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

Mobile Financial Services in Africa: The Next Generation 71
Africa have demonstrated both to Africa and to the world the potential
that can be unlocked when financial services piggyback effectively on this
seemingly inexorable expansion. But they have also shown that the acceleration
of financial service provision via mobile is not inevitable: it can be
greatly retarded or greatly aided through enabling policy and regulatory
environments. Fertile environments allow for a test-and-learn approach
to new technology, but will also have to publish roadmaps indicating
what the “tests” are and how and when the “learning” will be applied to
inform the next rounds of actions at the appropriate stages.
If enough policy makers in Africa adopt this approach to enablement,
then it is entirely feasible that, along with their mobile subscriptions,
most adults on the continent could also have an electronic store of
value. This e-value will serve as the lynchpin of their access to the formal
financial sector within a decade. Whether this will be contained in a bank
account, in an e-money account issued by an MNO, or by a third-party
provider will vary by country. In each case, the provider will be subject to
risk-appropriate oversight. Government payments to individuals can then
be electronic transfers, saving cost for governments and reducing the risk
of fraud and theft. Remittances will be easy and cheap.
To speak of the imminent arrival of a cashless society still seems highly
speculative in developed countries, and almost incredible in Africa, a
continent deeply locked into cash-based local economies. After all, developed
societies such as Singapore have tried to force a transition to cashlessness
with limited success, or at least a delayed timetable. 18 While the
end-state of cashlessness is perhaps indeed far in the future anywhere in
the world, the transition to a “cash-lite” society is more plausible. This will
happen when electronic payment is pervasive enough that the need for
cash is reduced and the stock of cash in circulation is declining, at least in
relative terms. On the back of an enabled, accelerated mobile financial
services rollout, African countries may be among the global leaders moving
toward that “cash-lite” future. Further generations of provider models
may have risen up by then, but in this sector at least, Africa will remain
a cradle for ongoing innovation.
Notes
1. Celpay’s approach was also described in the previous work by Honohan and
Beck (2007).
2. We use the phrase mobile financial services as the umbrella term covering both
traditionally distinguished categories of mobile banking (where mobile is