The Enabling Environment for Mobile Banking in Africa

This report investigates the extent to which the expansion of mobile is likely to lead to the expansion of access to appropriate financial services in developing countries, especially Africa The report:

• Investigates emerging models of development in mobile-payments and m-banking through interviews with emerging African providers and use of secondary material;
• Assesses the policy and regulatory elements of an enabling environment for this sector, based in part on the analysis of circumstances in two pilot African countries.

The report:

• Defines m-banking;
• Distinguishes between additive and transformational models of mobile banking;
• Lists the factors that make microfinance-banking transformational:
  • Uses existing mobile communication infrastructure,
  • Is driven by new players with different target markets than traditional banks,
  • Harnesses the power of new distribution networks for cash transactions,
  • May be cheaper than conventional banking;
• Defines ‘enabling environment and stresses the need for openness and certainty in the regulatory and policy sector.

The report identifies the following barriers to microfinance-banking in Africa:

• Uncertainty about customer adoption;
• Inadequate regulation.

The report finds that in the pilot countries of South Africa and Kenya, microfinance-banking is at an early stage. It concludes by proposing a two-tier framework of enabling regulatory principles for microfinance-banking.