Two weeks ago The Nation asked a CBN official why the CBN bet on the bank-led Mobile Money Payment (MMP) model against a growing body of evidence that shows the effective role that mobile network operators (MNOs) have proven themselves the most capable entities of launching and scaling mobile money services and to lead the partnership with banks that in most cases is needed to fulfil regulatory requirements and commercial efficiency. Reportedly, the CBN official answered: “If you want me to tell you the truth, there are two ways to answer that question. I can tell you the truth and I can tell you the politically correct answer. The politically correct answer is that they do not need to get involved in MMP, but the truth is that the telcos have close to 90 million customers, banks only have 15 million. If you give them the power to do this, then you must have inadvertently given them the national economy.”

In a number of countries (Nigeria, but also Colombia, Ghana, Guatemala, India, and South-Africa, among others) financial regulators have been reluctant to grant MNOs mobile money licenses because they are

• afraid that the MNOs could scale very quickly and dominate the formal financial sector, leaving regulators unable to control such  growth and unable to use that potential to deepen access to finance.
• nervous about allowing MNOs to offer mobile money services, given they believe that only banks can adequately safeguard customer money. But in many other markets, the regulator has been able to design prudential regulation and market conduct frameworks which help to make non-bank e-money providers sound and effective. Such regulations are described in MMU’s recent regulatory paper:

Some regulators have also argued that given the goal of financial inclusion, the bank-led model must be preferred because in that way providers will offer customers a broader range of financial services. Unfortunately there is no evidence that bank-led models lead to earlier adoption of a broad range of financial services. Instead, the there is a growing body of evidence that non-bank providers, particularly MNOs, are needed to develop sound mobile payments and transfers services (and storage of value) which then can be used by a range of financial providers to offer more complex financial services that benefit customers, such as credit, savings, insurance, etc. This is because MNOs have assets, expertize, and incentives that banks don’t have. Also, as David Porteus wrote recently “Evidence from places like Kenya, which has seen rapid increases in formal financial inclusion as the result of the application of mobile technology, suggests that mobile payments have not so far led to much greater use of other formal financial services, but they have made a profound difference in people’s their lives through enabling, supporting, and resourcing familial and other social networks.”

Also, in Ghana, India, and Nigeria, three market where regulators have adopted regulatory approaches that are slowing the development of the mobile money industry we see that MTN and Airtel, two MNO groups, have taken the lead in the implementation of those mobile money deployments that are growing more rapidly (even though their partner bank holds the licence). Formally they comply with the regulation, while showing the contradictions of its rationale.

What the CBN official is reporting in the quoted interview is an inconvenient truth that rarely is openly debated: Despite the evidence that exists around how mobile network operators can contribute to financial inclusion via mobile money, some regulators are still highly resistant. So what can we do to help create an enabling regulatory environment for mobile money?

In cases where the regulator is moving slowly, or not at all, to improve the policy climate for mobile money and remove regulatory barriers, in my opinion the priorities for MNOs are:

1. Educate the regulator: We shall share with the regulator positive examples of enabling approaches that result in market development, provide them with more opportunities to learn from the most progressive peers, and share with them more information about the operational aspects of mobile money, as well as the risk mitigation measures put in place by the providers.
2. Show the negative impact that conservative policies have on people life and economic growth, and the positive impact of enabling policies: I believe the most effective way to tackle the political motivations mentioned above is to hold the regulators responsible for the harm that is being done to consumers in the status quo. This is possible only if the negative impact of those decisions is quantitatively appraised and compared with the likely impact of different approaches. The pressure of the donor community, peer networks, and the press could do the rest to advocate for reforms.
3. Be a responsible industry: MNOs should lead the development of a mobile money industry that embraces key principles of responsibility toward customers (e.g., the transparency of fees) and take seriously compliance with important rules such as those aimed to protect the integrity of the financial system against the risk of money laundering and financial terrorism.
4. Broadly engage with constituents beyond the financial regulator: Mobile payments are a key asset to enable the development of provision of other services in areas such as health, agriculture, welfare, etc. Influencers can be found in different ministries and regulatory authorities because they need mobile money to be developed in order to support the achievement of other important public goals such as women empowerment and the digitalization of government to people (G2P) transfers.
5. Build more alliances within the private sector: MNOs need to do a better job not just of coordinating their advocacy efforts with each other, but also aligning with other private sector players who also stand to benefit from the reform of financial sector regulation that would enable mobile money, such as merchants, utilities providers, and financial service providers (e.g. MFI’s and banks).

