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Rise of mobile money in Africa

Cape Town – There is good news for the development of products and services in the mobile money and digital payments ecosystem, said an expert presenting at AfricaCom, Africa’s largest communications conference and exhibition.   

In the past 12 months, the African continent has seen an exponential increase in the number of mobile money transacting and payment solutions. For the unbanked on the African continent – which remain the majority – mobile money solutions have given access to mCommerce, which has in turn, opened up major economic opportunities.  

AfricaCom speaker Kim Dancey, regulatory head and specialist advisor for alternative banking at First National Bank, spoke to Fin24 about the core issues around the issue. She is a lawyer with a particular interest in the regulatory aspects of new payments products and services as well as financial inclusion in developing and emerging economies.

What is the key message you will be bringing to AfricaCom?

Dancey: “There has been a very noticeable acceptance of financial inclusion as a measurable policy objective by regulators. Service providers are therefore well placed to leverage products and services that meet financial inclusion objectives as a business imperative. This is good news for the development of products and services in the mobile money and digital payments ecosystem.”  

What technology has been invented over the past year that has had a significant impact on your overall operation?

Dancey: “An interesting development, which although being deployed across multiple regions, is particularly prevalent in southern Africa – is that of the mobile money companion card. These cards are usually a type of pre-paid card linked to the same source of funds as the mobile money account. A mobile money user can use the mobile phone or the card as the channel to make payments.”

What barriers still remain that hamper growth and how do you overcome them?

Dancey: “One of the challenges that the industry still faces is the slower than required adaptation by regulatory bodies of the financial inclusion policies advocated by the governments and central banks.

“A further challenge is that there is still a significant gap between the accepted potential for mobile money and the actual use of mobile money. The mobile money ecosystem still reflects a ‘dump-and-pump’ behaviour, where the ‘funds go in and then directly out’.  

“The challenge is to move mobile money from being a payment instrument to an offering that is used as a money management tool. This challenge sits both on the supply side and on the demand side.

“On the supply side, it is a question of the corporate appetite for serving low income segments, a business case that requires high and sustained use; as well as in the design of products and services that are appropriate and user friendly.  

“On the demand side, to the individual, the mobile money offering has not yet become a means of improving financial wellbeing beyond the receipt and transfer of remittance funds.”

How will mobile advancements help small business advance to new levels of self-sufficiency and sustainability?

Dancey: “Research indicates that small/micro-entrepreneurs see mobile money as a key part of their business; many report time and cost savings in making mobile payments.

“Business owners pay, and are paid frequently, mobile money assists in lowering cost and saving time by enabling a more convenient means to make payments.

“Mobile money assists as a means to increase the speed of the cycle from cash to inventory to receivables and back to cash.

“One of the challenges to the mobile money value proposition to SMME’s is record keeping – the importance of record keeping as a means of monitoring the progress of a business is well documented.

“Records can be used to show whether a business is improving and record keeping can increase the likelihood of business success.

“Mobile money does not solve this requirement - consideration should be given to solving for this essential requirement to the potential success of a business.”

* AfricaCom will take place at the Cape Town International Convention Centre November 11-13, 2014.

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