Mobile Money Africa

mChek, a leading mobile payment provider, and Swayam Krishi Sangam NGO, a registered society that acts as a Business Correspondent intermediary for banks, have partnered to launch an innovative model for cash-free microfinance for unbanked and under-banked customers.

Vikram Akula, Chairperson of SKS NGO, said, “The poor in India have few secure and convenient places to save their money. The mainstream banks cannot reach these individuals, the poor must struggle with the high costs and inherent risks of operating in cash. By using mobile technology and bringing banking services to their doorsteps, we are truly extending financial inclusion to the unbanked across India.”

“Cashless payments using mobile technology offer us a powerful tool to increase security for loan officers who today must carry large amounts of cash and are therefore the targets of robbery and violence, We also believe that the efficiencies gained by using mobile payments instead of cash can one day enable SKS Microfinance to offer better products and services to our members”, added Akula.

Also commenting on the partnership mChek CEO Sanjay Swamy said, “The vision of mChek is bring together the eco-system of partners across the banking sector, banking service providers, as well as leading Telecom Operator partners like Airtel and to serve the entire base of users – right from Platinum customers of banks to the unbanked and under-banked base – with one common product.”

Transaction services for customers through this initiative include balance enquiries, deposits and withdrawals at SKS NGO bank intermediaries, also known as ‘business correspondents’; a range of payment transactions including payment to local kirana grocery shops, re-paying loans borrowed from microfinance institutions, as well as re-charging prepaid mobile phone cards.