The other stakeholders (donor agencies, development partners, etc.) can contribute in many ways to achieve some of the above. Furthermore, they can certainly support policy makers introducing the culture of “better regulation”: There are ways to maximise public policy benefits whilst minimising the costs regulation may impose on the economy. “Better regulation” is a framework that can be adapted to different countries and sectors to prepare, follow-up and implement regulation, reinforcing the constructive dialogue between all public authorities as well as with stakeholders. The five principles of better regulation are: a) transparency, b) accountability, c) consistency, d) proportionality, and e) being targeted. These principles are translated into a range of regulatory instruments (from enhanced consultations and impact assessment to specific implementation monitoring) that would greatly improve the quality of regulation.

P.S.: These tools are not only limited to circumstances such as those in Nigeria. All markets and all MNO’s should be doing similar things.

In the Guidance, FATF emphasizes that applying an overly cautious approach to AML/CFT safeguards can have the unintended consequence of excluding legitimate businesses and consumers from the financial system. AML/CFT controls should not inhibit access to formal financial services for financially excluded and underserved groups, including low income, rural sector and undocumented groups. The document provides great clarity and guidance on the FATF Recommendations that are relevant when promoting financial inclusion and shows how the Recommendations can be read and interpreted to support financial access.

This project was conducted in partnership with the World Bank and the Asia/Pacific Group on Money Laundering (APG), and in consultation with several private sector representatives, including the GSMA. The first version of the FATF Guidance paper on financial inclusion was published in February 2011. The main change in this second version is that it reflects evolution of the FATF Recommendations which in the 2012 edition reinforce the role of the risk-based approach (RBA), as a general and underlying principle of all AML/CFT systems. FATF – and the GSMA – believe that the development of risk-sensitive AML/CFT frameworks will be a key step for countries that wish to build a more inclusive formal financial system, and give access to appropriate financial services to a larger proportion of the population, including the most vulnerable and unserved groups.

In March 2013 FATF adopted its new guidance to assist in the conduct of risk assessment at the country or national level. In fact, the 2012 FATF Recommendations require that countries identify, assess and understand the money laundering and terrorist financing risks facing them and adapt their AML/CFT system accordingly. The assessments carried out at the national level may form the basis for determining whether to apply enhanced or specific measures, simplified measures, or exemptions from AML/CFT requirements. The Guidance provides an interesting example: in Switzerland a multistakeholder task force has played a key role in the identification of low-risk products for which the exemptions could apply. In Guidance paper on financial inclusion, in the section related to the risk assessment methodologies, FATF refers also to the GSMA Methodology for Assessing Money Laundering and Terrorist Financing Risk, which offers a systematic approach for assessing the risks of mobile money. Effective solutions to manage and mitigate the ML/FT risks while enabling digital financial inclusion are also pointed out in the policy paper the MMU has recently released.

This paper describes how mobile money is most likely to succeed where there is an open and level playing field that allows non-bank mobile money providers, including mobile network operators (MNOs), to offer financial services. In addition, the paper describes how mobile money services can adequately provide consumer protection, how the challenges of anti-money laundering and combating the financing of terrorism (AML/CFT) compliance can be addressed by promoting risk-based know-your-customer (KYC) procedures, and how cost-effective regulatory solutions can be implemented to develop and set up distribution networks and accelerate customer adoption.

As awareness grows that financial exclusion is a source of risk for the financial system and that financial inclusion reinforces the objectives of financial stability, integrity, and consumer protection, mobile money is increasingly recognised as a means of driving economic and social growth through a cash-lite economy. As such, these regulatory reforms should not simply be items on the regulator’s financial inclusion agenda; they should become central to national strategies for improving financial stability and integrity, protecting financial consumers, fostering economic growth and job creation, and guarding the financial system against the risks of the widespread use of cash. The countries that have embraced the reforms discussed in this paper are ultimately driving innovation in mobile financial services and are building inclusive, secure, and efficient financial sectors.

