MOBILE MONEY SERVICES FOR A BETTER FINANCIAL INCLUSION IN WEST - - PowerPoint PPT Presentation

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

• f 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.

Source: *2019 FinAccess Report – FSD Kenya

• FinScope Report 2015 – Ghana
• Financial Inclusion Insights 2015 Survey, Ghana
• EFInA Access to Financial Services in Nigeria 2018 Survey

Comparison of Financial Inclusion Indices in Several African Countries

COTE D’IVOIRE

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
• f 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.

Financial exclusion is skewed more towards women:

Sources: * FinScope Rwanda 2016 Report

• EFInA Access to Financial Services in Nigeria 2018 Survey
• CGAP Financial Inclusion Insights 2018, Cote D’Ivoire
• Digital Access – Future of Financial Inclusion in Africa – IFC & MasterCard

Foundation

Cote d’Ivoire 65% of adult women are excluded 40% - men Nigeria 40% of adult women are excluded 32.5% - men Rwanda 65% of financially excluded adult population were women Women seemed to struggle with technology initially Mobile Phone

• wnership is

skewed towards men Digital financial services tend to close gender gaps (e.g. mobile money usage) Female agents seem more stable

Exclusion in Women:

• Reduces their capacity to

escape poverty cycles

• Disallows

them from managing their resources independently

• Reduces their participation

in productive projects.

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.

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