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INDO-AFRICAN KNOWLEDGE EXCHANGE WORKSHOP March 29-30, 2012. How can mobile payments be used to facilitate access of unbanked population in Africa? Presentation: Stephen Mwaura Nduati Head: National Payments System CENTRAL BANK OF KENYA. Outline. Mobile phone access in Africa - PowerPoint PPT Presentation
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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