adminAgrippa Mugwagwa
I had the thrilling and awesome privilege to chair the second day of the 7th edition of the Mobile Money and Digital Payments Africa 2014 in Johannesburg at the end of May.
Different stakeholders in the mobile money and digital payments industry across Africa and beyond converged at the Hyatt Regency Hotel in Rosebank to deliberate and exchange notes on the mobile payments industry in what is now an annual regional indaba. The biggest single grouping of delegates, as is normally the case, are mobile network operators from the region. Consequently, they would dominate the greater part of the conversation regardless of topic.
Being a banker, I believe I diversified the debate’s perspective by giving the banking view of the payments divide. Despite the regional discrepancies of markets, the experiences of the mobile telecoms markets are largely the same. Regulation has generally lagged behind innovation in the different countries, from the torch-bearer Kenya in East Africa to Ghana in the west and Malawi in the south.
There have essentially been 3 types of mobile money regulators in the region; ‘we’ll walk with you’ type , ‘we don’t know what you are up to’ and the ‘let us do a little at a time’. These have been categorised in the industry alternatively as either ‘MNO’ or ‘Bank-led’ models respectively.
East African regulators have apparently been more liberal than their West African counterparts, and in the view of mobile network operators have slowed mobile money growth in the region.
Southern Africa has been a bit of a mixed bag with South Africa being well controlled by the central bank, having a phased roll-out of mobile wallets in an otherwise well-banked market relative to other African countries. Malawi has 2 operators — Airtel and TNM — who strangely enough are collaborating and cordial in building a regulatory framework for operators and banks in the country.
A proper Mobile Money Coordinating Group was established comprising banks, telcos and regulators supported by non-state actors such as the World Bank, USAID and the United Nations Capital Development Fund.
Depending on the market structure, operator collaboration is generally a rarity, as the bigger players normally seek to dictate the pace at which the market moves and gets to be regulated as well as the structure in general.
Mobile money regulation in Zimbabwe is still evolving and the original roll-out date of September 2013 was missed by the central bank.
The not-so-strong position of the central bank after the dollarisation possibly has not been helpful, particularly when compounded with the lukewarm support of multilaterals.
The intervening period has been turbulent in terms of defining and managing the terms of engagement for operators, banks and other interested stakeholders.
The overlapping boundaries between the central bank and POTRAZ has not made the pre-regulation era any easier to manage.
In Kenya and other countries non-state actors such as USAID, UNCDF, the World Bank and prominent donors such as the Bill & Melinda Gates Foundation have given traction through a facilitator role.
Organisations such as the Helix Institute of Digital Finance and Microsave are proof of the capacity-building initiatives that have partly abetted success in Kenya over and above what the protagonists have done to create awareness and product uptake.
Interoperability
This brings us to the contentious issue of interoperability which mobile operators talk a lot about at every forum, but they seem not to agree amongst themselves as well as with their new competition in the financial services space, the banks.
The primary reason for not driving mobile money interoperability from the bigger players’ perspective appears to be that of protecting market-share, despite the fact that basic communication applications are already inter-connecting.
The motivation in my view is that short-term profit objectives are the major driver at both the institutional and manager level within the bigger institutions, since opening up to interoperability implies some surrender of market share to the smaller operators and perhaps banks which plug into the big player’s network.
Bigger operators appear miffed by the idea that smaller operators and non-telcos are ‘free-loaders’ who are coming to proverbially reap where they did not sow; from infrastructure to consumer and agent education as well as awareness. The pro-interoperability group naturally argues that interconnection will increase the volumes, and the size of the cake will grow for everyone and, more importantly, will extend significant convenience to the customer as there are more benefits and friendliness from an open and seamless ecosystem. I recall one operator asking banks to ‘build their own network’ if they do not wish to connect via any other gateway other than their wallet.
Whilst what the operator was proposing achieves interoperability, the solution unfairly advantages the operator under the competition narrative and they get more control and revenue. Perhaps that is what competition is all about, fighting for appropriated value in the financial services ecosystem.
Kenyan operator Safaricom and Equity Bank started off their collaboration well when they launched a number of microfinance products riding on the success of M-Pesa such as M-Kesho. The operator-bank relationship did not last and Safaricom switched to Commercial Bank of Africa and launched the M-Shwari service which offers M-Pesa clients access to mobile micro-banking services.
Apparently there was deep mistrust between the two institutions and there was never firm consensus on the profit-sharing ratios out of the partnership. Equity Bank on the other hand signed up Safaricom’s rivals yU and Orange for similar services before they moved on to get a mobile virtual network licence via Airtel to put them at par with the Safaricom-CBA alliance.
Quite clearly Safaricom thinks like a bank, and inversely Equity was also thinking like a telco from the onset of the rather nervy relationship, hence divorce did not take long to come. Equity Bank has been issued with a mobile virtual network operator licence, and will ride on Airtel’s infrastructure as it issues close to 9 million Equity SIM cards as it launches in July. That is a bank not only ‘thinking’ but ‘acting like a telco’.
In the Zimbabwean context Econet lured a number of banks to integrate into the EcoCash ecosystem at the wallet level hoping to reap huge rewards. A number of banks that ‘think like Telcos’ were wary of the dangers and insisted on neutral switch-level integration via Zimswitch which they had always used for ATM and POS connectivity. Whilst the jury is still out on the returns for banks that integrated with Econet at the wallet level EcoCash, it is apparent that they are uncomfortable with the aggressive move by Econet’s Steward Bank to convert EcoCash clients into bank clients.
One of the things Zimbabwean businesses are naïve about is the priceless value of data, and how competition can easily get access to that and target one’s customers.
Financial inclusion
Financial inclusion was one of the more immediate benefits of mobile money in Africa, but only at the remittance and to some extent payments level. The extension of microcredit, insurance and other products remains superficial.
A lot of work needs to be done to develop products that provide solutions to some of the most profound problems of the base-of-pyramid communities in and around Africa.
Non-state actors and non-governmental organisational delegates were not as pre-occupied of mezzanine ecosystem issues such as interoperability. They were more seized in ensuring accessibility and user-friendliness of services by the very marginalised communities who still feel they are not primary beneficiaries of mobile money.
This guest article was written for Techzim by Agrippa Mugwagwa (@AgrippaGRM. Mugwagwa is a banker and digital enthusiast, and he writes in his personal capacity.
To be continued.
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