MOBILE MONEY SERVICES FOR A BETTER FINANCIAL INCLUSION IN WEST AFRICA PRESENTATION BY CHIDINMA LAWANSON CONSULTANT, INTERNATIONAL FINANCE CORPORATION (WORLD BANK GROUP)
Financial Inclusion – Why it Matters � Financial Inclusion – access to & usage of appropriate, affordable & accessible financial services. � The services include - payments, savings, credit, insurance & pension products, leveraging on digital financial services. � Benefits include – reduction in poverty cycles, enhancement of investment, creation of building blocks for economic growth, especially in rural & semi-rural areas. � The benefits cut across government agencies, financial institution providers, individuals and entrepreneurs.
Mobile Money Services – An Enabler of Financial Inclusion � Impressive growth recorded in financial inclusion in Sub-Saharan Africa, significantly driven by Mobile Money (MM) & Agent Banking. � MM – e-money distributed electronically via mobile & sim-enabled devices (such as mobile phones). � MM Ecosystem includes financial services regulators, Fis (banks & non-banks), Mobile Network Operators (MNOs), FinTechs, Payment Service Operators, Agents/Super Agents, Aggregators, Merchants. � MM Services – air-time purchases, cash in/out; bills payments; Mobile Banking; ATM services; P2P, G2P, B2P, P2B transfers. Source: Digital Access – The Future of Financial Inclusion in Africa – IFC & MasterCard Foundation
Mobile Money Services – Lessons Learned From African Countries � Kenya – provides a star example of MM as a key to improvement in financial inclusion indices, with the introduction of M-Pesa in 2007 (Africa’s first MM product), driven by Safaricom. Comparison of Financial Inclusion Indices in Several African Countries Source: *2019 FinAccess Report – FSD Kenya FinScope Report 2015 – Ghana • Financial Inclusion Insights 2015 Survey, Ghana COTE D’IVOIRE • EFInA Access to Financial Services in Nigeria 2018 Survey •
Lessons Learned From African Countries – Cont’d Kenya – adopted an MNO-led approach to MM adoption & usage. The MNOs could apply for payment service licenses. � Access to interest-bearing savings accounts increased through FI partnerships (e.g. M-Shwari ). 34.5million MM accounts as at 2017 . Cote D’Ivoire - regulators allowed MNOs (in partnership with banks) and private sector, non-bank companies deliver MM � services. Return to peace, economic recovery & MM uptake & usage drove financial inclusion. Over 40% of adult population have MM accounts . Ghana – initial low pace of MM adoption due to restrictive regulations pre-2015. Promoted bank & non-bank-led provision � of MM services (MNOs excluded). In 2015, revised e-money regulations (including MNOs) + agent network guidelines expanded MM usage. By 2017, there were 21.4 million registered MM users . Tanzania – regulator allowed an MNO-led model, with non-stifling regulations. Interoperability was key. MM users enjoyed � interest payment on MM trust accounts. MM users increased from 1% in 2009 to 50% in 2013 . Nigeria – regulators allowed bank/non-bank led model (MNOs excluded). Competing, similar DFS products available from � banks. Low adoption of MM. Increase from 1.6% to 3.3% of MM users (2016 to 2018) . Sources: *Central Bank of Kenya, Mobile Payment Systems Bank of Ghana, Payment Systems Statistics • MMU 2013 State of Industry Report on Mobile Financial Services – (for Cote D’Ivoire) • Tanzania Communications Regulatory Authority (Apr – June 2013) Report • EFInA Access to Financial Services in Nigeria 2018 Survey •
Analyzing Partnerships for Financial Inclusion Program – Case Study of Nigeria Nigeria’s Target: by 2020, Financial Exclusion of adult population should be reduced to 20% (at 36.8%, 2018). � Different targets for Payments, Savings, Credit, Insurance, Pension in order to achieve the overall target . Recent strategies: Payment Service Banks (PSBs): 2018 - Central Bank of Nigeria (CBN), provided PSB licensing regulations. Reduced capital � requirements. Eligibility: MNOs, MMOs, banking agents, retail chains, courier co.’s. Leverage on mobile/digital platforms to enhance financial inclusion to under-served segments. Products – deposits, payments/remittances, e-wallets, government securities. Restrictions exit (no provision of credits & would not play in FX windows) . Shared Agent Network Expansion Facility (SANEF): Jointly promoted by CBN, Banks, Nigeria Inter-Bank Settlement Scheme, � licensed MMOs & Super Agents. Accelerate financial inclusion by aggressive roll-out of 500,000 agent networks. Remote enrolment on Bank Verification Number (BVN) to about 50 million under-banked populace . Above strategies leverage on partnerships within the financial services ecosystem . � Sources: *Central Bank of Nigeria, NFIS targets * CBN website * EFInA Access to Financial Services in Nigeria 2018 Survey
