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Impact of mobile money in west africa

  1. Presented by: Yasmine MISSINHOUN
  2.  The current weakness of the banking sector, which the vast majority of individuals and entrepreneurs do not have access to, is no longer in line with the continent's growth momentum. It even tends to suppress it by depriving the African populations of the financial services indispensable to economic development, such as banknote exchanges, secure savings and bank credit. The predominance of the cash currency in trade maintains the informal economy, weighs on the competitiveness of enterprises and limits the margin of maneuver of the states for the implementation of the monetary and fiscal policies. The current state of affairs can be explained in part by the lack of national regulations encouraging citizens to be banked, the lack of financial services adapted to the poor, and the weak deployment of the network of banks outside urban centers .
  3. They have not sought to deploy on the vast rural territories where the population is poor and human density is low, causing Africa to miss the stage of the material agencies on which the banking of industrialized countries is based. But the continent may well have found a technological solution that allows it not to reach this stage, but rather to jump it. This solution resides in the mobile phone, which has been widely adopted by African populations in the last decade, and offers them the opportunity to access financial services adapted to their needs and uses: mobile payment The practice of mobile payment spreading across the continent, or more precisely that of the electronic purse, that is, the device for storing currency on an account associated with the mobile telephone, and The device, money transfers. Mobile payment, unlike mobile banking, does not imply that the user has a bank account or has access to the Internet. The service is developed by the telephone operators, not by the banks. We will study the impact of mobile payment in West Africa in general more specifically in 4 countries of the sub-region.
  4.  As in other regions of the continent, West Africa is experiencing a rapid development of mobile payment, thanks to the increasing adoption of mobile phone by the populations in recent years. The process favors the dematerialization of a growing share of financial exchanges, in particular as more complex financial products appear on the market.
  5.  Mobile payment is an electronic payment system that allows a user to make financial transfers from his or her mobile phone. The operation requires that he first opens a mobile account with his operator, to whom he provides a copy of a piece of identification. The account is therefore associated with the mobile number. The user can credit his account by giving cash to a representative agent of the mobile operator, who delivers this service either in the agencies of the operators or in a street kiosk. Once the money is transferred to the mobile account, the customer can, from a menu accessed by USSD code, perform several types of transactions, such as transferring money to another mobile account, purchasing Telephone credits, payment of telephone and electricity bills or the payment of a television and Internet subscription. The operator charges this service by paying a commission, paid either by the sender or by the receiver. This system is a success in Africa, as it allows users to solve the problem of distance, in particular for money transfers between cities and countryside, to secure some of the species and avoid long tail Waiting in the places where the bills are settled. Moreover, the low cost of the agent network system, which is estimated to be 1000 times lower than that of the material agencies, ensures the increasing dissemination in the territories of the infrastructure necessary for the development of mobile payment.
  6.  The activity of issuing electronic money begins to emerge in Benin through mobile banking products. At the end of December 2014, according to the BCEAO data, the number of electronic wallets was 1097,021 compared to 364,154 at the end of December 2013. Apart from the banks (four banks are already authorized) Some microfinance players are also interested in electronic money issuance activities.  The regulatory texts governing the activity of mobile financial services are for the most part Community texts, some of which have been transposed into the national legal arsenal. Transactions carried out through mobile financial services have grown significantly in 2013 and 2014, from $ 4.8 million in 2013 to $ 33.4 million in 2014. Reload and re- (72% in 2014), which means that the primary use of mobile financial services is short-term savings. Other services used include telephone recharges, person-to-person transfers and purchase orders. Financial exchanges with foreign countries through these services were limited to the receipt of funds, but in the second half of 2014, initiatives to send funds to other WAEMU countries (Togo, Côte d'Ivoire, Ivoire) have been implemented. Efforts must be continued to increase the public interest in these products and thus contribute to increasing financial inclusion. Indeed, only 12% of the electronic purse accounts registered at the end of 2014 are active. The diversification of the use of electronic wallets by widening the scope of acceptors to major billers such as tax administrations, electric and water companies, telecom operators, should contribute to the development of these products .
