Mobile Money Africa

MICHAEL OUMA

Mobile phone-based money transfer and banking solutions have been recognised as the avenue to take banking services to people outside the formal financial industry.

The services have helped reduce the cost of access to financial services for 2.3 billion people in the world who live on less than $2 per day and cannot afford formal financial services.

According to the “Banking and mobile money transfer solutions in the Comesa region” conference held in Nairobi, these figures go to show that the opposition by banking institutions to financial inclusion of the new technological banking solution was baseless.

The meeting, organised by Africa IT Exhibitions and Conferences (Aitec), underscored the use of mobile phone-based money transfer services to provide banking services to those who cannot access formal services.

The services are cheaper than conventional banking, which comes with expenses the poor could not afford.

Apart from various existing mobile banking solutions in the region like M-pesa, Zap and yuCash, there are about 120 other pilot mobile banking services around the world.

The only concern is how to replicate the success services like M-pesa to other countries.

According to Bill and Melinda Gates Foundation senior programme officer for financial services for the poor Claire Alexandre, mobile banking services have various benefits to the population, including increased productivity and capital flows, helping to manage cashflow as well as enhancing management of erratic incomes.

Ms Alexandre said that opposition from formal banks to networks offering mobile banking is uncalled for as only 10 per cent of people living on less that $2 per day have access to formal savings services.

“The difference between transferring data and voice traffic by mobile operators and transferring money via mobile banking is very minimal,” said Ms Alexandre at the opening session of the two-day conference with the theme “Banking leadership through innovation.”

Reduced costs

She however urged mobile banking providers to look at ways through which the cost of the services could be reduced to reach more people in developing countries, adding that there is “no need to see new players unveiling new mobile money solutions as existing players are enough to create the necessary competition.”

Kenya’s Deputy Prime Minister and Minister for Finance Uhuru Kenyatta urged financial industry players to promote innovations for their potential clients.

While acknowledging the challenges posed by innovations such as mobile money phone-based transfer services, Mr Kenyatta stressed the need to further strengthen the supervisory capacity of regulatory institutions.

He said this was crucial in light of a recent survey that revealed that 38 per cent of the population is excluded from accessing services from financial institutions.

On his part, Paynet Group chief executive Bernard Matthewman argued for an interconnected automated teller machine systems among local banks and financial institutions “to get out of the current situation where a single street corner has six ATM points serving different bank customers where a single interconnected ATM point could suffice.”

Mr Matthewman, who runs the PesaPoint ATM network currently connecting 53 banks and financial institutions, added that a “ubiquitous presence of ATMs in other parts of the country would lessen bank’s dependence on midtown clients leading to development of new products and services that address the needs of new client segments.

ATM-flooded market

“Kenya has changed from the situation in 2001 when ATMs were targeted at high value account holders — the complete opposite of the practice in developed countries where cards are for low-income account holders with high-value customers being handled face-to-face by the bank.”

Central Bank of Kenya head of national payment systems Stephen Mwaura singled out Kenyan banks for their “tendency to concentrate their outlets and services on mid-town Nairobi where there is a perceived presence of target clientele.

“Adoption of technology by financial institutions and the recent reforms in the banking sector have helped mitigate against payment risk. For instance, the introduction of Real-Time Gross Settlement has enhanced efficiency and speed as transactions are conducted on real-time basis thereby mitigating payment risks for high volume payments,” said Mr Mwaura.

MICHAEL OUMA

The success of mobile phone-based money transfer services in the region is inspiring the development of online payment services by IT companies.
Taking advantage of the proliferation of money transfer services in the Kenya — Safaricom’s M-Pesa, Zain’s Zap and Yu’s yuCash — Intrepid Data Systems has launched a real-time online payment service called iPay.

The service incorporates both M-Pesa and Zap modes of money transfer to enable customers to buy and sell goods and services across the region via their mobile phones, a move that will be welcomed by M-Pesa’s nine million and Zap’s 400,000 subscribers.

“Today, more than 15 million Kenyans who own mobile phones have instant access to mobile-based tools. Our idea was to package M-Pesa and Zap into an online transaction processing system that would allow online merchants, service providers and other groups to receive real-time payments via a secure platform,” Intrepid managing director Steve Nyumba said.

