adminreceive money from anywhere in Zimbabwe, blah, blah, blah!
These are some of the latest touting words from campaigns for the new transaction payment technology in town accessible through cellphones; yes! This is mobile money. Several financial institutions in Zimbabwe have recently launched a variety of mobile money brands to supply the consumer cash market with what is considered as smart money transfer technology via the mobile phone.
A survey has been carried out in recent weeks to sample the various brands of this new transacting technology and today we will discuss the nature of the technology as well as some samples of brands that have been accepted by the market.
What is mobile money?
Known as M Pesa in Kenya, where it was first launched (in Africa) in 2007, mobile money is the ability for cellphone users to transfer money from one subscriber to another. It also consists of subscribers withdrawing cash from appointed mobile money agents. For a subscriber to access this facility they have to register their SIM card with a company that provides this facility. To load the money into their account, the user needs to visit the nearest agent and deposit cash there in exchange for “e-Float”. This e-Float is like money that can be used to make payments or transfer to any other person. The e-Float can be transferred to any person or merchant via encrypted SMS. The receiver of the virtual cash can either use it for further transactions, buy airtime or cash-out from mobile money designated outlets.
According to public information posted by Econet Wireless in the Press this week, the way we look at sending and receiving money is about to change. “Once, our understanding of money transfer involved sending registered mail from the local post office. It also meant trusting bus drivers and conductors to deliver cash to our relatives. It also meant we had to wait for the bank to open and then wait in long queues to send and receive money. Mobile money services are set to transform the way we send and receive money. With mobile phones outnumbering ATMs by 2 000:1, mobile money transfer is set to become the new choice in sending and receiving money.
“In Kenya, there are eight million mobile money users today and 10 percent of Kenya’s GDP now passes through the mobile banking service. Zimbabwean financial institutions that are already offering this service were, however, not keen to release the statistics of their subscribed users last week,” noted the publication.
Flamboyant telecommunications giant Econet Wireless has not been left out of the competition as they have jostled for the market share of the mobile money craze with their launch of the “Eco-Cash” brand last week. Central Africa Building Society (CABS) was not be outdone as they entered the race with their “texta cash” brand. Similar services have, however, already been launched before by other financial institutions such as ZB Bank (E-Wallet), Tetrad Bank (E-mali), Kingdom Bank (Cell-Card) and “M Pesa” by Vodacom in South Africa, just to name a few brands. Observers have, however, expressed reservations on the choice of
Econet’s diversification decision to wade into the money transfer market instead of partnering with existing banks to facilitate the service.
“The Zimbabwean financial market is overbanked and cash strapped at the moment, non-financial institutions must stick to core business and concentric diversification,” says Mr Delight Makotose, project management consultant and managing director of Business Connect.
However, Econet Wireless CEO Mr Douglas Mboweni was cautious to defend the project launch through a Press release distributed last week by outlining the background of mobile money and economic benefits.
What are the economic benefits?
It is projected that by 2015, the value of mobile money transfer will reach over US$200 billion, almost 8 percent of Africa’s GDP. As money moves more easily across the country, the benefits to local business and the economy at large will grow. To the millions of Zimbabweans with no access to banking services, mobile money services bring convenience of banking via mobile technology.
The methods of money transfer that we were used to were stressful since banks were not and are still not available to everyone across the country. People have to travel long distances to get to the nearest branch to withdraw money. Some money transfer services are expensive and take over 24 hours to deliver the transaction.
Mobile money helps Micro Finance Institutions to go deeper into remote areas very quickly without substantial increase in the costs. When the unbanked population in remote rural areas get access to financial services, their cash flow management gets better, their financial planning is enhanced and their savings are increased with increased options for providing for themselves for their old age. Mobile money brings a lot of unbanked customers under the formal financial system. Developing countries are severely constrained by the physical infrastructure of the finan-cial institutions, which means that a large part of its population is excluded from the formal banking system. For an economy like ours we have realised that money is not in the formal systems. And in the absence of a formal system, most of the transactions are cash based giving no audit trail to the regulators. Mobile money brings transparency in the money transactions by reducing the cash economy and digitalising the transactions. Mobile money is equivalent of credit card or debit card, which allows the regulators to monitor the trail. There is more visibility on the money flows as the remittances move from informal channels to formal channels.
There are many more agents of mobile money than banks, which means that the customers need not travel long distances to withdraw cash. With mobile money, there is no need to carry cash and hence the risk of the cash getting lost or stolen is not there. Unlike the traditional bank services, the mobile money service is accessible 24/7 and money can be sent anytime, anywhere.
Possible constraints
While the advantages of the mobile money services look exciting, Harare-based transaction payment systems expert and consultant Miss Barbra Chinzunza was pessimistic and quick to identify areas of caution and possible glitches to watch for in purveying the technology.
“In order for any information technology project to be successful we need to look at the feasibility of the project, feasibility will address the technical and financial aspect, she says.
“In most cases the technical part is very easy because with the right skills IT developers can develop anything, it is usually the business models that fail most projects. Just because the mobile money technology has worked in Kenya does not follow that the same project will be successful in Zimbabwe. Project sponsors need to ensure that they get business models that are tailored for Zimbabwe, because despite the fact that Kenya and Zimbabwe are developing countries, any project is unique and it has completely different parameters. Such parameters include the economic environment, political environment, regulatory requirements and cultural difference.
“All these areas are of importance and should not be missed during the build-up of the project feasibility stage. Another important part to address in launching the mobile money projects is the risk management component. Every project is susceptible to risk and it’s key to have a risk mitigation plan in place. With technology like mobile payments there are many risks that can affect the success of the projects and these should be put clearly to the sponsors so that they can address; the likely risk being the unavailability and unreliability of the GSM network in rural areas,” noted Miss Chinzunza.
- Peter Banda is the secretary-general and chief executive of the Project Management Institute of Zimbabwe (PMIZ). Send your views and comments via email; [email protected] website link www.pmiz.org.zw
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