By Mark Davison at Mobile 360 Africa, Cape Town – Mobile money has taken off in many African countries and contributed huge benefits to economies such as Kenya and Uganda, but regulatory bodies have to be careful that they don’t put a spanner in the works by interfering too much in its operations.
This was the warning from Sheila M’Mijjewe, deputy governor of the Central Bank of Kenya, addressing delegates at this year’s GSMA Mobile 360 Africa conference in Cape Town.
Kenya was one of the first countries on the continent to adopt mobile money in 2006 and M’Mijjewe says it has proved to be phenomenally successful in integrating an overwhelmingly rural population – 70% of Kenya’s citizens are considered rural – into the mainstream economy.
“Kenya can still hold on to the honour of being one of the front runners in mobile money,” M’Mijjewe says. “We have 36-million mobile phone subscribers, 27,7-million mobile money service subscribers and nearly 130 000 mobile money agents.
“We started [mobile money services] in 2006 and I joined the Central Bank in 2007, so I have been part of that journey and watched how the Central Bank oversaw and managed the process,” she explains. “In 2013, 60% of all transactions were mobile; today they account for 80% of transactions, so you can see the impact it is having in the Kenyan space.”
M’Mijjewe says that regulatory bodies such as the Central Bank have an important role to play in mobile money, but that they need to understand what that role is.
“Central banks have to clearly understand what their role is and it is important that regulators don’t get involved in areas they shouldn’t – it’s dangerous,” she told delegates. “It is very important that we do our job and that you do yours. Regulators have to be seen to be managing from a total market perspective.”
M’Mijjewe says that while mobile money was initially about moving money from one device to another, it has evolved to the integration of interfaces with financial institutions’ payment systems.
“The dynamics are changing,” she says, “and our role [as a regulator] lies in policy development and regulatory oversight.
“We are primarily concerned with market development, but we are also looking at creating the appropriate support infrastructure like deposit protection, consumer protection and financial education to make sure the various products are fully understood and Kenyans are protected when these products come out.
“What we need to do is enhance the efficiency in the provision of services,” M’Mijjewe says. “And it is not just a case of being there … being present … we need to see exactly how mobile money is developing and how it is evolving our communities as we move forward.
“We now have a much more structured approach and there are models that need to be studied,” she continues. “And we very much need to set up some kind of structure that also involves government.
“There are concerns about some of the challenges within the framework … that if things go wrong there could be major impact,” M’Mijjewe adds. “Kenya tends to be a country that looks around before adopting something and then cut and paste to suit its needs, but in this area we are at the forefront. Challenges and risks are there, but we’ll try to address them. We’re not blind to them.
“This form of payment has been instrumental in the way that Kenya has evolved,” she says. “There are still hiccups on the journey, but it’s definitely begun.”