What is an excise duty?

An excise duty is similar to a VAT as its value is based on the price of the service. However, unlike VAT, excise duty is applied on the amount sold by an operator, as opposed to being applied to the retail price.

This difference is important because from the perspective of the consumer, the tax is not distinguishable. Operators will be required to pay this tax directly based on the revenue generated by the transactions.

How could this impact the market?

As the operator pays the tax directly, the operator could decide to take the tax hit completely, leaving retail prices unchanged, and to absorb this extra cost entirely, but this would significantly harm its profitability and in the medium term prices would have to rise. Alternatively, the operator could pass part of this cost through, and the burden of the tax will be reflected in a proportional increase of the price of mobile money services for the customer.

Therefore, in general, excise tax either:

• Makes the market less profitable for a provider which would decrease their willingness to invest and develop, e.g., products and distribution networks
• Makes the market prices higher, increasing the barrier for customers to use the service.

Is the transposition of the excise duty on the consumer legal?

The Kenyan Finance Minister Njeru Githae has declared that the duty will not affect the consumer, adding that it will be paid by the service providers.  He went further to warn operators that the government will monitor the mobile operators to ensure they don’t make any secret adjustments to transpose the cost to the customer.

While I am sure that the Ministry will check collusive pricing behaviour, the Minister shall be aware that it would be perfectly rational and economic for operators to increase retail prices by the same amount of the new tax, as it is a legitimate cost increase they are facing. This transposition would be legal.

What’s next?

Mobile money transfer services in Kenya are an integral part of the country economy, with almost 20 million Kenyans using this service. The Central Bank of Kenya estimates that in the first half of 2012 KES 726.23 billion (approximately USD 8.6bn) were transferred through the mobile money platform. It’s hard to understand the rationale of this new tax on a service that is greatly benefiting the whole Kenyan society. Voice services in Kenya are taxed at a rate of 26% ( 16% VAT + 10% excise Duty). Adding this new 10% tax on mobile money transactions will stifle a nascent and important driver of commerce and socio-economic development. Unfortunately there was no consultation or engagement with stakeholders before the amendment was introduced.

The President must assent to it for the tax to become law. Our hope is that he will deny his assent.

There are two things to keep in mind when discussing interoperability in mobile money. First, the maturity of the mobile money deployments in the market will define the content and timing of the discussion. Most mobile money deployments are busy building the foundation of their services, such as a strong agent network and an active customer base, and cannot invest in connections to external parties. This becomes more possible for advanced deployments.

Second, it is important to be open to the opportunities that a better-connected mobile money environment can realise, and not prematurely focus on the technical solution or which assets should be shared. Interoperability is a tool and not an end goal by itself. Market players will likely drive this development if there are clear strategic and financial incentives to do so.

Interoperability and regulation will be discussed further at the Leadership Forum at the NFC & Mobile Money Summit in Milan next week. That discussion will take up from a previous MMU engagement on interoperability and regulation at the AFI Global Policy Forum, which highlights can be found here.

Download the full report Expanding the Ecosystem of Mobile Money: Considerations for Interoperability. Keep an eye on this blog as MMU will focus more on different forms of interoperability in mobile money in the months to come. Please send us your feedback by posting comments below or via email.

I was invited to join the panel on how to break the barriers that are impeding mobile financial services to make financial inclusion real. AFI members from Mexico, Pakistan, and Ghana were on stage with me, as well as one representative of MasterCard. We ended up spending all the session talking about interoperability in the form of enabling e-money to flow between wallets of different mobile money providers. The position of the GSMA was perfectly in line with those of the Mexican and Pakistani regulators. Today the key takeaways of that panel are on the first page of the GPFconnect, the magazine that is distributed every morning to all participants with the news and the views from the 2012 GPF. They are:

1. Interoperability is a means to an end. Financial inclusion should be a key focus rather than interoperability itself. Although it is a tool that can contribute to financial inclusion in certain circumstances, it does not guarantee it.

2. Interoperability must make business sense. Regulators need to be cautious about intervening and ask whether they are creating risks and extra costs for service providers by launching products and services in a market that is not ready to support them. Without a strong regulatory framework and customer confidence in the security of the system, interoperability will not succeed.