Women’s Financial Inclusion in West Africa: From Policy to Practice Gender equality – essential to sustainable development. Inclusive economies require women’s integration in all � aspects of endeavor, to enable them act as catalysts for progress . ECOWAS: In 2012, set up Federation of Business Women’s Entrepreneurs to promote women’s empowerment. � African countries set-up National Financial Inclusion Strategies, ensuring access to financial services for all . Challenges exist: � - gender gap in earnings (women earn less than men). - women are more likely to be employed as casual workers & in informal sectors (unable to meet institutional requirements for access to finance). - adverse socio-cultural factors affect women (e.g. early marriages, lack of education, lack of access to properties). - discriminatory laws & lack of legal education. Sources: *Central Bank of Nigeria, (CBN) NFIS targets EFInA Access to Financial Services in Nigeria 2018 Survey • https://insights.careinternational.org.uk •
Women’s Financial Inclusion in West Africa: From Policy to Practice cont’d. Rwanda � Financial exclusion is skewed more towards women : 65% of financially Cote d’Ivoire Nigeria excluded adult population 65% of adult women are 40% of adult women are were women excluded excluded 40% - men 32.5% - men Female agents seem more Women seemed stable to struggle with Exclusion in Women: technology Reduces their capacity to • escape poverty cycles Mobile Phone initially Digital financial Disallows them from ownership is services tend to • managing their resources skewed towards close gender independently men gaps (e.g. Reduces their participation • Sources: * FinScope Rwanda 2016 Report mobile money in productive projects. EFInA Access to Financial Services in Nigeria 2018 Survey • CGAP Financial Inclusion Insights 2018, Cote D’Ivoire usage) • Digital Access – Future of Financial Inclusion in Africa – IFC & MasterCard • Foundation
Women’s Financial Inclusion in West Africa: From Policy to Practice – The Way Forward � Progress towards women’s economic empowerment has been made but at a slow pace. � ECOWAS Gender Unit should promote financial inclusion for women across the region, as countries work on their National Financial Inclusion Strategies – such strategies should have actionable roadmaps for women’s inclusiveness. � Civil Society Organizations (such as West Africa Civil Society Initiative), NGOs & development partners should advocate regional governments to implement existing laws that favor women’s empowerment. � Central Banks, financial services operators (banks, MFIs, other non-bank institutions, FinTechs) should incorporate products and processes that are favorable to & do not exclude women. Global GDP could increase by $5.3 trillion by 2025 if the economic gender gap was reduced by 25%. - Gallup; International Labor Organization (ILO) Study Sources: * Digital Access – Future of Financial Inclusion in Africa – IFC & MasterCard Foundation * 2017 UN High Level Panel on Women’s Economic Empowerment
Take-Aways...... Mobile Money is a key financial service especially to under-banked segments, leveraging on digital platforms & significantly � improving financial inclusion across West Africa. Regulatory environments drive MM uptake & usage (as seen in some East African countries). Appropriate guidelines, � allowing wider array of financial services players in the MM ecosystem should be promoted by the regulators. These typically include banks, non-banks, MNOs, Agent Networks, Payment Service Providers. Partnerships between financial services providers should be encouraged in order to expand the array of financial solutions � to end-users. Interoperability should be a standard across ecosystem players. Deployment of agent banking network improves access points especially in rural and semi-rural areas. � High penetration of mobile telephony services creates opportunities to expand MM coverage especially to previously � excluded segments (in some West African countries, MM usage is driven by already-banked population resulting in reduced impact on financial inclusion). Consumer literacy & awareness campaigns on MM should be launched by financial services providers & regulators to drive � adoption and uptake.
THANK THANK THANK THANK YOU YOU YOU YOU
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