  7.  Economic growth is consolidated in 2015 through reforms aimed at improving the business climate and increasing investment.  • Economic growth in 2015 is, however, confronted with a risk of a slowdown in activity, linked to the holding of legislative and local elections.  • The activity of issuing electronic money emerges in Benin. Diversification of the use of electronic wallets will be important to increase the interest of the populations and contribute to their financial inclusion  Economic growth is consolidated in 2015 through reforms aimed at improving the business climate and increasing investment.• Economic growth in 2015 is, however, confronted with a risk of a slowdown in activity, linked to the holding of legislative and local elections.• The activity of issuing electronic money emerges in Benin. Diversification of the use of electronic wallets will be important to increase the interest of the populations and contribute to their financial inclusion
  8.  Mobile payment has grown in Burkina Faso from 2013. Transactions are handled by two operators, namely Airtel Burkina and Telmob owned by ONATEL, the historical telephone operator. In 2014, total mobile banking transactions amounted to CFAF 392 billion, representing 6.2% of GDP. These transactions essentially correspond to shipments and withdrawals of securities. One of the last significant changes in the system is the possibility for users to carry out international transactions with Côte d'Ivoire, in the framework of international exchanges and inter- operators. Transactions in bill payments, government transactions, market payments and wages represent barely 6% of the total transactions. It is these operations that participate in financial inclusion.SO, the margin for deepening the mobile payment system remains important. The potential is considerable considering the country's banking rate of 13%, which is one of the lowest in the UEMOA. At the end of December 2014, the total number of active service points (at least one transaction in the last 90 days) was 5,768. In any case, this figure represents as many direct jobs created by mobile payment.
  9.  Title: Distribution of mobile banking transactions in value in 2014 3% 26% 40% 25% 6% phone recharges cash reloads cash withdrawals person tu person transfers autres
  10.  Mobile financial services have grown slowly but rapidly. Orange was the first operator to implement mobile payment in 2008, followed by MTN the following year, followed by Celpaid in 2011 and Moov, Qash Services and Wari in (50% in 2014). These operators are now competing, although the market is largely dominated by Orange and MTN, which rely on a large mobile phone customer base. Growth in mobile financial services accelerated from 2011 onwards. It was fostered by the return of stability following the 2010 crisis, a high mobile phone penetration rate (95% in 2013) and the strategies Operators, who have invested in product promotion and the development of agent networks. In 2013, the number of users stood at more than 6 million, of which 2.1 million active users, and the total value of their transactions amounted to more than 1200 billion FCFA. More than 12,000. Floating agents were deployed on the territory. Basic transactions such as deposits, withdrawals and transfers accounted for 98% of mobile payment transactions in 2013. More complex services are emerging such as the payment of remote bills, the payment of wages in the administration and the purchase of insurance premiums. In addition, clients can now make international money transfers with several countries in the region (Mali, Senegal, Burkina Faso, Benin).
