system is already in use at game companies, which are yet to be announced.

Obopay has about 200 employees. Rivals include PayPal Mobile, Zong, Boku, MPesa, and others. Besides Nokia, investors include AllianceBernstein, Essar Telecom USA Limited, ONSET Ventures, Qualcomm, Redpoint Ventures, Richmond Management, and Wolfensohn & Co. In March, Nokia said it put $70 million into Obopay.

MobileMoneyAfrica is launching the ‘Pick of the Week‘ in the Month of November 2009 and the aim of this special focus is to review and promote Mobile Money Technologies,applications,Providers,Advisory services,Financial Institutions and Subject Matter experts in the evolving Mobile Money Ecosystem.

The ‘Pick of the Week’ selection will get a review by experts, Interviews,special feature in the Digital and Print Edition and the ‘pick of the week’ Logo which can be used for the next six months.

For Participation:Send Company name, contact details, website and area of focus to emmanuel@mobilemoneyafrica.com.

Credit SMS

Ben Lyon

Cell phones are bringing vital information and services to the developing world at an almost unthinkable pace. From CellBazaar in Bangladesh to Trade at Hand in Liberia, mobile network operators and third parties are producing myriad innovations to meet the demands at the base of the economic pyramid (BOP). Among the most successful innovations is the mobile payment, a system that enables users to deposit money into a ‘mobile wallet’ and distribute it via text message. Leveraging mobile payment systems to offer BOP users a full range of financial services is the next logical step, and FrontlineSMS:Credit was founded for precisely that reason.

If a rural farmer in, say, Uganda wants to borrow money to rent a market stall for her produce, she has relatively few options. Most likely, she will have to travel to the nearest microfinance institution (MFI), apply for a microcredit loan and accept a painfully high interest rate (usually around 28%). In addition to paying off her loan installments every week, she will either have to sit through lengthy group meetings or spend a great deal of time and money to trek to the issuing MFI. Either way, her opportunity costs are significant.

Enter mobile finance.

With mobile payment systems like MTN Mobile Money and Zain Zap now available in Uganda, the farmer in our example should theoretically be able to forgo her regular journey by submitting repayments via her mobile phone. Her time and resources – not to mention those of her loan officer – could then be devoted to more productive activities. In turn, both she and the MFI could simultaneously reduce operational costs and increase revenue. That’s the theory at least.

In practice, MFIs lack the necessary software to seamlessly integrate mobile payments into their management information systems (MIS), so they tend to overlook the channel entirely. Sending and documenting mobile payments to as few as five hundred clients, for instance, could take a loan officer all day. Consequently, manually managing thousands of clients from a single handset is out of the question.

By meshing the functionality of FrontlineSMS, a free & open source software that turns a computer into a mass text message communication hub, with the ability to process mobile payments, FrontlineSMS:Credit aims to mitigate this deficiency. Once released, FrontlineSMS:Credit will serve as a bridge between any mobile payment system and any MIS, which will allow MFIs to distribute mobile payments en masse, automatically generate client histories and maintain robust auditing trails.

As MFIs become more comfortable managing holistic financial products like savings, insurance and pensions, FrontlineSMS:Credit will allow them to offer these services via the available mobile payment channel. Microcredit clients will therefore have access to a full range of financial services wherever they have cell phone reception. If properly managed, such a development could mark the beginning of a new chapter in financial inclusion.

The short history of development is fraught with false promises and failed benchmarks, and neither mobile payments nor microfinance should be exalted as the next ’silver bullet.’ Nevertheless, the rapid emergence of mobile payment systems across the developing world presents a tremendous and exciting opportunity for billions of people.

To learn more about FrontlineSMS:Credit, visit http://credit.frontlinesms.com or follow @creditsms on Twitter.

Give us a brief description of your business – what do you do?