3. Timing is everything. There is no question that we need interoperability – the question is when and how. The maturity of the market must be taken into account and data and information need to be gathered that reveal the right time and the right source to launch services.

MMU released a position paper on interoperability early this year. Another contribution to the discussion of interoperability will be published in October in the MMU 2012 Progress Report.

In October during the MMU Leadership Forum we will have one session on this topic, with both operators and regulators among our guests speakers.

The core session of the first day of the GPF was dedicated to the country updates on the progresses made to advance financial access for poor households and small enterprises, particularly by those AFI members (93 financial sector authorities from global south) that joined the Maya Declaration and made specific financial inclusion commitments at last year’s GPF. Policymakers from Fiji, Equatorial Guinea, the Philippines, Malawi, Mexico, and Rwanda presented their achievements and challenges in building a support framework for financial inclusion. During the second part of the panel, the regulators left the stage and some representatives from the private sector, as well as CGAP and the Bill & Melinda Gates Foundation, joined AFI Executive Director Alfred Hannig to discuss possible ways to support the Maya Declaration.

Seema was one of panellists who was invited to discuss the potential impact of the Maya Declaration on the global financial inclusion landscape, the development of new forms of collaboration with regulators at global and country level, and the possible role that industry stakeholders can play in achieving these financial inclusion goals. MMU fully supports the Maya Declaration, and the push towards greater financial inclusion by so many countries across the globe. We see value in these commitments where they lead to policies and regulatory frameworks that support growth but do not stifle innovation. Probably one of the best outcomes of the Maya commitments at national level is that policymakers will improve coordination and engage in consultation with the private sector. When designing new policies, the implementation aspects need to be carefully assessed, particularly when the industry that is going to be regulated is young (out of around 130 deployments that active today over 70% of deployments launched in 2010 or thereafter) and the private sector needs to make significant upfront investments into mobile money services if they are to be successful.

Since 2009, MMU has helped to foster dialogue between regulators and mobile network operators through the GSMA MMU Leadership Forum (GSMA’s annual event on mobile money policy and regulation), in country, in collaboration with AFI and more recently through collaboration with the AFI Mobile Financial Services Working Group. MMU is already working with AFI members, such as the BCEAO, to help them to design and implement mobile money regulation.

MMU can help to facilitate discussion and consultation with the private sector, to shape policies regulation that most effectively supports the growth of mobile money industries that contribute to financial inclusion. Regarding the implementation of national objectives that each country sets up, MMU can also help to monitor progress towards financial inclusion and the accomplishment of the Maya commitments. The Global Mobile Money Adoption Survey provides data around the performance of the mobile money industry, such as the rate of customer adoption, which is a key indicator of success of mobile money policies.

PS: Nestor Espenilla, Deputy Governor of the Bangkok Sentral ng Pilipinas (BSP) is the new chair of the AFI steering committee. This is very good news. Mr Espenilla has contributed significantly to the growth on mobile money in the Philippines, and has collaborated with MMU in different circumstances helping the GSMA to advocate for enabling policies sharing the experience of the BSP. Under his leadership we hope that the AFI network will be even more active in the promotion of better regulations for mobile money.

This post is the fourth and last part of a series on the CGAP and the Mobile Money for the Unbanked blogs on the topic of mobile financial services in francophone West Africa. This short series features prominent voices from the region and discuss new developments and implications for the industry as a whole. Also read part 1, part 2 and part 3 of the series.

MMU was invited to participate in the Regional Consultation on Mobile Banking organized by the Banque Centrale des Etats de l’Afrique de l’Ouest (the Central Bank of West African States or BCEAO)  to discuss the state of mobile money in the Union Economique et Monétaire Ouest Africaine (the West African Economic and Monetary Union or UEMOA) and whether there is any policy intervention that could possibly advance the development of mobile money. It was encouraging to see the BCEAO undertake a participative approach to inform its decision making process. The regulator considers the private sector’s experience in delivering mobile money an important resource, and is keen to design any policy intervention using the lessons learnt by other regulators (representatives of the Central Bank of Kenya, the Bangkok Sentral ng Pilipinas, and Bank of Tanzania attended the consultation) and the evidence provided by a comprehensive set of data, including those presented by the GSMA, the Consultative Group to Assist the Poor (CGAP), and the African Development Bank (ADB).[1]

