indo-african knowledge exchange workshop march 29-30, 2012

INDO-AFRICAN KNOWLEDGE EXCHANGE WORKSHOP

March 29-30, 2012

• Mobile phone access in Africa• Telephone and mobile growth in

Kenya• MPESA growth in Kenya• Mobile money • Mobile money transfer

• Mobile phone access in Africa• Telephone and mobile growth in

Kenya• MPESA growth in Kenya• Mobile money • Mobile money transfer

Outline

Background• African countries are generally, less developed with high

unbanked populations, unemployment rates, illiteracy and poverty e.g.

Especially in Sub-saharan Africa

Number of Mobile service operators in some sub african countries

Mobile subscriber growth in sub - saharan countries

Status of financial services by mobile phone service operators in sub

saharan countries

Comparing the mobile phones with alternatives

Speed Convenience

Safety Cost

• Additive mobile phone model– Bank led– Added service to existing customers

• Transformational• Non bank led• Introduction of new entities• Reaches out to the unbanked

Bank

Mobile Service provider

Mobile phone banking (M-Banking)Additive

Access to a customers account via the mobile phone

Bank • Balance Inquiry • Fund Transfer • Bills Payment• TOP-UP / Reload phone• Checkbook Request • List Accounts • Change PIN request

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Mobile payments/remittancesTransformational

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KENYA: RELEVANT STATISTICS 2010

• Population: 40,046,566

• GDP per capita: $1,600

• Rural Population: 78%

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• Mobile Phone Penetration:

55.9%Source: CCK

• Bank Account Penetration:

22% Source: FiinAccess 2009

Mobile Network Coverage

Source: CIA Fact book, FSD Kenya

• BACKGROUND

A unique facet of the ICT phenomenon in Kenya has been widespread proliferation of mobile money. Starting with the M-Pesa system launched by Safaricom in 2007 and later joined by other systems, mobile money has become a fixture in the lives of Kenyans, extending a basic form of financial access to a wide population.

The mobile phone financial service plays a dominant role in rural areas, with important vertical integration consequences for existing financial service providers, including micro-finance institutions and SACCOS. 

There has been vertical integration with mobile phone financial services and commercial banks.

• BACKGROUND

A unique facet of the ICT phenomenon in Kenya has been widespread proliferation of mobile money. Starting with the M-Pesa system launched by Safaricom in 2007 and later joined by other systems, mobile money has become a fixture in the lives of Kenyans, extending a basic form of financial access to a wide population.

The mobile phone financial service plays a dominant role in rural areas, with important vertical integration consequences for existing financial service providers, including micro-finance institutions and SACCOS. 

There has been vertical integration with mobile phone financial services and commercial banks.

Case for MPesa

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In line with Kenya’s payment system modernization efforts, mobile

payment services including M-Pesa, Airtel, and Yu are within the

mandate of the Central Bank of Kenya as set out under Section 4A

1(d) of the Central Bank of Kenya Act which is to formulate and

implement such policies as to best promote the establishment,

regulation and supervision of efficient and effective payment,

clearing and settlement systems.

Regulatory challenges that have continuously been addressed

include;

In line with Kenya’s payment system modernization efforts, mobile

payment services including M-Pesa, Airtel, and Yu are within the

mandate of the Central Bank of Kenya as set out under Section 4A

1(d) of the Central Bank of Kenya Act which is to formulate and

implement such policies as to best promote the establishment,

regulation and supervision of efficient and effective payment,

clearing and settlement systems.

Regulatory challenges that have continuously been addressed

include;

Stability. Efficiency.Competition. AML/CFT issues.Legislation. Access.

Modernization

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Total customers (Millions)

Total customers (million)

As at DECEMBER 2011

•Safaricom 15.21 million customers.•Airtel 3.16 million customers.•Yu 0.52 million customers. •Orange 0.13 million customers•Tangaza 0.07 million customers•Mobikash 0.11 million customers

Mobile Money Transfer Industry in Kenya Overview

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Value of transactions (Ksh billion) Number of transactions (Million)

As at December 2011

M-Pesa transferred Ksh 116.65 billion equivalent to US$ 1.37 billion with 40.01 million transactions

Per day transactions-Ksh.3.76 bn or USD 44.25m Average value per transaction Ksh 2,768

equivalent to US$ 32.56 per transaction Transaction Cost at Ksh. 30-35 or USD 0.38-0.44

per transaction. M-Pesa remains a low value payment system:

targets the bottom population M-Pesa usage growing faster than amounts

transferred

Mobile Phone Financial Services in KenyaVolumes & Values

Source :Central Bank of Kenya, 2011

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Mobile Money Transfer Industry Overview

KENYA’S PAYMENT SYSTEM STRUCTURE

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• Like any other financial system, Kenya’s Payment System is divided into the Wholesale and retail payment segment

Wholesale - High values & Time criticalRetail - Low value & High volumesBest measure of risk concentration is value

From coins to paper to electronic

M-PESA

RELATIVE IMPORTANCE OF VARIOUS PAYMENT SYSTEMS

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Retail payment systemsWholesale payment systems

Enabling Environment

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Policy Framework

E-commerce

AML-CFT

Bank Agency Payment

systemsBank outsourcing

Comp-etition

Telco

regulation

EE: MOBILE PAYMENTS & MOBILE BANKING

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Enabling Environment: Policy Balance

Stability of the financial system

Efficiency

Broader access

Financial

integrity

Consumer protection

& choice

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What is the role of the private sector?

What is the role of the Government?

What is the role of the central bank?

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Possible roles for policy makers

• Regulator

• Supervisor

• Standard setter

• Information gatherer

• Facilitator

• Coordinator

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What is the next innovation?

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THANK YOU THANK YOU

Questions