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

64 Porteous
such as Brazil (which now has 160,000 bank “correspondents,” or agents—
quadruple the number a decade ago), the number of bank branches has
not declined markedly. In Brazil, as in Kenya, bank branches play a key role
in the chain of cash distribution, providing liquidity services to agents
without which the agents would not be able to play their role of cash
handlers. Hence, regulators must look beyond merely enabling agents to
the wider question of the efficiency of the distribution structure of financial
services in general. Apart from merely licensing agents, there may also
be a case for reviewing the often onerous and unclear requirements that
regulate the creation of new bank branches (BFA 2010a).
Third, enabling mobile financial services requires inter-agency coordination,
since at least two regulators are always involved in some form: the
financial regulator and the telecommunications regulator. Indeed, the
G20 Principles for Innovative Financial Inclusion call for cooperation and
coordination across government agencies, 14 so that reforms in one area
are not bottlenecked by contrary policies emanating from another regulator.
Even if the MNO’s role is “simply” to be the data channel, communications
regulators will oversee the quality and robustness of the channel
(such as uptime) and will also have the purview to consider competition
issues such as terms of access to mobile data services.
Coordination also brings the hope of taking advantage of regulatory
requirements in one sector to create benefit in another—which does not
happen automatically. One current example of a large potential gain from
closer coordination may arise from the requirement that prepaid
customers register and prove their identity in order to have continuing
access to the service. Of 44 African countries surveyed (see annex 2.A),
only 9 countries currently require registration of SIM cards with some
process for verifying identity. This requirement is new. But more countries
are actively following suit. The requirements for SIM registration are
very similar to those typically required for customer due diligence on
basic bank accounts. This means that a SIM registration process could be
designed so as to also satisfy banking know-your-customer (KYC)
requirements, at least for a basic account on a tiered approach to KYC. If
this happened, everyone with a registered SIM would not only have a
unique electronic ID number (the phone number) but would also be preverified
for a basic account as well. One of the largest hurdles to great
banked access—that is, the high costs of opening an account—could be
greatly mitigated. However, as a recent Cenfri report (2010) shows in the
case of South Africa, 15 a lack of explicit and deliberate coordination
between the telecommunication authorities and the financial authorities