  11.  Senegal has seen a marked improvement in its broadband connection over the last ten years and is positioning itself as one of the countries with high and stable flow in Africa. High-speed subscriptions per 100 inhabitants increased from 0.01 per 100 inhabitants in 2002 to 0.76 per 100 inhabitants in 2013, compared with 0.09 for the West Africa region and 0.75 for Africa. The progression is even stronger for the cell phone. The number of single subscribers increased from 12 per 100 inhabitants in 2005 to 47 per 100 inhabitants in 2014, compared with 44 in West Africa. Similarly, the percentage of individuals using the Internet rose from 1% to 20.9% over the same period. The rate of formal banking in the strict sense remains low. It reaches 5.8% on average, with a large disparity between the urban environment, where it reaches 9%, and the rural environment, where it rises to 4.5%. On the other hand, the disparity is lower between men and women, as it is 6.23% for men and 5.45% for women according to ADB data.  Faced with the low rate of banking and the availability of broadband connections, mobile payment offers an unprecedented opportunity for economic transactions. The transactions concerned are diversified, including both invoice payments and remittances. At the moment it is essentially the fact of the telephony operators and minus the banks
  12. BENIN BURKINA FASO IVORY COAST SENEGAL Flooz (Etilasat) MTN Mobile Money ASMAB (IMF) Wari Airtel Money (Airtel) Inovapay Mobicash (Etilasat) Wari Orange Money MTN Mobile Money Flooz (Etilasat) QashServices Celpaid Wari Orange Money Yoban’tel TigoCash Mobilecash Wari
  13.  Although mobile payment offers more complex financial services than simply transferring money, such as paying bills for example, the transition to mobile banking still faces a low penetration of the bank and the Internet. First of all, the bank is generally not very developed, as shown by the region's banking rate, which corresponds to the number of people who have subscribed to an account in a formal financial institution. The analysis of these rates in these countries of West Africa where these data are available reveals the low penetration of banking services. It is less than one in ten people in Senegal. This means that a large majority of people in the region always use cash for payments and savings. The second factor limiting the emergence of mobile banking is the low Internet penetration, which is measured by the percentage of individuals using the Internet within a country. This rate is growing rapidly in the region, but access to the Internet remains low compared to access to mobile telephony. Between 2001 and 2013, the Internet recorded an average annual growth of 44% in West Africa, where it reached a regional rate of 21% in 2013. This growth was accompanied by the growing adoption of Smartphone connected to High-speed Internet. The penetration rate of 3G and 4G mobile Internet remains low compared to other regions of the world, but reaches significant levels in some countries. In Côte d'Ivoire, for example, it rose dramatically from 0.2% at the end of 2012 to 7.3% at the end of 2014. The expansion of telephones connected to the Internet paves the way for the appearance of products Of banks.
  14.  Although the conditions for the growth of mobile banking are not met, several banking operators are putting in place strategies in this area, in particular by relying on mobile payment experiences. Financial institutions and mobile operators are putting in place ingenious systems to integrate unbanked populations into the formal economy via mobile phones. This is the case, for example, with the Pan-African group Ecobank, which has partnered with Airtel, MTN and France's BNP Paribas, and BIAO, through their subsidiaries in Africa Of the West, with Orange, MTN and Airtel respectively. For commercial banks, the main advantage of mobile telephony lies in its ability to penetrate all environments and to be able to be reached from anywhere. Mobile banking is a powerful tool to offer savings services to the billions of people around the world who have a mobile phone but do not have a bank account. Because it is free of geographical constraints, mobile banking has advantages over traditional banking. It is also immediate, safe and effective. It also modifies the economic model of the service, in particular by reducing the costs of financial transactions. That is its strength. Not surprisingly, this type of service is growing rapidly in sub-Saharan Africa. Mobile banking is a powerful tool for offering savings services. The mobile phone can serve as a virtual bank card and safely store information about the customer and the financial institution. The SIM2 card present inside most GSM3 phones is actually a smart card similar to a bank card. The PIN4 code and bank account number can be stored on this SIM card to perform the same functions as a bank card. The mobile phone easily reproduces the functionality of a point-of-sale terminal: it can be used to obtain a transaction authorization from a financial institution. The mobile phone can also be used as an automated teller machine. In fact, it can serve as a point of deposit and withdrawal of cash. Finally, the mobile phone can be used as an online banking terminal. This provides two basic customer services: instant access to any account and the ability to make payments and remote transfers. Through these initiatives, the aim of which is to encourage mobile users to open a bank account, mobile payment participates in the
  15. 1- Territorial coverage still inadequate The enthusiasm for mobile payments in West Africa should not mask the efforts that still need to be made to expand coverage in underserved areas. The margin for growth is significant, as mobile penetration rates, although high at the regional level, are actually lower in rural areas and among the poorest populations, which are more difficult to reach . The market in these four countries is dominated by four operators (Orange, MTN, Etilasat and Airtel), which alone account for 65% of the market. The importance of entry costs, in particular the cost of investments and Of licensing, the fact that few operators are from the continent and a strong concentration remains. In order to favor the development of telecommunications, the authorities must initiate reforms to better harmonize the regulation and taxation of the sector.
