mobile money - investment opportunities for saccos

7/29/2019 Mobile Money - Investment Opportunities for SACCOs

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MOBILE MONEY

AN INVESTMENTOPPORTUNITIESFORTHE SACCOS

A Presentation to Field Officers and Financial ExtensionWorkersAt the Regional Field Meetings/Workshops

By Wadriff Abdulfatah


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PRESENTATION SCOPE- Introduction

- Financial Transactions in the Phone-- Investment Costs involved in providingMobile Money Services by the Agent(SACCO)

-- Information Rates and CommissionCharges

-- Treatment of MM transactions in Books ofAccounts

- Challenges/Risks in providing MM services


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INTRODUCTIONThe continual expanding coverage and use of wireless mobile

devices such as mobile phones in developing regions such as Africa

and South East Asia, are leading to increased applications to deliver

financial services, especially to those in remote regions and whose

low income have typically excluded them from the traditional banking

system.

Penetration of mobile services across the world is increasing rapidly.


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INTRODUCTION CONTNIn 1990 there were just over 11m mobile phone users worldwide.

Today, over 3.6 billion consumers own mobile phones. Financial

access for the poor is still an issue in many developing countries.

There are currently approximately only 0.5 million bank branches

globally with only 1.4 million ATM's compared to over 3.6 billion

mobile customers worldwide.


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FINANCIAL TRANSACTIONSINTHE PHONE - CELLFinancial Transactions made through Cell Phones

Mobile financial services are often referred to as m-commerce or m-banking applications. They can be broadly categorized as extensions of

existing bank services delivery or as innovative approaches of

telecommunications providers where the mobile phone network

becomes a medium for financial transactions.


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FINANCIAL TRANSACTIONSCONTNMobile phone network transactions include the use of network airtime

or e-currencies for deposit, transfer of funds or credits, and payment of

services.


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FINANCIAL TRANSACTIONSCONTNMobile phone network transactions include the use of network airtime

or e-currencies for deposit, transfer of funds or credits, and payment of

services.

- Branchless banking models

- Mobile payment systems

- Mobile Payment/Business Development Model

- Air-time transfers


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INVESTMENT COSTSIN MM ASAN

AGENT/SACCOPartnerships between banks/SACCOs/Agent and mobile carriers mean

that both players are into a contractual agreement. However the biggestgainer here could be the banks/SACCOs.

- SACCOs will require very minor upgrades on their systems to transact in

mobile money while the telecoms companies have to invest heavily in

their infrastructure.


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AGENT/SACCO CONTN

- The second benefit to the SACCOs is that the telephony companies

will do the work of bringing on board the unbanked clients who the

SACCOs have been reluctant to approach in spite of the stifling

competition in the banking sector.


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AGENT/SACCO CONTNTo become an Mobile Money agent, each applicant must be a registered

company and have operating capital worth UGX 3,000,000 (in the caseof MTN) which is held in an account with a Bank, as well as high quality

premises.


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AGENT/SACCO CONTN- Agent must be a registered limited company and rovide proof

documents listed below:

- Completed agent agreement

- Certificate of registration/Incorporation

- Copies of Memorandum and Articles of Association

- List of Outlets

- Company bank account details

Minimum outlets is 1 outlet


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AGENT/SACCO CONTNPremises and their Maintenance

Mobile Money Companies avails branding and marketing materials for

your outlets.

The minimum branding requirements will be supplied to you on

commencement of business.


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MOBILE MONEYASAN INVESTMENT

OPPORTUNITY

As a SACCO grows and matures, it may find a need

to invest some of its surplus.

Investments can provide income, serve as a sourceof liquidity and can act as a cushion against

unplanned events.


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OPPORTUNITY CONTN

Investments Criteria

The fundamental guide to investing is the SLYprinciple, which is based, in order of importance:

Safety, Liquidity and Yield.

If an investment meets the safety

guidelines, liquidity is examined. If

safety and liquidity are satisfactory,

then yield is considered.


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OPPORTUNITY CONTN

Safetyin an investment is concerned withthe possibility of a loss. The degree ofsafety changes with time and must beroutinely examined.

Since the members entrust the SACCO with theirfunds, safety is a paramount consideration.

Liquidityis the ability to convert an investment intocash. Rule of thumb, the more liquid the investment, the

lower the yield. Conversely, the more time the investor iswilling to leave his funds in business circulation, makingthe investment less liquid, the higher the return or yield.


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YieldThe commission on mobile money should be

properly calculated and SACCO must include

that in its cash flow.


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IDEAL PROCESSFORMOBILEMONEYINVESTMENTIN

SACCOS

Develop a cash-flow estimate.

Make internal preparations for investment

decisions.

Determine portfolio requirements.

Develop internal controls to manage risk.

Purchase the investment.

Follow-up


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INTERNAL CONTROLSFORMOBILEMONEYRISK

MANAGEMENT

Internal ControlsInternal controls are an integral part of the investmentprocess and supplement the written policies.Appropriate staff should be designated and controlsestablished to:

Ensure that all mobile money transactions are properlyaccounted.Include all new investments in mobile money in reports to the

board and management.Provide for adequate safekeeping of records

Restrict to the degree possible, amounts of investmentsare matched with liabilities.


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ACCOUNTINGENTRY

1. When money is invested

Dr. Mobile Money Investment with the amount invested

Cr. Cash/Bank

2. When Commission is Received

Dr. Cash/Bank

Cr. Commission - MM with comm. received


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TREATMENT IN FINANCIAL STATEMENT

mobile money - investment opportunities for saccos

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