Beatrice Wanja

Although the mobile money phenomenon is still young, the World Bank in Africa has labeled it a “cornerstone for development” because of its potential to mobilise remote rural economies. Already mobile phones have transformed the lives of people in developing countries hence the mobile money service could have an even bigger impact on these people and their small businesses.
By using mobile money services, millions are breaking a technology barrier that remains in Europe and the United States, and paving way to what could be the cash of the future. Mobile phones have evolved in a few years to become tools of economic em¬powerment.These phones compensate for inadequate in¬frastructure, such as bad roads and slow postal services, allowing information to move more freely, making markets more efficient and unleashing entrepreneurship.
According to Mr Elly Kamugisha, a trade and development expert, with mobile phones now so common placed, a new opportuni¬ty has been created for entrepreneurs especially in the SME sector to thrive via mobile money, which allows cash to travel as quickly as a text message. Entrepreneurs and development organisations are eagerly seizing the opportunity presented by such growth. They are creating mobile phone applications for profitable and nonprofit ventures across the board. Since mobile money transfer was launched in Uganda months ago, millions of people have embraced the innovation to better their businesses.
Among the many businesspeople who have taken advantage of the rapid telecom technological advancements to improve the efficiency in business running, is Mr Charles Mubiru a businessman dealing in fruits and groundnuts at Nakasero market. He buys all his fresh supplies upcountry and sometimes as far as Kenya. His business is five years old and Mr Mubiru says it (his business) is set for a revolution given the boost the business community has received from telecommunication companies, after the introduction of Money Transfer services. “I no longer need to carry money in the pocket or line up in banking halls to make transactions,” he says. “A phone dial is enough for me to transfer money to my upcountry agents who buy the fruits. I also pay my transporters through the phone.”
To make his business more efficient Mr Mubiru operates both MTN and Safaricom mobile money transfer services. “I use the two services because my suppliers in Kenya might need money urgently, which I have to send on time or my goods especially apples which are on high demand will be sold to my competitor who has ready cash,” he explains.
Mr Mubiru reloads his Safaricom Mpesa account every one week within Kampala or whenever he travels to Nairobi for his goods. He says that he cannot use the MTN account to pay his Kenyan suppliers because it is yet to start working across the border. The service has proven to be important and people particularly from the business sector have embraced it.
Mobile phones have evolved in a few years to become tools of economic em¬powerment.These phones compensate for inadequate in¬frastructure, such as bad roads and slow postal services, allowing information to move more freely, making markets more efficient and unleashing entrepreneurship.
A businessman dealing in matooke in Kampala for example, will have no need of travelling to the countryside to buy matooke. The only thing he needs is to use a phone to send money to an agent who can do that (buying) for him. This makes the product safe in this era when accidents and theft are rampant making travelling with loads of money risky.
MTN Publicist, Ms Sheila Kangwagye says the Mobile Money system is efficient in its self, and that is why it can manage to make transactions “in real time.” “It has a self audit system to track every single transaction,”
“Carrying out a transaction should take you under three minutes assuming you have money on your account, however, the Mobile Money platform is dependent on SMS and the network in general, so any interference in that area may affect its performance.”
Not only is the service fast, cheap and efficient, there is no limit in the number of transactions that need to be executed in a day. Mr Moses Kalungi, an MTN service agent along Kampala Road says that the service that is hardly half a year-old and it has registered success. He however says instances of network breakdown at times compel clients to wait for a little longer before making their transactions. To make business even simpler and more effective, plans are underway to turn mobile money into a global venture. As MTN’s Marketing Manager, Mr Isaac Nsereko revealed this development will only serve to widen the mobile money transfer market and also boost MTN’s presence in the market.
It is a faster, cheaper and safer way to transfer money than the alternatives, such as slow, costly transfers via banks and post offices, or handing an envelope of cash to a bus driver. Rather than spend a day travelling by bus to the nearest bank, recipients in rural areas can spend their time doing other things that add to their productivity. Mobile money also provides a stepping stone to formal fi¬nancial services for people who lack access to savings accounts, credit and insurance. Although for regula¬tory reasons mobile money accounts do not pay interest, the service is used by some people as a savings account.
Having even a small cushion of savings to fall back on allows people to deal with unexpected expenses, such as medical treatment, with¬out having to sell a cow or take a child out of school. Mobile banking is safer than storing wealth in the form of cattle (which can become diseased and die), in neighbourhoods savings schemes (which may be fraud¬ulent) or by stuffing banknotes into a mattress.
Mobile money presents a shining opportunity to start a sec¬ond wave of mobile-led development across the developing world. Operators, banks and regulators should seize it. According to Ms Winfrey Katto, a Zain agent in Wandegeya, carrying out a transaction comes with a cost depending on the amount one intends to send or withdraw. “Though we charge a fee for all transaction, many clients don’t mind because it is cheaper than using banking services,” Ms Katto explainsd. “Mobile handsets are in an excellent position to become the primary digital channel for providers of banking and related financial services in emerging markets,” Mr Kamugisha says.
The scope of the mobile money systems has grown quickly from simple cash transfers by text message to payments for everything from a salon visit to a utility bill, and it is possible to spend a day without carrying cash around.
Beyond simple profit, Mr Yesse Oenga, the Zain Uganda Managing Director says the real value of mobile cash to phone firms lies in securing a long-term connection with customers as cut-throat competition in the mobile market eats into revenues. “We see it as a tool to create stickiness,” Mr Oenga says. “Yes, it’s a revenue service but at the cost of an SMS, you’re not going to get rich quickly.”
The service has also allowed money to penetrate more easily into rural areas where it’s really needed. Ms Gemima Namubiru is someone whose life has become much more manageable because of mobile money. She is 70-years old and somehow manages to maintain her small family farm in Mbarara.
Like other people living off the land and a small number of livestock, she is dependent on money earned by a close relative, far away in an urban centre. A weekly SMS message from her daughter in Kampala negates what she used to experience – long delays and sometimes the non arrival of cash brought by relatives, friends or informal couriers.
Ms Namubiru is not in top form health but she can use her mobile phone walk to the nearest trading centre to cash in her SMS transfers at the local shop which acts as an agent for the service. Back in Kampala, her daughter, Irene, works as a lowly paid voluntary assistant for a HIV-Aids clinic and is relieved not to face the trouble and cost of the three-hour weekly bus journey to her mother’s home. “I used to send money with friends or relatives or sometimes anyone who I thought would be reliable,” she said. “But so often, money used to get stolen or lost.”