  16. 2- Agent networks: a limited mode of distribution The expansion of the network of agents allows operators to extend their services to unserved areas. The proximity of agents favors financial inclusion and is an alternative to a shortage of banking networks. However, this model remains artisanal in its implementation and is not extensible indefinitely. The development of networks of agents is hampered by the need to maintain a sufficient income for those already operating in the area concerned. Moreover, the remoteness of agents in isolated areas poses a problem of cash management and the supply of electronic money in these areas. This sometimes results in the unavailability of occasional "credits" to the agent, which can ultimately discourage customers and raise doubts about the reliability of the system.
  17. 3- interoperability system Interoperability is defined as the possibility for telecommunication operators to operate on different networks in terms of information exchange but also in terms of interconnection between customers. In general, it is a state regulatory agency that must ensure compliance with the rules of operability in order to ensure quality service and promote competition. While the exchange of data between operators is generally difficult, the conditions for doing so are problematic. 4- the cost of implementing innovative solutions Administrative procedures are generally complex and lengthy. This is why paying bills online or by telephone, setting up online companies, virtual one-stop-shop when setting up a company or official acts, tele-tax reporting, paying wages and Payment of dues are virtual services that could revolutionize the public administration in West Africa and change its relations with users. This process of dematerialization of administrative acts and public services requires substantial funding which the budgets of the States of the region can not bear. Nevertheless, the resulting benefits appear to be more important than the cost of implementing it. Particularly in terms of governance.
  18.  5-An imprecise regulation The rise of mobile payment services highlights the need for a legal framework guaranteeing the protection of users and clearly defining the responsibilities of operators. This need for regulation lies at several levels. At the operational level, rules should govern payment services like banks. On the other hand, the prudential rules applicable to banks must also be extended to telecommunications operators once they provide a financial service. The storage and use of data collected by operators must take place within a regulatory framework that guarantees the right of consumers, since the risk that these data are used for litigious and illegal purposes is great. This risk is magnified by the fact that these services reach a larger proportion of the population than the banks. For this reason, the challenge faced by regulators in the region is to encourage the development of these services to allow for greater financial inclusion. Finally, mobile payment services can be diverted from their use and used as a transit channel for the financing of criminal activities and money laundering because the purchase of the SIM card is not By the provision of an identity document.
  19. - Financial Inclusion Mobile payment, as a gateway to banking, is a financial inclusion factor for the most marginalized populations in West Africa. Indeed, as in other fields of social life, the rate of banking reveals inequalities related to the socio-economic variables of gender and place of residence. The number of women with an account in a formal financial institution is, in the region, on average 20% lower than that of men. In some countries, the gaps are even larger. For example, the differential is more than 30% in Burkina Faso. The rate of banking also varies according to the place of life, with strong inequalities in access to banking services that exist between urban and rural areas. In most countries, the gap is on average double for urban residents. The fact that women and rural populations do not have access to banking services has an impact on the development of countries in the region. This situation is not conducive to the empowerment of women and the modernization of the rural economy, which are major challenges in the fight against poverty. Mobile payment, based on technology already available locally, could gradually strengthen the financial inclusion of these categories.