The service is targeted at online merchants giving to them an alternative payment channel to credit cards.

“While any business can use the product to receive payments, it is the businesses that deliver their product in a digital format such as music stores, online book stores, publishers, video libraries, e-ticketing, consultancies, donor supported organisations, and premium content providers that will benefit most from the new platform,” said Philip Nyamwaya, Intrepid business development manager.

The advantages of the service include the ability to track payments using the firm’s cart software, easy account opening, order management and creation of printable receipts and orders for better record keeping.

Pioneer service

The launch of iPay comes a few weeks after Kenya Data Network (KDN) launched MobiPay, a multichannel Internet payment gateway solution that turns mobile phones into a means of secure electronic transactions.

The MobiPay platform is meant to offer both “proximity” and “remote” payment services while at the same time bypassing the inherent risks associated with card usage in Africa.

It allows consumers and businessmen to purchase or pay for products and services sourced from multiple Internet merchants and governmental agencies on the continent as well as from any location in the world.

“The market today demands a secure, scalable and proficient e-payment transaction processor which can also act as a single entry provider in bringing the banks, businesses, credit card networks, consumers and governments together,” said KDN chief executive officer Kai Wulff.

Mobipay converges e-payment, credit card networks, and mobile and banking transactions, providing a “secure payment platform.”

“The growth of mobile telephony in Africa, coupled with a high unbanked population, presents a unique platform for businesses,” said Mr Wulff.

Like iPay, MobiPay enables users to carry out “proximity” transactions such as personal payments, ATM withdrawals, retail transactions at point of sale and “remote” transactions like money transfers via the web.

“Mobipay will be able to work across all telecom operators as it is handset-independent and works well with all financial instruments be they credit, debit or prepaid cards. The service is also applicable across different merchant categories to give our consumer the convenience and enhanced security of mobile payments,” said the KDN boss.

Paul Leishman

On Tuesday in Yaounde, we hosted the GSMA Central African Mobile Money Roundtable. This was the first regional event of its kind hosted by the GSMA, and it was designed to share information and experiences regulating mobile money with BEAC, the financial services regulator for the Economic Community of Central African States, which includes Cameroon, Central African Republic, Chad, Republic of Congo, Equatorial Guinea, and Gabon.

The roundtable was attended by MTN, Orange, Zain, Camtel, Citibank, Afriland First Bank, BEAC, BCEAO, Central Bank of Kenya (thanks to the support of the Alliance of Financial Inclusion), Bank of Ghana, CGAP and GSMA.

So why did we choose to host our first regional regulatory roundtable in Cameroon? If you look at our deployment tracker, it’s clear that East and West Africa are hotbeds of mobile money activity, but so far no deployments have been launched in Central Africa – this in spite of the fact that MTN, Orange and Zain all have strong footprints in the region. Our hope is that this will change in 2010, and if Tuesday’s session was any indication, the outlook is positive.

I’d like to highlight two promising themes from the day:

Mobile Operators and Banks Working Together

MTN, Orange and Zain all made brief presentations describing their models, and it was clear that each of them have logically divided responsibilities between bank and MNO based on which party has the relevant expertise. It became clear to the participants (and regulators) that there is a clear win-win situation both for banks and MNOs (not to mention the social and economic benefits for Central Africa) when they work together.

Dialogue – Curiosity From All Sides

We left a great deal of time for discussion on the agenda, but even still it wasn’t enough. Regulators were keen to share their perspectives and ask candid questions to their peers from other markets, as well as the banks and operators in the room. It’s clear that there is a huge desire to exchange knowledge, particularly between countries that share similar contexts and challenges.

A lot of the day’s value came from creating dialogue between the key stakeholders on the specific issues that are relevant to Central Africa as a precursor to (hopefully) approving the launch of mobile money. There is an incredible amount of potential for mobile money in Central Africa – but, like any other region, there are questions about the service that must be answered first. Tuesday was an important step in the process.

We’d like to thank our co-hosts, MTN and Citibank for helping to make this roundtable possible, as well as BEAC for actively participating in and contributing to our first regional regulatory event.