MMU presented the state of the market based on the quantitative information from the 2011 Global Mobile Money Adoption Survey, and based on that data formulated some observations on the possible development of the policy and regulatory frameworks for mobile money. The analysis highlighted three key themes:

• Customer Adoption – Of the 7 mobile money deployments in the UEMOA which participated in GSMA’s survey, the number of registered and active customers (3.1m and 190,000 in June 2011 respectively) show that mobile money in the region has faced difficulties in reaching scale. However, the growth rate between 2010 and 2011 is encouraging, with the West African deployments growing at the same rate as the rest of Africa and faster than in the rest of the world. Among the eight UEMOA countries, Côte d’Ivoire in particular is experiencing fast growth.
• Product Diversification – Given the range of diverse needs that the unbanked face, a broad range of service offering is advisable. Most services in the region offer a good mix of products. Niger stands out as a positive example with healthy customer uptake of P2P transfers, bill payments and bulk payments.
• Distribution – Another key element for the success of mobile money is the distribution network. The number of mobile money agents in the region is not vast in absolute terms, but the market is still in an early phase of development. A comparison between the current size of the distribution network in the UEMOA and the data on the ratio of customers to agents in the experience of M-Pesa was shared to support this opinion. On average, active mobile money agents in the UEMOA serve 78 active customers and do 4.7 transactions per day.

At the end of the presentation MMU was invited to formulate suggestions to the regulator, which are as follows:

• In UEMOA all players are at an important time of their learning curve. New providers are entering the market increasing competition and professionalism. Today there are 14 mobile money deployments in the region – the latest one to be launched was Airtel in July, with a product called “M-Ligdi” or “Airtel Money” that is now offered in Burkina Faso. Furthermore customer adoption in the Côte d’Ivoire and product diversification in Niger can provide relevant case studies and learnings. Therefore, this is not the time for a revolution of the regulatory framework that the BCEAO has designed for the UEMOA, because the market in the region is not broken, and creating regulatory uncertainty could deter the providers from keeping their level of investments and slow or reverse the current trend of market growth.
• Rather, at this point it is interesting to observe in the detail what level of development the market will reach in 6 to 12 months, and to continue the dialogue with the providers in order to assess what corrections could make the current regulatory framework work at best, reducing market entry and compliance costs and favouring the quality of the offer while keeping the highest standards of technology security and consumer protection. For instance, to encourage new actors to enter the market, and in particular operators to directly request an e-money license, it shall be considered to speed up the licensing process, for example by reducing the paperwork (i.e., asking the providers to submit part of the contracts with their partners sometime after the license has been granted), or to lower the capital minimum requirements (which is currently 300M CFA franc).
• To increase customer adoption, the provision of financial education programmes would be relevant. The BCEAO could significantly contribute to increase awareness of the advantages of digital currencies compared to cash among potential mobile money users (in the eight countries of the UEMOA notes and coins are still the prevalent mean of payment by far) and to develop customers confidence in mobile money and the providers.
• Regarding the agents, we have explained why their number shouldn’t be an issue, although there are initiatives that could help to improve the efficiency of the distribution networks: the BCEAO could support market development by making available to the private sector all necessary data in order to better inform their decisions on the localization of the agents. In this sense the work done by the Comisión Nacional Bancaria y de Valores (CNBV) in Mexico has been much appreciated by the Mexican stakeholders and could serve as an example to the other regulators (see, i.e., the financial inclusion data report as well as the report on banking agents).
• Finally, early this year the Financial Action Task Force (FATF-GAFI) has released a new framework of recommendations on Combating Money Laundering and the Financing of Terrorism & Proliferation. The updated international standards allow now more flexibility for simplified measures to be applied in low risk areas such as mobile financial services. The risk-based approach allows regulators to apply AML/CFT precautions proportionally and incrementally, and the BCEAO could draw on its own experience and on international practices to test new solutions for know-your-customer (KYC) procedures that would help the promotion of financial inclusion though mobile money while safeguarding the objective of fighting terrorist financing and money laundering.

