In East Africa the adaptation of Mobile Money has been documented as a success especially in the context of financial inclusion. It has caused a disruption within the financial status quo with Brick and Mortar financial institutions like banks having to create a similar platform-Pesalink- to compete with services like MPESA. But they may be too late to the party.
What Mobile Money has done is to approach financial inclusion without the pretense of neocolonial hubris and complicated financial tools like derivatives which traditional banks including investment banks have peddled. What Mobile Money services like MPESA have done is that they have enabled the normal working man and families to simply transact, send money, pay bills, share problems without all the materialistic dreams banks promise customers whom they well know may not afford those services. Not everyone can be Bill Gates, but to provide food, shelter, clothing and education for their family that is a noble duty very man aspires to fulfill. The problem arises where to provide this basic necessities complex financial tools are engaged and this is what for example caused the global financial crisis of 2008 where the US housing market collapsed. What l am saying is that until the product and customers mature let not Mobile Money be drawn into the quagmire of international finance with its grey areas with regard to jurisdiction, regulation and accountability.
The place factor was East Africa where the environment for the proliferation on Mobile money was set. The time factor was the innovation of the mobile handset and internet in the late 20th century. The why factor was that in Kenya, Mobile Money was adapted to circumvent the absence of Brick and Mortar financial institutions in villages in the rural areas. This lack of infrastructure of banking institutions and lack of financial inclusion was a common feature not only in East Africa but in Africa as a whole. But let’s focus briefly on East Africa specifically Kenya’s neighbors to the North, South Sudan and Somalia. These countries have been experiencing perennial conflict on top of barely existing financial institutions and infrastructures. Banks like KCB in Kenya have tried to venture into South Sudan but the risk involved there is very high. The answer to this predicament has been Mobile Money.
For example WorldRemit, an online remittance service that allows subscribers to send money using computers, smartphones or tablets has managed to leverage the lack of Brick and Mortar institutions and the availability of smart phones and internet to make financial services available to people in countries such as Somalia. It’s no coincidence its Founder & Chief Executive Officer Ismail Ahmed is from Somalia. Research shows in January 2017, WorldRemit customers transferred more than $140m (Sh14 billion at annualised rate) to Kenya, making it one of the largest remittance companies serving the Kenyan diaspora. WorldRemit is now connected to over a fifth of all mobile money accounts at 112 million around the world. Some 74 per cent of all international remittances to mobile money accounts coming from money transfer operators are sent via WorldRemit. Transfers to mobile money accounts make up 93 per cent of WorldRemit transactions to Kenya now. That refugees for example can get financial assistance from extended families across the world who have relocated means Mobile Money enables them have access to basic necessities like food, shelter and clothing.
In Uganda, Rwanda, Tanzania and Kenya people are now able to send money across networks and this means that Mobile Money financial systems are becoming interoperable in East Africa. Even though states in East Africa have very different priorities with regard to domestic and foreign policies, policy makers need to realize that there is a need to relax the restriction of policies governing for example Mobile Money if this will enable its citizens and businesses within East Africa to mutually benefit. It is these policies in areas dealing with technology and digital innovations such as Mobile Money and Internet which are not restricted by state territory and sovereignty that need to be addressed. These services tend to offered by multinational organizations which operate in different domestic environments which have different rules and regulations. It will be a pity if states or even the MNCs themselves prevent the transfer of this knowledge for selfish interests if policies are not in place to regulate these issues. There needs to be dialogue between states and MNCs in East Africa to assess the regional policies for handling Mobile Money otherwise a clash with the respective Central banks in the region and a neocolonial global financial system is inevitable. I foresee a chaotic 21st century where global innovations which have no restrictions of boundaries clashing with states who have control over a defined psychical territory and an undefined digital territory on the internet.
Tuesday Orina, Lecturer Foreign Policy Analysis, Riara University. 2nd April 2017.