Perspectives 2019 2020 Public Sector

44 Mobile Money Momentum: The Race Towards Interoperability, Interconnectivity and Inclusivity Across Sub Saharan Africa • Kenya: While M-Pesa continued to mature its model in Kenya with interoperability with banks, in 2017 we also saw the launch of the real-time money transfer service called PesaLink. The interbank money transfer platform transacted Sh81 billion in its first 17 months. The platform is offered by Integrated Payment Services Ltd (IPSL), a subsidiary of the Kenya Bankers Association (KBA), and can handle person-to-person transfers. PesaLink was set up to rival telcos’ mobile money service currently dominated by Safaricom’s M-Pesa. KBA manages the switch and facilitates direct transfers without going through intermediaries such as M-Pesa, Airtel Money and Orange Money. While it is still scaling, it provides a credible integration for any local or crossborder player that would like to pay into digital wallets that are active on the switch. (Source: Business Daily — Kenya) • Uganda: Mobile network operators (MNOs) in Uganda also launched a scheme in their own market when in 2017, the Central Bank of Uganda directed telecoms to implement mobile money interoperability, which would enable cross-network and cross-border mobile money transactions. MTN and Airtel hold a combined 90 percent market share of mobile subscribers in Uganda. Unfortunately, however, this service (cross network money transfers) has since June 2019 been unavailable, with some of the key MNOs having technical failures. • Zambia: In June 2019, the Bank of Zambia also confirmed it is working on a project to link up all mobile money service providers in the country. The project is being undertaken in collaboration with the Zambia Electronic Clearing House Limited (ZECHL) and implemented under the National Financial Switch (NFS), an electronic platform (system) which will link all mobile money operators in a bid to increase financial inclusion among the over 60% unbanked Zambians. The NFS is being established under the National Payment System with the aim of linking with other payment systems without undue restrictions. (Source: Zambia Reports June 2019) • Democratic Republic of Congo: The Banque Central du Congo (BCC) will be launching in 2020 an instant payment switch, interoperable in nature, and will require the participation of mobile wallet providers mandatorily. This is critical given the complexities of operating in Congo, which is largely unbanked, and has minimal telecommunications and infrastructure for its widely dispersed population. Emerging Risks to the Mobile Momentum and the Ecosystem While we see great momentum in interoperability across Sub Saharan Africa, we also see some potential risks to the ecosystem. • Cote D’Ivoire: One example, is in Côte d’Ivoire, where the introduction of a tax on mobile money transactions threatens to reverse some key gains and may limit the impact of mobile money on the country’s 2040 vision and delivering on the SDGs. Electronic money issuers wholly owned by mobile operators and licensed by the Central Bank of West African States (BCEAO) face a 7.2% tax on turnover introduced in January 2019, an action which could slow down the effort to develop B2C and C2B use cases and to achieve ubiquity amongst users This is a tax specifically levied on the mobile sector as other e-money issuers and mobile money providers that are not promoted by a mobile operator are not subject to the tax. This renders mobile money transactions disproportionally higher in cost than similar transactions processed by banks and other financial institutions. (Source: GSMA West Africa 2018 Mobile Economy) There is also a general recognition that much of the existing bank-focused infrastructure is not optimal for mobile money and is not fit for purpose in the new mobile money world. So we have seen key ecosystem players take the lead in launching a cross continental payments infrastructure. The Launch of Mobile Wallet Interoperability (MOWALI) In an effort to solve interoperability across the region, MTN and Orange, two of Africa’s largest mobile operators and mobile money providers, launched a joint venture to enable interoperable payments across the African continent. This service was launched in conjunction with the GSMA, which will support its development. Known as Mowali (‘mobile wallet interoperability’), this service is open to any mobile money provider in Africa, as well as banks, money transfer operators and other financial services providers, who are encouraged to join the Mowali ecosystem to promote digitization of payments across the financial sector.