New mobile payment service powered by Creova to be offered by BIAT bank and Tunisiana

Creova, a leader in developing mobile payment software solutions, has announced the launch of the first Mobile Payment service in North Africa. Called Mdinar©, the new service is an m-wallet solution powered by Creova’s mobile payment technology that is being launched in Tunisia by Banque Internationale Arabe de Tunisie (BIAT) in partnership with Tunisiana, Tunisia’s leading mobile phone operator, ENDA (a leading microfinance institution in Tunisia) and Viamobile (a service provider).

Creova was chosen as the mobile payments platform to support Mdinar© because its solutions add value to both the service provider and the customer. “Our payments solution system does not simply interface to a loan management system by just providing a standard interface,” said Ramzi El-Fekih, CEO of Creova. “A typical user wants to see all loan information (amounts, dates, history, etc.), and the loan provider wants the processing to be handled in real-time and automatically (no paperwork, no reconciliation time, etc.). Our technology meets these requirements and is scalable, interoperable with financial and commerce systems, and adaptable to different segments and applications.”
The Mdinar© service offers P2P, top-up, and loan payment services from a user’s mobile phone. It also offers multiple features, including the ability to view account balances, history of transactions, and the possibility to save and use the list of people frequently receiving payments from the user. Even smarter, it allows the user to send a request for money to another person.

With a few clicks on their mobile phone, users of Mdinar© can make universal payments with total security and reliability. The underlying technology developed by Creova has been carefully designed to be highly reliable and scalable to millions of users.

“Our solutions are at the forefront of the mobile payments industry,” continued El-Fekih. “The Mdinar© payments solution gives control, flexibility and the capacity our customers need to reach their development goals. Our rich and completely modular platform design has been developed with the goal of providing a fast deployment for our service provider customers, enabling them to get a preferred position among early adopters in mobile payments and then integrate additional applications according to the needs of their customers as they move forward.”

“Simple, innovative and accessible, Mdinar© can be easily integrated into all mobile phones. Mdinar© is a new technology that will improve the quality of the banking services offered to the customers,” said Slaheddine Lâajimi, CEO of BIAT.
Yves Gauthier, the head of Tunisiana, commenting on the impact that this will have in market, said;”Mdinar© is an innovation that will revolutionize the world of mobile telephony. It will also optimize the choices and the freedom of our customers.”

About Creova

Founded in 2008, Creova is a provider of mobile payment systems; these can be used by financial institutions, mobile operators, e-commerce providers and merchants for use by their customers. These innovative, secure, high performance and easy to use solutions allow Creova’s customers to provide mobile payment services that support features such as person-to-person transfer, bank account transfer, loan reimbursement, bill payment and mobile top-up, helping companies increase customer reach by providing access for all mobile phone users. Creova is based in Paris with offices in Munich (Germany), Boston (USA), and Tunis (Tunisia).

Octopus Ventures Ltd , one of the UK’s leading investment companies in early-stage and expanding companies, has led an investment round of £3 million into Mi-Pay Ltd , a leading processor of payments for the fast-emerging mobile money sector. The investment round was also supported by existing institutional investor Albion Ventures LLP and management.

Mi-Pay’s existing service enables customers to ‘top-up’ their pre-paid mobile phone directly on-line, or via their mobile phone, rather than using indirect brand channels such as Paypoint or bank ATMs. Benefits of the direct service include cost reductions for mobile network operators and a more personal engagement with customers, removing the anonymity of customer relationships allowing substantial improvements in customer churn management.

This round of investment will enable Mi-Pay to roll out its new mobile money services, which are now fully developed and ready to scale with blue-chip launch customers. The additional mobile phone services include:
• International Airtime Top-up: Customers can top-up pre-paid mobile phones on behalf of friends or relatives overseas.
• Domestic money transfer: Enabling agent networks such as banks and mobile operators to run domestic money transfer services in emerging markets.
• International money transfer: A white-label service enabling money transfer networks to run direct (online and mobile phone initiated) money transfer services.

Mi-Pay currently operates throughout Europe, Africa and the Middle East, and has an impressive client list of well known brands including Tesco Mobile, The Carphone Warehouse, Vodafone, Du in UAE, KPN Telfort and Zain amongst others.