L’approche participative de la BCEAO en matière de réglementation : l’engagement du programme MMU auprès de la Banque Centrale des Etats de l’Afrique de l’Ouest sur les initiatives visant à accroître l’adoption des services d’argent mobile

Le programme MMU a été invité à participer à la consultation régionale sur le « mobile banking » organisée par la Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO)  afin d’échanger sur l’état du secteur de l’argent mobile dans l’Union Economique et Monétaire Ouest Africaine (UEMOA) et de discuter dans quelle mesure une nouvelle intervention en matière de réglementation était nécessaire pour avancer le développement de l’argent mobile. Il est encourageant de voir que la BCEAO a entrepris une approche participative afin d’être autant informée que possible lors de son processus décisionnel. La BCEAO considère que l’expérience du secteur privé en matière de provision de services d’argent mobile est une ressource importante. Afin de définir toute nouvelle intervention, la BCEAO souhaitait d’un part, utiliser les leçons apprises par les autres autorités réglementaires compétentes à l’étranger (des représentants de la Banque Centrale du Kenya, de la Bangkok Sentral ng Pilipinas, et de la Banque Centrale de Tanzanie ont assisté à la consultation), et s’appuyer sur un ensemble de données exhaustif incluant notamment celles fournies par la GSMA, le CGAP et la Banque Africaine de Développement (BAD).[2]

Le programme MMU a présenté l’état du secteur, se basant sur les données quantitatives de l’Etude 2011 sur l’Adoption des Services d’Argent Mobile et, à partir de ces données, a formulé un certain nombre d’observations sur le possible développement du cadre réglementaire sur l’argent mobile. Cette analyse mettait l’accent sur 3 thèmes en particulier :

• L’adoption de l’argent mobile – 7 services d’argent mobile de l’UEMOA ont participé à l’étude de la GSMA. Le nombre total de clients enregistrés d’une part et actifs d’autre part (3.1 millions et 190.000 en juin 2011 respectivement) dénote une certaine difficulté à atteindre une échelle importante. Toutefois, les taux de croissance sont très encourageants, avec les services de la région UEMOA grandissant à la même vitesse que les services du reste de l’Afrique, et plus rapidement que ceux dans le reste du monde. Des 8 pays de l’UEMOA, la Côte d’Ivoire est le pays qui présente la croissance la plus forte.
• Mix-produit et diversification de l’offre – Etant donné le nombre de besoins différents de la population non-bancarisée en matière de services financiers, on peut recommander une offre de service large et diversifiée. Le Niger s’illustre ici comme un exemple en raison de la forte adoption des transferts de personne à personne, paiements de factures et paiements groupés via la plateforme d’argent mobile.
• Distribution – Un autre facteur clé de succès pour l’argent mobile est le réseau de distribution du service. Le réseau d’agents d’argent mobile dans la région n’est pas vaste en termes de nombres, mais le marché est encore relativement jeune et est en plein développement. Une comparaison de la taille actuelle du réseau d’agents dans l’UEMOA ainsi que du nombre de clients actifs par agent actifs par rapport à M-PESA a été partagée afin d’étayer ce point. En moyenne, les agents d’argent mobile de l’UEMOA servent 78 clients actifs et effectuent 4.7 transactions par jour.

A la fin de cette présentation, le programme MMU a été invite à formuler des suggestions pour le régulateur. Ces suggestions sont les suivantes :