MobiCash was born out of the need to develop a convenient, secure and affordable payment platform that will address the use of our technology to enable people who are not served by financial institutions to start using financial services without having to access them through traditional bank branches. By combining our vast knowledge in various IT domains and the experience of our management team in learning and excelling at new technologies, we were able to devise a realistic business model and plan that utilise the convergence of banking and telecommunications technologies. With MobiCash, every phone becomes like a bank account that is identified by its phone number. Users can easily load, transfer, spend, give or retrieve cash from their phone.

Give an example of how the transaction of your business model works?

MobiCash leverages the ubiquity and power of the standard mobile phone as a payment platform, delivering more customer convenience. MobiCash is able to offer anyone with a cell phone a convenient, simple and easy to use mobile payment and banking at low transaction fees regardless of the device and the mobile network operator he is on. MobiCash turns any cell phone into a Merchant Point of Sale (PoS), giving the merchant the ability to do both Merchant-to-Customer and Customer-to Merchant transactions, opening up business opportunities for a multitude of small businesses and operators. The merchant can sell goods and services as well as take deposits and provide cash back services.

What makes your business concept unique and universal?

The patented technology developed by our partner TagAttitude is the cornerstone of our product development and marketing strategy using any cell phone, over any network! Overview of the technology include: NSDT™ (Near Sound Data Transfer) and Voice Biometrics that works immediately on every phone. Transactions are securely signed with NSDT™ a technology that sends “cryptosounds” through the phone’s audio channel to enable contact-less mobile payment. To add another layer of security our Voice Biometric solution is accomplished by comparing the voiceprint that was created at enrolment to a sample given when the user wants to sign a transaction. Authentication is very fast; it can be completed in 0.5 seconds.
The majority of existing mobile payment solutions rely on technologies such as SMS, USSD, NFC, or STK that suffer from weak security, mobile network operator dependence, requirements for specific handset technology, or inappropriate design for retail transactions. SMS and USSD payment processes are time consuming and ill suited to the retail context and illiterate clients! These weaknesses have hindered the effective deployment of many mobile payment services. This retail context problem is compounded by the fact that SMS and USSD technologies can not be used on a POS and do not offer the possibility of printing a receipt.
The universality of our solution comes from the fact that the functions offered by NSDT™ are identical to NFC and is available on every phone model without any modifications. NFC (near Field Communications) is an emerging standard and there are plans to deploy it in western countries over the coming years. This deployment is expensive as it requires a change in existing phones and the installment of specific Point of Sale (POS) terminals. When NFC is used with mobile phones it is under the control of the MNO s, which detracts from the universality of this technology.

Clearly define and describe your target market?

To fill a niche of providing the first real opportunity for many unbanked people to get on to a formal “banking ladder” with benefits including basic bank accounts, savings and micro-credits This is very promising for emerging countries as it brings them bank services leveraging the existing cell phone infrastructure already in place. MobiCash has a simple solution to bank the unbanked and offer them secure mobile transaction capabilities.
The latest full set of mobile subscriber figures for all of South Africa’s mobile operators relates to the end of March 2009. In the three months ending March 31 2009, the total mobile customer base increased by 3.8% to surpass 51.9mn.

The market can be split into four distinct sectors: -
Urban Elite 3.5 million 8% Banked / Insured
Urban Middle Class 9.2 million 21% Banked/ Underinsured
Emerging Consumers 17.2 million 39% Unbanked / Uninsured
Rural Survivalists 11.4 million 26% Unbanked / Uninsured

The ‘Emerging Consumers’ and Rural Survivalists are MobiCash’ target market.
They are: -
• 82% black;
• Live in rural or peri-urban areas;
• 60% of households own a cellular telephone (GHS 2005)
• Cellphones in use: 39.66 million (2006). A little over 70% of cell phone users do not have a land line at home (AMPS2005RA and AMPS2003A)

The country’s three cellular network operators – Vodacom, MTN and Cell C – provide telephony to over 50-million subscribers or nearly 100% of the population. 85% of these are pre-paid.

