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INDO-AFRICAN KNOWLEDGE EXCHANGE WORKSHOP March 29-30, 2012

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

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INDO-AFRICAN KNOWLEDGE EXCHANGE WORKSHOP March 29-30, 2012

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  1. INDO-AFRICAN KNOWLEDGE EXCHANGE WORKSHOPMarch 29-30, 2012 How can mobile payments be used to facilitate access of unbanked population in Africa? Presentation: Stephen MwauraNduati Head: National Payments System CENTRAL BANK OF KENYA

  2. Outline Mobile phone access in Africa Telephone and mobile growth in Kenya MPESA growth in Kenya Mobile money Mobile money transfer

  3. Background African countries are generally, less developed with high unbanked populations, unemployment rates, illiteracy and poverty e.g.

  4. BUT Africa has the highest growth rate in mobile phone usage

  5. Especially in Sub-saharan Africa

  6. Number of Mobile service operators in some sub african countries

  7. Mobile subscriber growth in sub - saharan countries

  8. Status of financial services by mobile phone service operators in sub saharan countries

  9. Comparing the mobile phones with alternatives Convenience Speed Cost Safety

  10. Additive mobile phone model • Bank led • Added service to existing customers • ADDITIVEMOBILE PHONE MODEL Types of mobile phone financial services Bank • Transformational • Non bank led • Introduction of new entities • Reaches out to the unbanked • TRANSFORMATIONAL MOBILE PHONE MODEL Mobile Service provider

  11. Mobile phone banking (M-Banking)Additive Bank • Balance Inquiry • Fund Transfer • Bills Payment • TOP-UP / Reload phone • Checkbook Request • List Accounts • Change PIN request Access to a customers account via the mobile phone

  12. Mobile payments/remittancesTransformational

  13. KENYA: RELEVANT STATISTICS 2010 • Mobile Phone Penetration: • 55.9% • Source: CCK • Bank Account Penetration: • 22% • Source: FiinAccess 2009 Mobile Network Coverage • Population: 40,046,566 • GDP per capita: $1,600 • Rural Population: 78% Source: CIA Fact book, FSD Kenya

  14. Case for MPesa • BACKGROUNDA 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.

  15. Modernization • 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;

  16. Mobile Money Transfer Industry in Kenya Overview • 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

  17. Mobile Phone Financial Services in KenyaVolumes & Values Source :Central Bank of Kenya, 2011

  18. Mobile Money Transfer Industry Overview

  19. KENYA’S PAYMENT SYSTEM STRUCTURE • Like any other financial system, Kenya’s Payment System is divided into the Wholesale and retail payment segment • Wholesale - High values & Time critical • Retail - Low value & High volumes • Best measure of risk concentration is value

  20. From coins to paper to electronic M-PESA

  21. RELATIVE IMPORTANCE OF VARIOUS PAYMENT SYSTEMS Wholesale payment systems Retail payment systems

  22. Enabling Environment

  23. E-commerce AML-CFT Bank Agency Payment systems Comp-etition Telco regulation Bank outsourcing Policy Framework EE: MOBILE PAYMENTS & MOBILE BANKING 23

  24. Stability of the financial system Efficiency Broader access Enabling Environment: Policy Balance Financial integrity Consumer protection & choice

  25. What is the role of the private sector?What is the role of the Government?What is the role of the central bank?

  26. Possible roles for policy makers • Regulator • Supervisor • Standard setter • Information gatherer • Facilitator • Coordinator 26

  27. What is the next innovation?

  28. Questions THANK YOU

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