A group of investors led by ADC African Development Corporation, an Africa-focused private equity firm, has acquired the majority shareholding in Premier Finance Group. The Zimbabwean banking company was sold for around $6m.

With this transaction, ADC will hold a 45 per cent stake in Premier. KMQ Enterprises, a Mauritius domiciled company, will own a further nine per cent shareholding. Of the remaining shares, 28 per cent is held by a local consortium, and the balance of 18 per cent is held by other local investors and an employee share trust.

This investment is aligned with ADC’s focus on the financial services sector in Africa. The private equity firm has already invested in Banco Nacional de Guinea Ecuatorial (BANGE), a commercial bank in Equatorial Guinea; SIMTEL, a payment and mobile-banking provider in Rwanda and IVERI, a banking-application specialised software company in South Africa.

ADC CEO Dirk Harbecke said, “ADC’s investment demonstrates our confidence in our local partners, the future of Premier and the prospects offered by the Zimbabwe economy in general. We would not have made this investment if we did not believe in the opportunity that exists to build Premier into a significant player within the growing local market.”

ADC is a pan-African private equity firm investing in the financial services sector, and which was founded and controlled by the Altira Group, a German asset manager with $1bn under management.

Leading mobile phone provider, Safaricom, is changing tack on its method of recruiting mobile money transfer, M-pesa, agents by introducing a new system known as Aggregator Model, which removes the need to deal directly with sub-agents.

In the new model, the appointment of the sub agents will be handled by the agents on its behalf especially in Nairobi and areas that it considers highly saturated by agents.

The move is likely to keep doors open for entrepreneurs who may be interested in the sub-agency contract with the mobile firm.

Although, the implementation of this model started before the launch of a money transfer service yuCash by its rival, Essar telecom Ltd, their approach in handling the money transfer agents are similar in that both companies plan to deal with a limited number of agents.

In the case of Safaricom, it is these agents who will be getting floats from their super agents, normally banking institutions which they have arrangement with, then pass the details to the sub-agents who will then work on agreed commissions by the agents.

Essar, on the other hand, has eliminated altogether the need for sub-agents so as to ensure that agents get maximum commission, which it says is yet to be finalised but will be competitive.

Safaricom says its move is motivated by the need to protect its partnership with the existing agents.

However, this is pegged on the demand for the service and if need be more agents will be recruited.

Safaricom chief executive Michael Joseph said the company is convinced that the existing agents have the capacity to serve Nairobi and other areas adequately.

“We have begun migrating existing sub-agents under the agency model to Aggregator,” said Mr Joseph. “This means a situation where Safaricom appoints an organiasation/agent which in turn appoints sub-agents on its behalf. This exercise has started and should take between 6 to 8 months”

In the Aggregator Model, Safaricom and its agents are targeting social places with high traffic such as eateries and entertainment spots.

Of late, the company has been enhancing its offering on M-pesa jointly with partners such as the transport sector.

Travellers can now book online and pay for flights or bus tickets through M-pesa.

Safaricom has more than 12,000 agents in Kenya and in the UK, where it recently launched an international money transfer service.

Oikocredit project partner PAWDEP is leading the way in microfinance pricing transparency in Africa. The Kenya-based Pamoja Women’s Development Programme became the first African microfinance institution to submit data to MFTransparency Transparent Pricing Initiative.

MFTransparancy allows organizations in the microfinance sector to make public their pricing structure and in turn help ensure transparency, integrity and poverty alleviation in the industry.

The MFTransparency staff are now working with other Kenyan MFIs to complete the data submission process. The success of the MFTransparency Transparent Pricing Initiative in Kenya depends on the submission of information on product pricing.

Oikocredit was the first Dutch microfinance investor to endorse the pioneering organization and has renewed its support to the organization last month. With the continued endorsement and financial backing of organizations like Oikocredit, MFTransparency has been able to scale up its pricing transparency operations.