Explain the ‘Network Effect’ of your business model

Network effects become significant after a certain subscription percentage has been achieved, called critical mass. At the critical mass point, the value obtained from the good or service is greater than or equal to the price paid for the good or service. As the value of the good is determined by the user base, this implies that after a certain number of people have subscribed to the service or purchased the good, additional people will subscribe to the service or purchase the good due to the positive ‘utility:price’ ratio.
A key business concern must then be how to attract users prior to reaching critical mass. MobiCash offers three ways to move funds between MobiCash accounts: proximity transfers, remote transfers, and web-based transfers. MobiCash can be set up so that receiving a P2P payment can serve to enroll new users automatically. This feature of the MobiCash mobile payment system makes it highly viral. Scalable and Viral solution:

What is your expansion / growth strategy?

MobiCash is creating a fully meshed African Payment Network with points of presence (POP’s) in all major African cities. A fully operational Pan African Payment Network will allow African nations to link directly with each other, rather than having to switch through one of the major US or European hubs.
MobiCash has already established a firm foothold in Africa and has or is finalizing licenses, joint venture agreements with in country partners in Africa and the rest of the world.

Contact:

Patrick Ngabonziza Gordon, CEO, Cel: +2784 3762255,
Roger Munya, VP International Markets, Cel: +2782 9050999
Email: info@mobicashonline.comserge.vandam@mcom.co.nzsergej.vandkam@mc2om.coj.nzs ,
Website: http://www.mobicashonline.com.

African workers send home more than $40 billion to the region each year but restrictive laws and costly fees hamper the power of remittances to lift people out of poverty, according to a new report by the UN’s rural development agency, the International Fund for Agricultural Development (IFAD), stated a press release.

Remittances are sources of income for poor families, particularly in Africa and the Latin American and Caribbean regions. With the majority of poor not having access to banking facilities the potential of microsavings facilities for increasing financial stability by enabling them to plan and save for their future. Microfinance institutions (MFIs) in some countries are offering these services, but legislation in many countries does not permit MFIs to collect savings. Collecting savings can also benefit MFIs by expanding their capital base and reducing their dependence on external sources for funding.

“Sending Money Home to Africa” report was presented at the Global Forum on Remittances 2009, organized by IFAD and the African Development Bank (AfDB) in Tunis, Tunisia, on Oct. 22-23.
Globally remittances top $300 billion per year, outstripping foreign direct investment and development assistance combined. But while transfer costs have declined significantly in Latin America and in Asia, sending money home to Africa is still expensive as it costs as much as 25% of the money sent.

Access is also limited, with the number of locations where remittances can be collected for the entire African continent are the same as Mexico, which has only a tenth of Africa’s population. Furthermore, Between 30 and 40 per cent of all remittances to Africa are sent to rural areas, often requiring recipients to travel long distances.
The report finds that simply by expanding the institutions for remittance services to include microfinance institutions and post offices, the number of payment points would more than double.

The IFAD report highlights how new technologies, such as cellphones, and existing infrastructure like post offices or small retail outlets could increase the reach of remittance services. Algeria, where 95% of remittances are paid through post offices, could be a model for other African countries.

“Supporting this people-to-people money flow to rural areas of Africa is especially vital now because of the recession” noted IFAD Assistant President, Kevin Cleaver. “The power of remittances can be catalysed by easing restrictions and making it less costly for African families to collect this money.”
Most money sent home by migrants is spent on daily consumption but research shows linking remittances to financial services for the unbanked – savings accounts, loans and insurance – allows even the very poor to save and potentially invest in the development of their community.

The Global Forum on Remittances 2009 is hosted by IFAD in partnership with the Africa Development Bank (AfDB) and in collaboration with the Inter-American Dialogue. The 2009 Forum has tried to asses trends in remittances to Africa, amid the financial crisis, and identify policy solutions.

The International Fund for Agricultural Development (IFAD) is an international financial institution and a specialized UN agency based in Rome – the UN’s food and agricultural hub. It is a partnership of 165 members from the Organization of the Petroleum Exporting Countries (OPEC), other developing countries and the Organisation for Economic Co-operation and Development (OECD). Since 1978, IFAD has invested $11 billion in grants and low-interest loans to developing countries, empowering some 340 million people to break out of poverty.