Monday, August 10, 2015. A bank is a number one player in any sort of financing The out of 45million people, 27.9% leave in urban, 72.1% are in rural

Wednesday, April 19, 2023

A bank is a number one player in any sort of financing

The out of 45million people, 27.9% leave in urban, 72.1% are in rural.

The current banked community in the country, (13.9) %: 17.9% male, 10.1 % female (2013);

Only 6.8% rural community use banking services as compared to 27.6% urban

78.6% of formally employed people use banks, 4.9% subsistence farmers use banks

Sources of Income: Salary 7.2%, Own business 22.4%, Agriculture 36.4%, dependents = 22.9%


29.6%=Insufficient money(perception, fact: 28%,

84 % (rural) live below poverty line)

Minimum balance =21.0% (monthly fees:

psychology of the poor keep, protect)

Banks are too far = 12.8%Does not know how to open a bank account = 6.3% (illiteracy = (20-30)%)

Does not understand benefits =4.2%


Worry of failure to pay back = 37.5%

=> Business models: when does a farmer default? Community banks know better!

No need to borrow money = 35.2% (You borrow to grow – no growth in subsistence farming)

Don’t believe in borrowing = 8.0%


Scale down: the only way to get closer! But…business case?

Use Technology: Use of payment channels like ATMs, mobile and Agency banking is key….business case?

Share: Economies of scale & synergies….YES

Financial Education: Increase financial literacy levels

Community based financial institutions are Community based financial institutions are very key to rural financing: Community very key to rural financing: Community Banks, MFIs, Village Community Banks Banks, MFIs, Village Community Banks (VICOBA), SACCOS (VICOBA), SACCOS


More than 70% of all payments are made through non bank instruments

◦ The right agent banking model must address the following challenges

◦ Increase the banked community ◦ Address agent liquidity challenges◦ Keep the bank-customer relationship positive◦ Help to raise both deposit and loan portfolios◦ Increase bank footprint◦ Have business proposition: both the bank and the agent


Infrastructure (road

network, communication) Illiteracy

Business challenges:

◦ Population Dispersion

These make rural business propositions challenging

Solution: Provide simple, shared solutions to create economies of scale.


The trend is towards convergence and sharing

Sharing infrastructure, reduces cost

Enriches product provision

Facilitate cross-institution payments

Creates numbers needed for rural business viability



To address all these challenges, in year 2006, six banks started a Consortium of banks in order to establish a shared infrastructure for provision of ATMs and related electronic payment services (POS, Mobile, etc)

The name Umoja, in this context stands for Unity,

Togetherness

Ownership: Owned by member banks

Due to increase in number of members, The Consortium transformed its governance structure from Consortium to a Company, limited by shares.


Membership: 27 member banks (Community and commercial banks)

ATMs: Around 200 ATMs

Coverage: Country coverage across the mainland and Zanzibar (Unguja and Pemba)

Transaction channels Currently: ATMs, Mobile, Agency banking

To be introduced: InternetAll services (to be) introduced in a shared environment


PHASE I• Cash withdrawal • Balance enquiry• PIN change • Mini statements • Same card holder accounts

transfers

PHASE II Inter-bank/Inter-card Transfer Card-less withdraws Shared Mobile banking Shared Point of sales Shared Agency banking Cross -bank beneficiary payments Online Airtime Recharge Utility Payments Subscription Services Internet Banking Regional and International

Integrations


UmojaSwitch is owned by banks but it is not a bank

Banks within UmojaSwitch Compete while Cooperating

New banks have equal chances of becoming owners

Banks participate as shareholders or non shareholders



UmojaSwitch has gone miles


UmojaSwitch is now an East African Network


Documents

Monday, August 10, 2015. A bank is a number one player in any sort of financing The out of 45million people, 27.9% leave in urban, 72.1% are in rural