AFI’s XI Mobile Financial Services Working Group (MFSWG) meeting held 5-7 March 2014 in Arusha, Tanzania, proved fertile ground for the cultivation of fruitful dialogue among the participants of AFI’s largest and most active working group.

Bank of Tanzania (BOT) Governor Benno Ndulu and his staff showcased the role of regulation and how it factored in the development of mobile financial services (MFS) in Tanzania, contributing to a 50 percent cut in the nation’s financial exclusion rate in just four years. Later discussion revolved around Tanzania’s success story while exploring views on upcoming financial inclusion issues in regard to interest payments on e-money accounts, e-money guarantees, and mobile money enabled cross border remittances.

“With the advent of mobile financial services, we see that we are able to leapfrog access to financial services,” said Governor Ndulu. “MFS is now the single most important service to provide access to financial services globally, especially in Africa.”

Bangladesh, Nigeria and the Philippines illustrated interesting cases for consumer protection regulation in the context of mobile financial services. Ghana shared its progress during the past three years in terms of ATM, agent interoperability and interconnectivity. Informative presentations were delivered on the new MFSWG guideline notes on consumer protection, and supervision and oversight, while attendees heard about upcoming guideline notes on mobile-enabled cross border remittances and interoperability.

The Central Bank of Nigeria (CBN) provided a presentation on the planned deposit insurance coverage for e-money accounts which led to a lively and detailed debate about the reasons why Nigeria decided to allow e-money trust accounts to be covered by deposit insurance, the objectives of offering this service, the steps for introducing this, and the coverage amounts. This was followed by a discussion on the benefits and challenges of offering deposit insurance.

Bangladesh Bank (BB) shared its experiences in collaborating with the telecommunications regulator to ensure all banks in Bangladesh have fair and reasonably priced access to the USSD channel. It was noted that if BB had not intervened, the situation that exists in the country today would not have happened – a point that underscored the role and importance the regulator can assume in helping develop and support digital financial inclusion as well as guiding the development of markets.

Additionally, CGAP unveiled a new study on mobile payments infrastructure access and regulations. And GSMA Mobile Money for the Unbanked (MMU) shared the latest update on the statistics of the mobile money industry, noting there are now 219 deployments of mobile money services in more than 80 countries. The majority of these deployments are in Africa, however Latin America is now expanding rapidly with many more planned deployments in 2014. Fifty-two markets have at least two mobile money providers with Africa in the lead worldwide, and Latin America in a close second with multiple planned deployments in 2014. There are now more than 203 million registered users globally and 61 million active accounts (twice the figure as in 2012). Nine markets, all in Africa, now have more mobile money accounts than bank accounts.

The role of measuring access and usage, particularly the comparative indicators for regional areas was also highlighted.

Other key points included:

• An emphasis on the need for regulators to be “in the game” of financial education;
• In terms of supervision and oversight, it is critical to balance safety and integrity with perceived and actual risks of MFS and the role of payment systems;
• A common understanding was created of the terminology of the stages of interoperability and the ultimate objective to achieve effective interconnectivity;
• The MFSWG is now working to provide technical expertise and guidance for regional groups such as the African Mobile Phone Financial Services Initiative (AMPI) and potential work with other AFI regions in the future to implement concrete actions on a range of issues such as cross border remittances, oversight and supervision, consumer protection and financial education, as well as improved approaches to trust agreements and interoperability.

Finally, as a part of the AFI Network’s dedication to private sector engagement, representatives from Vodacom, Airtel, and Tigo shared their highlights and experiences in supporting mobile money expansion in Tanzania, and their views on the important role that regulations play in providing an appropriate enabling environment. The presentation provided a crucial view of the development of the industry over the past half-decade, specifically the previous two years when mobile financial services really took off in Tanzania.

Apart from an appropriate regulatory environment, the fundamental takeaways from successfully offering mobile money in the Tanzanian market included the importance of a substantial distribution network of agents that are properly trained, on the ground education directly with customers, focus on appropriately targeted marketing with promotional support on usage and uptake, and continuous innovation. The representatives also shared an impressive list of payment partner businesses where mobile money drove substantial cost reduction and increased business opportunities. Another critical point was the role each saw for linking with banks and other financial institutions to support access to a broader range of financial services including savings, credit and insurance.

The rapid expansion of digital services for financial inclusion, interoperability, mobile-enabled cross border remittances, and the further engagement of the private sector in this field are expected to be key areas of discussion and debate at the 2014 Global Policy Forum (GPF) this September in Port of Spain, Trinidad.