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

Mobile Financial Services in Africa: The Next Generation 65
overseeing AML/CFT requirements may lead to uncertainty, and possibly
to the loss of this great opportunity to advance access to formal financial
services into the next generation in Africa.
These three issues at least seem clear in their implications for policy
makers. But a further issue is emerging, with questions being sharpened
although clear answers do not yet exist. Financial regulators have not
traditionally had to deal directly with competition policies, even though
this may have been among their mandates (possibly in concert with a
national competition authority). By contrast, telecommunication regulators
are usually explicitly mandated to deal with competitive issues—
such as discriminatory access to telecommunication channels or a large
incumbent’s unwillingness to allow a new competitor to interconnect
calls to its network—to promote the efficiency and competitiveness of
the network as a whole. Communications legislation in some countries
(such as Kenya) even explicitly recognizes the all-too-common situation
of one player holding a dominant market position, and therefore endows
the regulator with enhanced powers to scrutinize and intervene in such
cases. However, financial regulators usually lack such explicit powers.
Indeed, relatively few countries have granted payment regulators explicit
mandates and corresponding powers to consider competition in payment
markets, although these markets are subject to similar network
considerations—Australia and the United Kingdom are relatively recent
examples.
The competition issues around mobile financial services manifest at
several levels. First, the way that MNOs provide third parties with access
(and pricing) to channels such as SMS and USSD (whether the third parties
are banks or payment service providers) can affect the viability of a
mobile financial service. Complaints have arisen in some markets that
mobile operators have used pricing to block or impede access, making it
harder to compete. In theory, if not in practice, these telecommunication
channel issues are the province of the telecommunications regulator,
although it would help if coordination with the financial regulator sharpened
the issues around which forms of discriminatory practice are
unhelpful. Similarly, MNOs in some markets allege that banks impede
access to existing payment systems in ways that slow interconnection to
these systems. Financial regulators would have to take note of the latter,
as part of overall policy for the development of national payment
systems.
Second, and even more important for mobile financial services, acquiring
and managing the large networks of cash-handling merchants or