The allocated funds for Octopus were provided by the Octopus Titan VCT funds, together with the Octopus Eureka EIS and the Octopus Investor Group.

Alex Macpherson, Chief Executive of Octopus Ventures, said: “We are delighted to be joining the team at Mi-Pay. Octopus looks to partner businesses with exceptional management teams, innovative products, and large addressable markets – Mi-Pay has these elements to its business. We now look forward to working closely with the business and ensuring that it continues to build on strong foundations.”

Ed Lascelles, Partner of Albion Ventures, said: “We continue to be impressed by the team at Mi-Pay and the progress they have made in developing the Company’s leadership position. We are delighted to further support Mi-Pay as it takes advantage of the considerable market opportunity.”

Norman Frankel, Chief Executive of Mi-Pay, said: “Mi-Pay is delighted to have funding and support from Octopus Ventures as well as existing investors Albion Ventures. Their pedigree working with eCommerce related businesses will add significant value to our business and strengthens our list of blue-chip investors. With their help, we can develop the many significant opportunities in this dynamic market while continuing to deliver our award winning market innovation. The investment will enable us to achieve our strategic and operational goals which include driving International Airtime Top-up and money transfer solutions to a wider market in key remittance corridors in Europe, Africa, Middle East and Latin America.”

Alliott Cole led the deal on behalf of Octopus. Shoosmiths were legal advisers to Octopus. Ed Lascelles represented Albion Ventures. Miranda Morad of Berwin Leighton Paisner provided legal advice to Albion. Mi-pay received legal advice from Mark Lucas at Barlow Robbins. Corporate Advisory services were provided to Mi-Pay by Stuart McKnight of Ascendant.

Nancy Sudheer

Mobile payment solution companies are engaged in talks with the Middle East telecom operators to target the large immigrant population.

Many of them are talking to two to four operators in the region to meet the growing demand for mobile payment solutions. The companies see large-scale use of mobile phones for banking in Middle East and Africa. While some of them are finalising pilot projects, others are set for a wholesale implementation of their mobile payment solutions.

Gemalto, one of the largest in the mobile payments solutions segment, is already working with du and etisalat. Pascal Oromi, Vice- President for mobile financial services at Gemalto, confirmed they are also entering a tender for du, which is outside NFC (near field communication) transactions.

“There are already two to three deployments being made in the region – mainly in Pakistan and Iran. This year, we are targeting Dubai and already working closely in Egypt. In total, we are targeting five deployments in 2010 in the Middle East,” Oromi said. “The immigrant population from India and Pakistan in the Middle East is the target audience. The region is not unbanked like Africa, but [migrant workers] require to send money back home. Mobile payment solutions are largely required for transferring money and also, many a time, making big transactions in the Middle East.”

In Africa, Gemalto works actively in Nigeria and Uganda among others. Oromi was of the opinion that the UAE operators have a clear view of their requirements. “In terms of challenges in the region, it’s also about being clear about banks, regulators and operators. There are a lot of solutions available in the market, making it fragmented. India, Africa and Latin America are also potential markets for Gemalto. As we work with different operators in these countries, interoperability is essential.”

Currently, one third of Gemalto’s revenue comes from the Middle East which, according to Oromi, will increase in 2010.

Close competitor Fundamo has been talking to operators in the region for a long time and also failed in tenders made previously in the UAE. Richard Bailey, Product Manager at Fundamo, is, however, positive. He said: “Bahrain is an active market but in Dubai, we didn’t have much of success. The offering made was complicated at that time as the market was strongly led by banks and the solution did not suit them.”

The company has not given up and continues to see money remittances as big business. “Mobile money is a big opportunity and provides a ready access to migrants. Many of them still don’t have access to traditional banking services. Banks also have opportunities to offer services to the unbanked. Until now, we have focused on Africa, the Middle East, Pakistan, Indian Subcontinent, Indonesia, Malaysia and Latin and South America,” said Bailey.

