2018 - 2019 Edition of Citi Perspectives for the Public Sector

Citi Perspectives for the Public Sector |  2018-2019 25 The emergence of MNO, fintech and bank models Banks and fintech companies are leveraging mobile network operators (MNO) to deliver financial services through SIM cards. In addition, banks have been granted MNO licenses to issue SIM cards loaded with banking products. More recently, there has been a move towards e-commerce transactions and interoperability with banks, application programming interfaces (APIs) and even business-to-business transactions. MNO-led models tend to be more agile as they are incentivized to further grow and develop their infrastructure, products and agent networks. MNO-led models, such as those in East Africa, and mobile products have also become more sophisticated, with the B2C and C2B market segments reaching critical mass and leading to new use cases. In countries with bank-led models, mobile development has been slower and in some regions this has resulted in regulators allowing non-bank FIs (mainly MNOs) to issue e-money. Smart policies, digital public sector and enabling regulations Since 2005, the regulatory environment has undergone a huge shift to support mobile money across the region. The goal for most regulators is financial inclusion so that many more people can have access to basic financial services. A World Bank Findex survey, published in 2018, showed that financial inclusion in SSA has increased from 23% in 2011 to 43% in 2017. Formerly, only Zambia and a few West and Central African countries had relevant regulatory frameworks in place, whereas today enabling regulations have passed in most of the region. Mobile money is not only better regulated, AML guidance is more robust and cross-border transfers are permitted in some corridors including the U.S. and EU. The regulatory structures across the region consist of newly passed national payment systems acts, e-money directives, anti-money laundering acts, remittance regulations, emerging cybersecurity policy and regulations and interoperability frameworks on mobile money payments. These developments will be critical to the overall success or failure of digital financial services across Africa. Perhaps most importantly, the public sector has been a key adopter and enabler of digital services delivery. Initially, the aim is to increase fiscal efficiency by lowering the costs of revenue collections. However, many government digital strategies have recognized that technology is a key overall enabler of national strategy — and will empower citizens by using data to drive policy, budgeting, national dialogue, accountability and decision making.