  20. 2- Possible declines in the financial services of other economic activities Mobile payments already offer more complex services than simple deposits and money transfers. However, many opportunities remain to be exploited in the next phase of sophistication in which East Africa has already entered. These are financial products for unbanked people. The MasterCard and Airtel foundations have set up the credit card service associated with the mobile account in all four countries. This product will allow mobile payment users to make purchases both on the Internet and in stores, but also to withdraw money from the ATMs of unbanked partner banks for access to a banking-type service. It reduces the boundary between the bank and mobile payment. Ultimately, it is expected to revolutionize trade between producers and consumers (B2C), but it also offers new opportunities for relations between economic actors(B2B)
  21. 3- Mobile as a tool for improved governance Mobile payment can also contribute to improving the economic governance of African countries Particularly in the relationship between governments and citizens (G2P). In several countries in the region, for example, the salaries of public sector employees are transferred to a mobile account 4- Support for regional integration Mobile payment in West Africa first developed on a national basis. Given the importance of intra-regional financial flows, notably through migratory remittances, this framework is however insufficient and deserves to be extended to a framework regional. Faced with these constraints, mobile payment operators intend to make the transfer operations more competitive, and some have already positioned themselves on the West African market for migratory remittances. This is the case, for example, with the Orange Group, which launched Orange Money International in 2013. This service enables clients residing in Côte d'Ivoire, Mali and Senegal to make instant international transfers between the three countries. In 2015, the French group developed a partnership with Airtel Money, leader in Burkina Faso, to extend the service. Thanks to the interconnection of their mobile money platforms, customers of both brands can make international and inter-operator transfers between Côte d'Ivoire and Burkina Faso. By 2014, MTN and Airtel had already set up a similar system between the two countries, which form the largest migration remittance corridor in the WAEMU zone (in 2012, almost $ 300 million was transferred between Côte d'Ivoire Ivory and Burkina Faso). By reducing transaction costs and delays in these financial flows, mobile payment offers significant support for the dynamics of regional integration. Mobile payment also offers new opportunities for extra-regional migratory remittances
  22. 5- From mobile payment to mobile banking Mobile payment could evolve towards that of mobile banking, thanks to the development of the Internet in the region and the learning of populations, who are increasingly mastering cellular technology. But things could change in the near future, in particular under the impetus of the private sector, which seeks to strengthen Africans' access to the Internet. World groups as Facebook and Google have already expressed their wish to contribute to it and are looking for innovative solutions to achieve this, such as the use of drones to serve as relay antennas in remote areas. At the level of mobile telephony as well, companies in the sector intend to accelerate the advent of the Internet, not at the level of networks but of hardware. Indeed, several operators are involved in smart-phone promotions in the region, selling low-cost offers in partnership with manufacturers. More recently, Orange has launched alongside Alcatel and the Mozilla Foundation, a Specially designed for its African markets, which includes a smart-phone and a 6-month communication and data exchange package for less than $ 40. These dynamics, if they reach their goal of digitization of West African companies, would offer new prospects for mobile banking via the Internet.
  23. Mobile financial services are an effective tool to fight poverty and promote inclusive economic growth in West Africa. Development partners should provide financial support to States in the region in extending the networks needed for wider dissemination of mobile financial services. For their part, states should put in place incentives for private actors who are willing to invest in infrastructure development Regulators should seek to preserve the benefits of competition in the sector. It is therefore necessary to anticipate possible market dysfunctions, to avoid a slowdown in current dynamics, to protect the interests of stakeholders (States, consumers, operators) and to encourage the dissemination of innovations to sophisticate products. The regulation of mobile financial services is a complex equation, due in particular to the plurality of actors involved (banks, telephone operators), possible regulators (sector regulators, competition authorities, central banks) Sector. The regulation of the activity requires a prior analysis of the stakes and the forces involved, without which unforeseen obstacles could be erected. It also involves identifying who is the most relevant actor in developing, implementing and enforcing it. To increase the economic and social benefits of mobile financial services, it is desirable to encourage the development of more complex solutions, such as invoice payments, m- commerce and mobile financial products. This upgrading involves technological innovations that need to be encouraged. For example, the region's states and development partners could create an investment vehicle dedicated to financing innovative companies in the sector. Given the efficiency gains that mobile financial services provide in economic exchanges, it is desirable that governments take ownership of technology to improve their relationships with citizens. The regional dimension of the financial flows of mobile payment, which goes far beyond the national framework of countries, calls for the establishment of a regulation on the scale of West Africa.
  24.  Suri T. et V. Jack, “Reaching the Poor: Mobile Banking and Financial Inclusion”,, 27.02.2012 /27/m_pesa_ict4d_and_mobile_banking_for_the_po or_.html  Demirguc-Kunt A., Klapper L. et D. Singer (2013), “Women and Financial Inclusion”, Findex Notes, n°9 [ /Resources/8519638-1332259343991/N9gender.pdf]