Fundamo is currently talking to two telecom operators in the Middle East. “In Africa, we have worked closely with MTN, and also Yemen, Iran, Afghanistan and Syria. Currently, the growth is less than 10 per cent from the Middle East for Fundamo, and we expect it to grow up to 20 per cent in 2010. We are working with 40 operators in the MEA region.”

Even Bailey has seen an appetite for such kind of applications in the Middle East among telecom operators. “Operators are willing to take the risk, expand service offerings by extending beyond voice and data. Value- added services are in the limelight and therefore gained relevance.”

With mobile payment solution companies tapping the business potential in the region, smaller players in the mobile wallet solution segment are also joining the bandwagon. “In the Middle East, with the regulator getting tough on the immigrant population to create bank accounts, it has invariably increased business potential for mBlox. Our top-up systems doesn’t focus on mobile money, but there are vouchers, which can be bought from banks, and retail counters. It’s not restricted to airtime on prepaid phones but also transferring real time money,” Andrew Bud, Executive Chairman at Sweden based mBlox, said.

He also revealed that the company is currently talking to five operators in the Middle East. “The talks are focused on top-up systems and are pursuing opportunities globally. The high mobile penetration and also lack of banking infrastructure in some areas make it a top area for mBlox.”

Bud also stressed on the fact that security was not an issue on these systems. “Customers are already using credit cards or bank cards,” he said.

Mobile payments work on similar lines with either a barcode or an NFC phone or any established payment technology. The technology can be used to pay salaries using the ‘mollet accounts’ of mBlox. “It does not matter who services the bank and customers should not worry about security as even today’s banks cannot provide 100 per cent security,” he said.

The company plans to operate from Mumbai in India, covering the Middle East. It currently has its development centre in Kolkata with six offices across India and Africa.

Mobile payment technology has attracted money exchange centres as well. Khalid Fellahi, Senior Vice- President, Mobile Transaction Services of Western Union, said: “We are present in more than 200 countries, and a large amount of our business comes from remittances. Consumers are interested in mobile wallet solutions, wanting to transact differently. Our space in the value chain is to shoot money to these countries. As a company, we have also been building our connections with various mobile wallet solutions.”

Although Western Union has yet to make any announcement on its mobile wallet plans in the Middle East, Fellahi said, the technology has been a success in Kenya and Philippines.

Kaustuv Ghosh.

What is innovation? Is it the process of giving birth to an original idea and therefore an invention in the true sense? Or is it the use of existing ideas in different contexts to produce solutions that can be used for identified purposes? Better still, is innovation an accident of sorts-a chance encounter with a tool, a formula or even a few scribbles that can bring about change?

It is, perhaps, all the above. But I like to consider innovation as a series of events where a process born partly of deliberation and partly of chance, has created value in a way and of a kind largely not possible before. That has been, for instance, the case with mobile money in Africa and The Phillipines. I suppose these case studies have been cited many times over-but we cannot emphasise enough their importance. Their importance lies not only in the business opportunities and the benefits unlocked for so many people. No, I think the larger story is the fact that these innovations were initiated in, driven in and deployed in emerging economies. When we look back at the series of events which lead to these success stories, we may well find a pattern of complex forces working together to present the near-perfect solution for a very relevant problem. But that is for another time. For now, let us understand that emerging economies have stepped out of the shadows of legacy to show the whole world a new way of doing business and making a difference to peoples lives. Where do we go from here, then?

The network economy has a number of key drivers, in my opinion- one, the ferment of ideas that arises due to the connectivity between traditional idea powerhouses and traditional developing nations; two, the development of a wired and aware middle class in large parts of the world; three, new and large markets with new sets of needs and challenges; four, migration. These drivers feed the need to create new products, services and business plans- such needs arising from the demands of global enterprises and globally aware consumers. This sets in motion a complicated series of engagements between localised consumers, glocalised transnationals and local companies. This gives rise, in turn, to centres of intellectual churn which become the hubs of new product development. Today, the Silicon Valley is perhaps the only place which has consistently held such a distinction for itself. That, by itself , is a topic for scholarly work; but if the early successes of mobile money are to be followed by more, Africa needs its own Silicon Valley.