• Dans l’UEMOA, les acteurs du secteur de l’argent mobile sont en pleine phase d’apprentissage. De nouveaux acteurs sont en train d’arriver sur ce marché, ce qui contribue à accroître la compétition et la professionnalisation du secteur. Aujourd’hui, il y a 14 services d’argent mobile dans la région – le dernier à avoir été lancé est le service “M-Ligdi” or “Airtel Money” de l’opérateur Airtel au Burkina Faso en juillet. De plus, l’adoption en Côte d’Ivoire et la diversification de l’offre au Niger offrent des cas d’étude intéressants. C’est pourquoi ce n’est pas le moment d’engager une révolution du cadre réglementaire mis en place par la BCEAO dans l’UEMOA. Le marché dans la région n’est pas en état de disfonctionnement, et la création d’incertitudes quant à la réglementation pourrait décourager les fournisseurs de services à poursuivre leurs investissements, et ralentir voir inverser la tendance en matière d’adoption.
• A ce stade, il est davantage intéressant d’observer précisément quel sera le niveau de développement du marché dans 6 et 12 mois, et de poursuivre en parallèle le dialogue avec les fournisseurs des services d’argent mobile afin d’évaluer quelles corrections éventuelles peuvent être portées au cadre réglementaire actuel afin qu’il fonctionne au mieux, en réduisant le cout d’entrée sur le marché et de mise en conformité et en favorisant la qualité de l’offre tout en conservant les plus hauts standards de sécurité technologique et de protection des consommateurs. Par exemple, pour encourager de nouveaux acteurs à entrer sur le marché, et en particulier pour encourager les opérateurs à demander des licences directes, il devrait être considéré d’accélérer le processus d’obtention d’une licence, par exemple en réduisant les formalités administratives et la paperasserie (par exemple, en demandant aux fournisseurs de service de soumettre une partie des contrats avec leurs partenaires après l’accord d’obtention de la licence), ou en diminuant le capital minimum requis (qui est actuellement de 300 millions de francs CFA).
• Il serait également pertinent de mettre en place des programmes d’éducation financière afin d’accroître l’adoption de l’argent mobile. La BCEAO pourrait ainsi contribuer de façon significative à la sensibilisation de la population aux avantages des monnaies digitales en comparaison à l’argent liquide (dans les 8 pays de l’UEMOA, les pièces et les billets sont toujours le moyen de paiement le plus largement utilise) d’une part, et à développer la confiance des clients dans l’argent mobile et les fournisseurs de service.
• Pour ce qui est des agents, nous avons expliqué pourquoi leur nombre n’était pas un problème, bien qu’ils y aient des initiatives qui pourraient aider à améliorer l’efficacité des réseaux de distribution : la BCEAO pourrait soutenir le développement du marché en mettant à disposition des fournisseurs de services les données nécessaires susceptibles d’informer leurs décisions en matière de localisation de leurs agents. Le travail en ce sens effectué par la Comisión Nacional Bancaria y de Valores (CNBV) au Mexique a été largement apprecie des acteurs Mexicains et pourrait servir d’exemple à d’autres régulateurs (lisez par exemple le rapport sur l’inclusion financière ainsi que le rapport sur les agents).
• Enfin, en début d’année, la Financial Action Task Force (FATF-GAFI) a publié un nouveau cadre de recommandations pour combattre le blanchiment d’argent et le financement et la prolifération du terrorisme. Ces nouveaux standards internationaux permettent maintenant plus de flexibilité pour la mise en place de mesures simplifiées pouvant être appliquées aux services à bas risques comme les services financiers sur mobile. Cette approche basée sur la compréhension des risques permet aux régulateurs d’appliquer les règles de LAB/CFT de façon proportionnelle et incrémentale, et la BCEAO pourrait utiliser sa propres expérience et ces pratiques internationales pour tester de nouvelles procédures de connaissance du clients (KYC) qui pourrait aider à promouvoir l’inclusion financière à travers l’argent mobile tout en préservant l’objectif de lutter contre le financement du terrorisme et le blanchiment d’argent.

MMU: Sergio, why is financial inclusion a priority for Namibia?

SdS: Namibia has a population of approximately 2.1 million, spread thinly across 824,292 square kilometres. As a comparison, Germany, with a population of 82 million, is only a third the size of Namibia. Namibia is classified as a middle-income country with GDP per capita of US$7,300, but that income is unequally distributed resulting in one of the highest Gini coefficients in the world. The high costs and difficulty associated with serving a low-density population has excluded much of the poorer population from the formal banking sector. Against this background, the Bank of Namibia in recent years has set a strategic focus on promoting financial inclusion in Namibia. This is currently documented as part of the Bank of Namibia (BON, the national central bank) Strategic Plan 2012 – 2016.

MMU: What makes mobile money functional to achieve financial inclusion?

SdS: According to a recent study 62% of Namibians are banked, but for 49% of them it still takes more than one hour to go to a bank. Low population density spread across the country means that traditional brick-and-mortar solutions are not cost-effective to reach the 38% of people who are financially excluded. There are 2,681,339 mobile connections in Namibia; alternative distribution channels such as mobile phones are key to driving financial inclusion, and also to making the financial system more efficient for the people who are banked but cannot easily get daily access.

