缅北禁地

Customers at an M-Pesa counter in Nairobi receiving assistance in making a money transfer by phone.

Photograph: Associated Press / Sayyid Abdul Azim

More people in Africa鈥檚 poorest countries have mobile phones than have bank accounts. That reality is spurring mobile service companies to explore how they can capture a share of the potential banking market by enabling migrants from these countries to transfer funds back home to their families.

Sending such remittances by mobile phone can be a cheap, efficient and safe alternative to the usual channels of employing money transfer companies or acquaintances traveling to the home country [see Africa Renewal, October 2005]. Money can be sent to even remote rural areas quickly, so long as the recipient has cell phone access or can go to a participating business that pays out cash.

The market is a potentially lucrative one, Pieter Verkade, an executive at the MTN telecommunications company, told Africa Renewal. Such transfers already are 鈥渁 well-beaten track, with a lot of migrant remittance money coming into Africa for some time through other channels.鈥�

The technology is taking hold especially in countries where established transfer services charge high fees. Kenya鈥檚 Safaricom and the UK telecommunications firm Vodafone blazed the trail in 2007 when they launched M-Pesa (M for 鈥渕obile鈥� and pesa meaning 鈥渕oney鈥� in KiSwahili). Initially just a domestic mobile money service operating in Kenya alone, it has since expanded into an international transfer service for migrants in the UK sending money home to Kenya. Growth of mobile money services in the Kenyan market, where M-Pesa is still the predominant player, has been rapid. By the end of 2010, four mobile phone operators had signed up more than 15.4 million subscribers 鈥� more than half of Kenya鈥檚 adult population 鈥� to their mobile money transfer services.

Ignored at first

M-Pesa鈥檚 rapid growth is particularly astonishing since the service was, at first, 鈥渧irtually ignored by the 鈥╢inancial institutions,鈥� recalls Bernard Matthewman, chief executive of Paynet, which developed software for M-Pesa that allows cardless transactions at ATMs.

Part of the early challenge in launching the service, says Mr. Matthewman, was convincing banks that people outside major cities were potential customers. 鈥淢ost importantly, in launching the Paynet cardless ATM service, we had to have an education campaign,鈥� Matthewman explains.

There was no reference point for this kind of service. Many of the people M-Pesa hoped would sign up had never used an ATM before, let alone used an ATM without a card. But a cardless ATM transaction can be very straightforward, requiring just a PIN code that is texted to the user and kept active for only a few hours to safeguard the security of the transaction.

In the short time since the launch 鈥╫f M-Pesa, some $100 million has been withdrawn by remittance recipients from PesaPoint ATMs, without the need for bank cards or bank accounts.

Teaming up

The use of mobile money transfers for remittances and small payments, such as school fees and utility bills, has expanded beyond Kenya to other African countries. In South Africa, Vodacom recently teamed up with Nedbank to offer the service for domestic transfers. 鈥淰odacom鈥檚 existing penetration into the target market 鈥� its distribution coverage through outlets even in rural areas 鈥� was attractive to us,鈥� says Ilze Wagener, an executive at Nedbank.

Mobile money transactions can offer banks a way to reach people in rural markets without the expense of building new branch offices or agency outlets. By May 2011, nine months after its launch, the Vodacom-Nedbank partnership had signed up 140,000 customers in South Africa and set up more than 3,000 M-Pesa outlets and 2,000 ATMs throughout the country. In a country like South Africa, which has people both with and without bank accounts, as well as a range of retailers from very sophisticated to simple, 鈥渨e have to think about M-Pesa in a very different way,鈥� adds Ms. Wagener. The service 鈥渉as its own unique set of new opportunities and challenges.鈥�

In some countries, banks are forming partnerships with multiple telecommunications companies. 鈥淭he mobile money network we now have in place, through partnerships with four different telecoms companies in Ghana, has enabled us to extend our services to reach customers in every part of the country,鈥� Owureku Osare, Ecobank鈥檚 head of transaction banking in Ghana, told Africa Renewal. Mr. Osare described Ecobank鈥檚 development of a mobile money network throughout Ghana as part of a larger strategy to build up the bank鈥檚 client base.

Mobile banking services, such as M-Pesa in Kenya, make it easy for people without bank accounts to receive remittance payments from relatives abroad.

Photograph: Africa Media Online / Felix Masi

Reaching the 'unbanked'

There are increasing signs that traditional banking and other financial services are adapting to this new technology and new market in ways that increase financial access for those without bank accounts, the 鈥渦nbanked.鈥� Banks offering mobile money services are encouraging people who may have some money left over from remittances to hold it in 鈥渕obile wallets,鈥� basic electronic accounts linked to a mobile phone.

鈥淏y making it easy for unbanked people to hold money in the mobile wallets linked to their mobile phone numbers, the hope is that eventually the money will find itself in an actual bank account,鈥� explains Mr. Osare. In May, Ecobank introduced a mobile savings account that can be linked to a mobile wallet for customers in West Africa.

M-Pesa also provides an interesting case. Last year it formed one of the first partnerships in which a telecoms company and bank teamed up to offer a basic interest-earning savings account, known as the M-Kesho M-Pesa Equity Account. By mobile phone, an M-Pesa user can move money from an M-Pesa mobile wallet to an interest-bearing electronic M-Kesho account, held with Equity Bank.

According to a 2010 report by the Bill and Melinda Gates Foundation, M-Kesho attracted 455,000 new account holders within its first three months, taking off at a faster rate than the M-Pesa service itself had in its earliest stages. In addition to providing a full virtual account managed from a user鈥檚 cell phone, M-Pesa offers the M-Kesho account holder the opportunity to take out a microloan after several months.

From insurance to 'cash-lite'

Beyond savings accounts and microloans, banks have also begun introducing prepaid debit cards and insurance services to this new market. Insurance policies that cover funeral costs are now an important financial service in many African markets, but so far they have usually been confined to cities, according to MTN鈥檚 Mr. Verkade.

With mobile money transactions catching on rapidly in Ghana, Hollard Insurance and Mobile Financial Services Africa joined with MTN in early 2011 to launch mi-Life, a mobile 鈥渕icro-insurance鈥� service available by mobile phone. 鈥淭hese insurance services make complete use of our technology, so that the entire registration process also happens over the mobile phone,鈥� Mr. Verkade explains. With very small premiums, the idea is first to tap into the strong unmet demand for this kind of service in Ghana, including in underserved rural areas, and then to extend the service to other African markets, such as Rwanda.

Partnerships between telecoms firms and banks and other financial service providers can be expected to increase, to serve a rising number of African countries and markets.

Another logical step is to move more in the direction of 鈥渃ash-lite鈥� 鈥� transactions that eliminate or greatly reduce cash in the money transfer system, says Mr. Matthewman. 鈥淲e鈥檙e beginning to see that already, where you can buy your prepaid airtime on an M-Pesa phone and send the airtime to another phone user, eliminating the need for paying in cash.鈥� In that way, a remittance sender could send prepaid airtime to a recipient, who in turn could exchange the airtime directly for goods or services at participating retail shops.