Rwanda: Central Bank Approvals Delay Crossborder Mobile Money Service

By Ben Gasore

When telecommunications companies MTN and Airtel Rwanda announced they were going to start cross-border mobile money transfers between the Northern Corridor states in November last year, subscribers were excited at the prospect.

This would make it easier for citizens in Rwanda, Uganda and Kenya to transfer money across the three East African Community (EAC) countries.

Presently, traders and ordinary people like parents with children studying Uganda or Kenya have to use more expensive options like Western Union and MoneyGram or commercial banks to send and receive money.

Others have to send the money through bus drivers plying the regional routes, an option that is not only risky, but time-consuming as well.

Some also use forex dealers at border points (who have mobile money telephone lines of both Rwanda and its bordering countries) in order to send and receive money, which is risky and unreliable.

All of these options clearly show the trouble people go through to carry out cross-border money transfer.

That's why when MTN and Airtel announced they would start cross-border mobile money transfer services between the three Northern Corridor states, Rwandans were excited since this was seen as an easier, safer and quicker option for them. Though the service was initially planned to kick off at the end of November, subscribers are still waiting more than two months down the road.

What is delaying the launch of the much-awaited service?

According to the two telecom companies, the infrastructure to facilitate the service is ready. However, they say there have been delays in getting the necessary regulatory approvals by the central banks in Rwanda, Kenya and Uganda.

In an interview with Business Times, Teta Mpyisi, the MTN Rwanda corporate communications manager, said approvals from the central banks are vital as this help the service providers in setting a benchmark currency exchange rate for the countries in which they will be operating.

"One of the reasons for the delay was getting the required documents from within the region. Because we intend to work with MTN Uganda, we had to get approval documents from them and the Bank of Uganda," she explained.

She added that they received the documents about two weeks ago, and submitted them to the National Bank of Rwanda (BNR) for the final stage of approval.

"They now have all the necessary documentation... It is after we have gotten a go-ahead from BNR that we will know when to launch the service. This shouldn't be too far though," she said.

BNR's Adeline Mukashema said the central bank has already given approval to Tigo (which is operational) and Airtel for cross-border mobile money.

"Further information can be given by the companies themselves," Mukashema added.

Airtel Rwanda, which last year got the licence from the central bank to launch the service, says it has been operating a pilot phase of the service (to test it) as it waits for approvals from Kenya and Uganda. The pilot phase started in October.

"Airtel Rwanda received approval from the central bank and our counterparts in the region are currently in the process of acquiring the same from their respective central banks," said Teddy Bhullar, the Airtel Rwanda managing director.

Analysts and subscribers say once the two firms have launched the service, they will have made a big step towards facilitating regional integration in that they will be facilitating trade by reducing transaction costs, enabling a cashless economy and boosting financial inclusion. Rwanda has several traders who import and export goods from and to neighbouring countries, which makes a seamless mobile transfer service an important tool in regional trade.

Also, individuals like parents with children studying in Uganda or Kenya, would find it easier and cheaper to send money to their children in these countries.

There are also several Rwandans involved in informal cross-border trade, who would benefit significantly from the service while transacting business with their counterparts on the other side of the border.

Tigo Rwanda launched its cross-border mobile money facility with its sister company, Tigo Tanzania in February last year.

Over Rwf179.6 million was sent from TigoCash (in Rwanda) platform to Tigo Pesa (Tanzania), while Rwf139.8 million was pushed through the Tigo Pesa facility to TigoCash, figures from the telecom indicate.

Pierre Kayitana, the Tigo Rwanda public relations manager, told Business Times that people were getting more familiar with the service, adding that the telecom firm was planning to expand the service to Kenya, Uganda and the Democratic Republic of Congo this year.

"We need all these telecoms to start the service as soon as they can. It would make life easier for us as parents with children studying in neighbouring countries," Grace Mutangana, a parent whose children are studying from Uganda, said.

Mutangana told Business Times that she uses forex bureaus in Nyabugogo, a city suburb, whenever she wants to send money to her children in Uganda, which charge her an additional Rwf10,000 fee. The forex bureaus then send the money to an affiliate forex bureau in Kampala, from where the guardian of the children 'withdraws' the money after a few hours or the next day.

She said once the service is operational, it would be easier for her children in case they fall sick or need money for upkeep.

More than a third of the mobile phone subscribers are registered on the mobile money service.

With the mobile phone penetration rate almost surpassing 70 per cent, the launch of the service could attract more clients, especially traders and ordinary Rwandans with relatives working across the EAC bloc.

SOURCE:THE NEW TIMES

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