What kind of a place would that be?The geographic location of a such a concept is not important. Indeed, it may not even need to be located in one place. It may be a number of centres of thought linked together by the strands of free enterprise and collective good. Typically, such places are centred around an university campus or two. Often, these hubs are the gathering points of gifted migrants who seek the right kind of atmosphere to let their talents run wild. I like to reach back into history for examples and it is Africa which can provide some of those to the rest of the world-ancient Alexandria and the still living city of Timbuktu, for instance. But my interest, in this specific context, lies not in the built environment but in the soft power of the African people. We hear about African footballers, writers and musicians, but what about African scientists, managers, sociologists and designers? What are the programmes of training and scholarship that are sending them to Europe and United States to learn and experience more? Is there or can there be an African Harvard and at the same time, an African Berkeley? For this is not just about building another mobile money network-far from it. We need to look forward to fundamental ways in which technology can work with new forms of inquiry to create new kinds of enterprises, new ways of distribution and new forms of communication. That essentially will brin g about significant crossovers between different kinds of media-between content and transmission, between television and internet and between mobile phones and newspapers. Fashion designers and architects will be able to have a say in the end user interfaces and urban planners will want to integrate these new networks with public transport ideas. And last but not the least, it is absolutely important that we can hear more about African entrepreneur-technocrats. There are a few names now familiar to the rest of the world. But we need to see an African Jack Dorsey and Mark Zuckerberg.

Above all, the African experience must inform the rest of the world about the possibilities of change. In the world of free enterprise, change is constant and is manifested through innovation. There is, today, a real chance that Africa may lead the way. And the frameworks it puts to use, may be emulated by the rest of the world tomorrow.

Note: The views expressed by the author are his own entirely and this article has been written in his personal capacity. The author acknowledges his debt to Dr Manuel Castells(who propounded the term “network society”), Prof James Carey and Prof Harold Innis, among others.

The Economic Times

An Afghan police officer gets his salary in a text message on his mobile phone. A Kenyan worker dials a few numbers to send money to his family.

The rise of banking transactions through mobile phones is giving a whole new meaning to pocket money in parts of the developing world that lack banks or cash machines.

Mobile money applications are emerging as potent financial tools in rural and remote areas of the globe, allowing people with no bank accounts to get paid, send remittances or settle their bills.

“One billion consumers in the world have a mobile phone but no access to a bank account,” said Gavin Krugel, the director of mobile banking strategy at GSM Association, an industry group of 800 wireless operators.

“We see it as very big opportunity,” he said this week at the Mobile World Congress in Barcelona, Spain, the industry’s annual four-day event that ended on Thursday.

Mobile banking began to emerge six years ago in the Philippines and South Africa, where 8.5 million and 4.5 million people, respectively, use such services.

Today, 40 million people worldwide use mobile money, and the industry is growing, according to the GSMA.

“Africa and Asia are the most active regions right now,” Krugel said. “We expect Latin America pick up this year.”

There are 18,000 new mobile banking users per day in Uganda, 15,000 in Tanzania and 11,000 in Kenya, he said.

Mobile phones can offer a wide range of banking solutions, from sending transfers to a relative to buying goods in a store or putting money aside for a rainy day — all by dialing a few numbers on one’s handset.

Mobile banking can also make life easier for people in parts of Africa where paying a simple bill can be time-consuming, said Reg Swart, regional executive of Fundamo, a company that makes banking applications.

“It takes one day to pay one bill. You have to physically go to the bank, then you must queue, a long queue,” he said.

In Afghanistan, the national police has been testing a service from mobile operator Roshan to pay its officers — a system that helps to limit corruption, the company said.

“We are currently moving from a trial to a full launch in paying the Afghan national police,” said Roshan’s head of mobile commerce, Zahir Jhoja.

Every month, police officers receive a text message in the language they prefer informing them they have received their salaries, Jhoja said.

A voice message is also left on the phone “because a lot of them are illiterate and cannot read,” he said.

The officer can then go get his money from an authorised Roshan agent.

“The benefit is that police and police officers don’t have to carry cash anymore: from their post they are able to send their money home, buy items, and take whatever cash they want from an agent, or to store for future,” he said.

The system has helped officers who were not receiving their full salaries due to “corruption and skimming.

