Financial Sector Development in Africa: Opportunities ... - World Bank

20 Jarotschkin
individual repayment mechanisms without incurring more defaults. 8
When this move was successful, group meetings were still held despite
the transition to individual liability. It is worth considering these findings
when thinking about a transition to individual liability and m-banking
and the use of frequent mobile reminders about client repayment rates.
Next in importance to methodology considerations is the scale of the
MFI. Implementing m-banking solutions in a small MFI might be costintensive
and thus will require that the initial application costs and the
resulting profits be carefully evaluated accordingly. Consequently, particularly
for smaller MFIs, it will be necessary to find ways to save costs
when trying to access m-banking or biometric technology. Doing so early
in the process will be crucial for success. From getting permission from
m-banking operators to receive training sessions to exchanging knowledge
and information about common problems, costs could potentially
be saved if MFIs teamed up. In the Kenyan example, MFIs approached
M-Pesa separately to receive the allowance for using the service.
The opportunities presented above apply to MFIs operating in countries
where this type of technology already exists and is sufficiently well
regulated. If MFIs wish to pilot this technology, they can jump into a
difficult and tedious technological process, concurrently having to gain
permission to launch the services. Lessons learned by the OIBM might
prove useful for other MFIs on the continent as well. 9 On the technological
side, Aleksandr-Alain Kalanda, Chief Executive Officer (CEO)
of the OIBM, admits that the process took “longer and was more expensive
and complicated to implement” than expected. He points to some of
the pre-requisites necessary prior to rolling out a comparable service.
Among these are the following:
1. A proven track record to implement complex technology-based
projects
2. A strong core banking IT infrastructure that is able to handle large
volumes of data flow
3. Substantial financial resources available to pay not only for the technological
solution but also for the human resources, the agent network,
and a significant marketing campaign.
Cost hurdles, as suggested by the OIMB’s CEO, can also be overcome
by teaming up with other MFIs. 10 In the case of the OIBM, which is
equipped with a commercial bank license, the Central Bank of Malawi
was in favor of the idea and granted permission. 11