MMU: The Central Bank has adopted a “test and learn” approach, with at least one deployment launched before the regulation was issued. Is that correct?

SdS: BON received its first application from a non-bank to provide Mobile Payment Services (MPS) at the end of 2009. The first full license for MPS in Namibia was issued in 2010, before any specific regulation for mobile payments was in place. Driven by the objective to promote financial inclusion and seeing the potential of MPS in contributing to this goal, BON used the existing regulatory framework for payment systems to issue this license.

MMU: Then BON has decided to develop a regulation for electronic money…

SdS: After issuing this first license, BON realised the need to develop a specific regulation that catered to the uniqueness of MPS and the adopted technology. The aim was to develop a regulation framework that safeguarded the national payment system and the public; enabled innovation and competition in payment services that could promote financial inclusion; and provided clear guidance to potential electronic money (E-Money) issuers.

In the process of developing a regulatory framework, the bank decided to focus on regulation for e-money and not only MPS. The rationale behind this change was that E-Money would enlarge the scope of the regulation which would cover MPS as well as any similar services that may emerge in the future including payments via mobile phones, computers, cards, etc.  This is consistent with the National Payment System Vision 2015 of Namibia to promote access to payment services by providing market access to non-banks that offer alternative innovative payment services such as mobile money. The oversight of the first deployment has given us the opportunity to learn important lessons that we have used for the development of the new regulatory framework.

MMU: Tell us about the new regulatory framework. What are the main points touched by the regulator?

SdS: After much investigation and consultation (within BON as well as with all relevant stakeholders, including banks and mobile network operators) on 28 March 2012 the Bank issued the new “Determination on the Issuing of E-Money” (PSD-3). PSD-3 was issued under the Payment System Management Act, 2003, as amended. The regulation considers numerous key policy issues such as protection of customer funds and the use of agents, and covers a number of services including opening an electronic money account; loading value onto an electronic wallet (cash-in); redeeming value from an electronic wallet (cash-out); paying bills; sending domestic money transfers; and receiving/disbursing domestic money transfers.

This regulation is accompanied by guidelines for issuers of electronic money and other payment instruments, and a circular on the transaction and balance limits for electronic money accounts and the fees payable. The objective of this regulation is to encourage more players to enter the E-money space by providing an enabling environment for innovative financial services that promote both financial inclusion and customer protection.

MMU: Both banks and mobile network operators can apply to receive a license that would allow them to issue E-Money. What is the rationale?

SdS: A key policy decision taken was to allow both bank and non-banks to become E-Money issuers. The reason for this is to allow for greater competition and innovation. It is believed that with more players in the market there is a greater likelihood of reaching more of Namibia’s predominantly rural population. While some may have fears to allow non-banks to play in this space, BON believes that the risks are sufficiently mitigated in the approved regulatory framework to allay such concerns.

In the Declaration, members recognize the key role that financial inclusion policy plays in bringing stability and integrity, its role in fighting poverty, and its essential contribution toward inclusive economic growth in developing and emerging countries. The Declaration reaffirms the importance of peer-to-peer knowledge exchange and learning among financial regulators and policymakers to help develop and implement innovative and relevant policy solutions.

Several countries used the forum to announce new initiatives to expand their population’s access to financial services:

• Brazil agreed to launch a National Partnership for Financial Inclusion in November.
• Peru pledged to enact a new law regulating electronic money within the next year.
• Mexico committed to establish banking agents or branches in every municipality in the country by 2014.
• Tanzania pledged to raise its financial access level to 50% of its population by 2015 through mobile banking and other initiatives.
• Nigeria said it would work to reduce its unbanked by 50% by 2020.
• Malawi will introduce agent banking in 2012.
• Zambia said it would raise financial inclusion to 50% within two years.
• Rwanda set a target of 80% by 2017.

Other members making commitments included members from Kenya, Uganda, Ethiopia, Burundi, Pakistan, Fiji and the Philippines.

AFI will provide the necessary support to its members in achieving their commitments and will continue to monitor development. The progress review will be showcased at the 2012 GPF in South Africa.