“The police officers who received the money electronically were very surprised to learn that they earn so much money. When they were getting cash they were receiving 25 to 30 percent less,” Johja said.

Syeda Amtul

Finding the smartest mode of overseas money transfer is a concern especially for many expatriates, most of whom send money to their families back home. Speed, economy and security are the main features they look for in remittance instruments, such as, online and mobile phone transactions.
“A popular remittance choice for expats is the draft system. For decades, I have seen foreign workers queue outside banks the first week of every month. They are the only breadwinners of their families back home, who anxiously await the money transfer,” said Syed Saleem Quadri, a banking professional. He said that another mode – the telex transfer – is faster than the draft system, although costs involved in the latter are relatively high.
“Unfortunately, there are many expats who send money through the illegal transfer system of hawala (also known as hundi),” said Quadri.
Hawala transfers are illegal and informal. They are not effectively regulated by the government. However, Quadri listed three reasons why hawala is favored by some expats.
According to the World Bank’s website, the exchange rate margin for remitting money from Saudi Arabia to Bangladesh is 0.13 percent which is 2.84 percent of the total cost, to Egypt 2.13 percent of exchange rate margin and 5.40 percent of total cost, to India 0.45 percent of exchange rate margin and 3.08 percent of total cost, to Jordan 2.18 percent of exchange rate margin and 5.84 percent of total cost, to Pakistan 0.28 percent of exchange rate margin which is 2.50 percent of total cost, to the Philippines 1.61 percent of exchange rate margin which is 5.07 percent of total cost and to Yemen 0.03 percent of exchange rate margin which is 2.70 percent of total cost. These figures are for the collection period of the third quarter of 2009.
Quadri said remittance schemes offered by some banks are also popular due to “a good exchange rate and speed”.
According to him, all major banks offer online money transfer ranging from a few days to immediate transfer to the accounts of the beneficiaries. Additionally, some agencies “send money in minutes and offer rates higher than the usual bank rate,” he said.
“In the credit card system, an individual sends money to his account, which can be withdrawn with his credit card by his family from an ATM anywhere in the world,” he explained. “However, illegal workers in the Kingdom send money through hundi or hawala because those are the only options available to them.
“I chose to transfer money through an illegal channel because I thought it was convenient and guaranteed delivery of money at the doorstep. However, this caused many problems for my family in India,” said an Indian expat (requesting anonymity) in Jeddah, who remitted a few years back a “large amount of savings that I accumulated over months”. The amount was SR45,000, all of which he said he “lost in the transaction”.
“When the amount is large (typically amounts above SR20,000), questions are raised.
You must obtain a printout of your bank statement attested by the bank along with a mini statement from the ATM machine of your bank. As per the rules of the Saudi Arabian Monetary Agency (SAMA), these documents are verified by all banks and exchanges as a measure of safety against money laundering.
However, in an effort to save time and energy pursuing these formalities, many expats like me end up loosing a lot of money due to the hawala system,” the Indian expat said.
Quadri said the transactions are lost when the dealers involved in this illegal business are raided by the authorities.
“This mode (hawala) was used by people living in Asian countries who accumulated a lot of wealth through illegal ways,” said Quadri.
According to reports, remittances from Saudi Arabia’s estimated nine million mostly Asian foreign workers are soaring as the Kingdom recruits more expats for its massive development projects.
“Expatriates from South Asia have been working in Saudi Arabia for more than three decades. The increase in their remittances is due to the rise in their numbers and a hike in salaries,” said Quadri. – SG

Bola Adeyinka
Chief Executive Officer.

Peter Afam Emeleogu
Chief Visionary Officer

MMA: Share with Africans the strong compelling reason for eartholeum’s foray into technology and mobile payment systems?

