Perspectives 2019 2020 Public Sector

Citi Perspectives 43 Figure B. Mobile Money Model (Source: Citi GPS Report 2019 Bank X — The New New Banks) Country Cash Dependency Absence of Alternative Payment Options Unbanked Population Demographics (Internal Migration, Youth Population) Regulatory & Institutional Support Mobile Money Future Potential Ghana High High High High High High Kenya Medium High Medium High High Medium Nigeria High High High High Low Medium/High South Africa Medium High Medium High Medium Medium Tanzania High High High High Medium High Uganda High High High High Medium High Multilayered Interoperability: Regulatory Reforms & Institutional Partnerships Over the past year, several countries have taken steps to accelerate mobile money adoption and, by extension, financial inclusion. These include regulatory reforms and infrastructure partnerships initiated by the private sector. As markets develop and mobile financial services deepen and mature, development organizations, industry bodies, regulators or industry actors themselves may embark on similar interoperability initiatives. (Source: IFC) A. Interoperability between mobile money providers for wallet-to-wallet (P2P) transactions: This gives users the ability to transfer between mobile money accounts held with different mobile money providers (MNOs) and other financial system players. Tanzania led the way in 2014, but several countries across the region, including Kenya, Rwanda, Nigeria and Ghana, have now launched interoperability projects and use cases. B. Interoperability between mobile money providers and banks (facilitating B2C and C2B): This is a use case that will significantly increase volumes moving between mobile money and banking systems. A key next step in this journey will be the implementation of innovative solutions to integrate mobile money platforms with the wider financial ecosystem, including sub regional context with common currencies, such as ECOWAS. This has and will ultimately solve for the ability to facilitate institutional payments to mobile wallets and vice versa across the region, may it be a business, government or development organization. Various approaches exist around central switching infrastructure for the industry to enable nascent use cases to scale, including merchant payments and efficient connections to domestic and international financial system players. This is already happening at sub-regional and country levels across multiple layers and combination of ecosystem players. Mobile Momentum across the Sub Saharan Africa Ecosystem • West Africa: For example, the eight countries of the West African Economic Monetary Union (WAEMU) are building an interoperable payment system that will connect 110 million people to more than 125 banks, dozens of e-money issuers, and more than 600 microfinance institutions. This initiative is led by the Central Bank of West African States (BCEAO), which is the central bank regulator for the common monetary zone, and part funded by the Bill & Melinda Gates Foundation. • Tanzania: In 2014, Tanzania became the first country in Africa to introduce multilateral interoperability including between mobile money services, making Tanzania one of the first countries in the world with an industry-agreed interoperable market for mobile financial services. The policy allows instant transfers between customers of different providers — a move said to widen access and increase competition. Regulations state operators must connect services to the National Switch — the platform already used by other finance providers to ease fund transfer and expand customer access to banking infrastructure such as ATMs. In 2020, the Bank of Tanzania plans to go live with an interoperable, instant payment switch that will include the MNO and fintech community and their digital wallets, another initiative that is supported by the Gates Foundation.