PAWDEP has been an Oikocredit project partner since 2008, and has received one Oikocredit loan of Kenya Shillings 84,000,000 (€ 801,000). PAWDEP has 70 staff and 58 of them are women. They have 48,000 clients – all women – throughout five provinces in Kenya.

Carphone Warehouse has signed a deal with mobile money company Monitise to launch a shopping service for its customers.

The ‘Mobile Money Network’ application will be available for customers to download from early next year in the UK and will later be made available in its European outlets and America.

Carphone aims to reach tens of millions of consumers with the service via the application. Customers will be able to sign up to mobile banking services, buy goods and services, send money to other accounts, top up prepaid and loyalty cards.

Carphone chief executive Andrew Harrison said: “We are delighted with how our alliance with Monitise is developing. It is enabling Visa to optimize the development and user experience of Visa mobile applications for a broad range of mobile devices in the market today.”

Monitise chief executive Alastair Lukies said: “Monitise has reached a point of significant momentum. These new partnerships, together with the investments and full support of our existing strategic shareholders, validate our market leading status and position us very well to take the business through to profitability.

“People everywhere will be able do their banking, shopping and make payments from their mobiles as easily as they can talk and text.”

Essar Telecom Kenya which operates under the brand yu, has tied up with Obopay for a mobile money transfer service. Called ‘yuCash by Obopay’, the service has Equity Bank as its banking partner. Jayant Khosla, CEO-Africa for Essar Group said that they intend to ensure that the same platform will be utilized across Africa. The companies are currently focusing on building a countrywide network of agents, which will allow subscribers to transact from anywhere in Kenya.

yu is the fourth GSM operator to be launched in Kenya. Essar Telecom Kenya, which is a joint venture between Essar, which has a 80 percent stake in the company, and Econet Wireless International. In August it announced a successful national network coverage rollout in Kenya in less than a year of operation, and has set a target of 2 million subscribers by March next year. Essar also owns 51 percent of Dhabi Group’s Uganda and Congo Brazaville telecom networks which it bought for $150 million in November.

In India Essar owns a 33 percent stake in Vodafone Essar India and indirectly holds a 9.9 percent stake in Loop Telecom (earlier BPL).

Cellphone Banking customers performed more than 56 million transactions to the value of over R7,2 billion in the last 12 months, indicating that the cellphone has come of age as a transactional channel.

“Cellphone Banking has truly come of age in SA and now more widely used than PC based banking. The high adoption rates we’ve experienced show that it’s a trusted and convenient channel for customers to perform a wide range of transactions from checking account balances to buying prepaid airtime or paying a beneficiary,” says Len Pienaar, CEO of First National Bank (FNB) mCommerce.

The ability to purchase prepaid data and SMS bundles purchases directly from a FNB account using Cellphone Banking has also been a hit with customers. FNB Cellphone Banking users have also taken to purchasing LOTTO tickets since the service was made available in July 2009, with the first LOTTO millionaire on Cellphone Banking in September 2009 hitting the jackpot to the tune of R2 million.

November 2009 marked the 20th consecutive month that monthly transaction volume growth on FNB Cellphone Banking exceeded 100% year-on-year. That month, monthly transaction volumes grew by 147% year-on-year.

The Bank also continued to innovate, adding a range of new Cellphone Banking services and offerings to its portfolio, including eBucks on Cellphone Banking– introduced in August 2009, to offer eBucks clients a cellphone channel through which they can spend their eBucks on buying prepaid airtime, Telkom airtime, Globel international airtime, Vodacom SMS and Data Bundles, MXit Moola, prepaid electricity for Eskom and selected municipalities. Furthermore, the bank introduced Send Money – an instant solution for FNB customers to transfer money to anyone with a South African cellphone number.

Following the success of Cellphone Banking in South Africa, FNB rolled out Cellphone Banking services to its operations in Zambia in 2009, and now offers one or more Cellphone Banking services in Namibia, Botswana, Lesotho, Swaziland and Zambia. Further to the innovative offering of Cellphone Banking, the bank expanded its cross-border prepaid airtime top-up service to include Lesotho in addition to its Namibian offering.