The banking infrastructure in Africa is low compared to the developed countries of the world, in terms of bank branches, point of sales terminals and ATM points. However, there is a high level of mobile telephony penetration and this provides a veritable opportunity to gaining unlimited access to financial services that were not freely available.
The need to enhance security through cashlessness, from the norm in Nigeria and other African societies where almost all financial transactions are cash based, brings to fore the imperative of Mobile Money that reduces such risks inherent in a cash based society. Mobile Money democratizes access to financial services.
Technology is all about finding solutions to life, enhancing convenience; For example the invention of the wheel brought about a great revolution in transportation.
Technology is about impacting people’s life and this is highlighted in our vision and mission at Eartholeum Networks
Vision: To lead in the provision of electronic solutions and transaction channels for people in Africa.
Mission: We provide secure, reliable & easy-to-use electronic transaction solutions and channels to support your lifestyle
Because of our exposure to worldwide advancement in terms of security, authentication and convenience, vis-à-vis our experience, we feel strongly compelled to create the same ease, which we are doing leveraging on various technologies and partnerships worldwide to create an environment that is world class, with a view to even surpassing global standards.

This we can confidently claim and has been substantiated by our technical partners that the requirements we have tasked them to meet is an operation far beyond their present services which they are offering in Europe, Middle East and Africa.

MMA: From your point of view, as an independent provider in the Mobile Money space, how can a non telcos and non Bank operator like Eartholuem engage the Nigerian market?

Our business model identifies that consumers in Nigeria and Africa are now more sophisticated and require world class standard services as obtainable worldwide; we have therefore, adopted a business friendly model which recognizes business interdependency, this makes us willing and ready to work with the different players in the mobile money space.
Our platform is designed with interfaces that can support the backend of the various players in the mix, banks or telcos. Our product is interoperable and helps us to focus on those who have not experienced the formal financial system, giving them access to the various financial services. So be it bank or telco, we have put together an ecosystem that is based on two indices:
a. Value: Our motivation is to impact people’s lives, which adds value to them and our product is the vehicle. There is no argument where there is obvious value which we bring to the table at all times.

b. Collaboration: We view competition as collaborators and or business model eases our market entry as we bring value and are already working with a number of participants in the mix: Financial institutions, Money transfer service providers, switch companies, government agencies etc.

MMA: How do you plan to bring Formal financial services to millions of Nigeria?

We have put together a very robust Agent network that will be taking banking to your doorsteps. It gives individuals a touch point where financial services can be anchored within their neighborhood.
The byline of our product “life is mobile” carries the essence of our service delivery. We want millions of Nigerians to harness an ecosystem to access what hitherto was not available to them.

MMA: Educate us more on the regulatory landscape as it affects Eartholeum?

According to the CBN Mobile Money framework, 3 models were defined:
a. Bank Focused: Where a bank promotes her localized product.
b. Bank Led: Where a bank or group of banks in conjunction with a service provider promotes a mobile payment product.
c. Non Bank Led: Where a non financial institution partners with others (bank or telco) to promote a mobile payment.
We at Eartholeum can operate in any of these models because we have an ecosystem that is interoperable and accommodate multi-players. We are not limited in any way and can function well in any of the CBN framework models.
However, our overall objective is to deliver an ecosystem that can accommodate millions of never served and under served Nigerians and Africans, because we believe in collaboration.

MMA: What services should 140 million Nigerian be expecting in the next few months from the stables of Eartholeum?

Nigerians should expect a reliable, secure and easy to use service from Eartholeum Networks Limited.
Our platform will deliver the following:
• Person to person transfer on their mobile phones
• Utility payments from the confines and convenience of their homes using their mobile phones
• Access financial services within their neighborhood etc.
We are delivering a complete bouquet of effective, reliable and cost friendly product which resonate the word convenience.

MMA : Any Regional or West African plans?

Our vision and mission statements make it clear that, we have a pan African vision; because we recognize that the challenges across Africa are similar. Looking through Sub-Sahara Africa we have the same ideologies as it affects financial transaction, where cash plays a very prominent role.
In addition, there is no well rounded developed financial service delivery infrastructures, which has given rise to the high un-banked population within the continent.
Once the Nigerian market is well conquered we shall face the African frontier and according to our philosophy we are very open to exploring partnerships with other organizations within other countries in Africa and beyond.

Contacts:
Office Address:
14b, Ahmed Onibudo Street
Victoria Island, Lagos.
Website: www.eartholeum.com
bolaadeyinka@eartholeum.com
peterafam@eartholeum.com
info@eartholeum.com

Tel: +234-1-4627961, 4627963
Fax: 234-1-4611142