FNB’s success with Cellphone Banking received industry recognition during 2009 in the Celent Model Bank annual best practices review for Mobile Banking. In addition, Len Pienaar was nominated as one of the three finalists in the Visionary CIO 2009 awards presented by the Computer Society of SA (CSSA), ITWeb, the Gordon Institute of Business Science and Gartner Africa.

Moving into 2010, FNB has many new developments in the pipeline. These developments not only will enhance the lives of cellphone banking customers, but will allow new and exciting options and solutions to be a part of their daily lifestyle as well as establishing cellphone banking as part of mainstream banking.

Valimo provides multipurpose Mobile ID technology to kick off first pilot implementations in Middle East and Africa

Egypt Trust, a Digital Signature and Information provider, and Valimo, the global market leader in Mobile ID solutions, today announced an agreement to launch Mobile ID service pilots in Egypt. Vodafone Egypt, the Egyptian subsidiary of the world’s leading international mobile communications group, provides the SIM cards, connectivity and secure messaging for the pilot. The Mobile ID service is delivered in co-operation with Professional Services & Integrated Solutions “ProSIS”, a leading IT security consultant and Valimo’s Business Partner.

At the first stage of the launch, the Mobile ID service platform is offered to selected Egyptian service providers. The providers were chosen by analysing customers’ interests and prioritising banking, governmental and brokering segments. Kicking off in early 2010, the first service pilots run for three months. The installation of Mobile ID platform began in November.

“Complete security and ease-of-use are challenging to combine and ideally Mobile ID should be usable anywhere, anytime. Safe use requires secure authentication,” explained Yahia Al-Atfy, Chairman, Egypt Trust. “Mobile ID is a simple, easy to use solution for proving your identity and obtaining easy access to your accounts. The user doesn´t have to remember separate passwords, just one PIN code is enough.”

“The Mobile ID pilot will be launched in Egypt with a number of service providers,” explained Mahmoud Swedan, CEO, ProSIS. “Initially, Mobile ID can be used to access and confirm transactions in cardless ATM’s and online stock trading services.”

Mobile ID users are able to securely log in to online services, sign documents and confirm transactions by using their mobile phones. As people typically have their mobile phones with them at all times, a legally binding digital signature is easily done regardless of time or place.

“The Egyptian authentication market is expected to grow rapidly in the coming years. The government aims to develop governmental services with e-Services in order to increase Egypt’s competitiveness,” said Juha Murtopuro, CEO, Valimo. “Currently, Valimo Mobile ID is used in a variety of services throughout the world, including mobile banking and payments, governmental services, e-commerce and m-commerce applications, along with enterprise access management. Mobile ID enables various digital self-services such as mobile payments, banking and money transfer, which is very convenient especially for people living in scattered settlement areas.”

“More and more customers in the Middle East and Africa browse the internet with their mobile phones. As mobile authentication is secure, legally binding and easy to use, we expect to see rapid growth in mobile signing,” said Mohamed Wahba, Payment Platforms Marketing Senior Manager of Vodafone, “Mobile ID is easier than sending an SMS, and it enables multiple users, profiles or roles in one device. The latter is important when considering eg. communities which share one mobile device.”

Valimo Mobile ID can be used for all services that require personal authentication, identification or a legally binding signature. It is based on Wireless Public Key Infrastructure (WPKI). Valimo is the global market leader in Mobile ID solutions in terms of both installation base and number of active users. Valimo solutions are used by operators, banks, enterprises, public sector, e-commerce and other service providers throughout the world.

Valimo mobile signature can be used with all mobile phones and devices with a SIM card or other secure storage inside. The resulting safe and reliable digital authentication replaces various tokens, password and code lists. When using an online service requiring authentication or digital signing, the request is sent to the user’s mobile phone using secured SMS technology. The message pops up on the phone screen, asking the user to confirm his or her identity or approval by entering his or her personal PIN code. If the device is lost or stolen, the services cannot be accessed without re-entering the PIN.