Download pdf - Delivering Innovations to scale up Mobile Financial Services for Financial Inclusion in Africa

© 2013 mFino Ltd.| All Rights Reserved |Confidential

Delivering innovations to scale up

Mobile Financial Services to promote

Financial Inclusion in Africa


Financial Inclusion

Finance is not an end by itself but a means to help

solve significant development challenges in order

to improve the lives of people

Financial Inclusion helps to make basic, essential

services and utilities like

energy, health, education, and water more

accessible to people at the bottom of the

economic pyramid

Access to affordable financial services helps in

overcoming poverty, reducing income disparities,

and contributes towards overall social and

economic development (GDP Growth)


Population of Africa –more than 1.1 billion

Total mobile subscribers:

above 800 million

Close to 80% of the adult population is unbanked

which stands at 326 million

25 African countries have mobile penetration

more than 90%

Nigeria mobile

subscriptions at 120 million

Sources1. World Bank2. MDI3. GSMA 4. Tech 360 (http://www.tech360ng.com/nigerian-subscribers-at-120m-in-2013-q2-mtn-tops-table/ )5. Business Community (http://www.bizcommunity.com/Article/410/87/62217.html

Africa – An Overview


Africa leads MFS with 117 of the

total 220 deployments in the world

Source: GSMA

Mobile Financial Services in Africa

46% mobile money transactions

processed in East Africa

Main services offered

• Airtime Top-up

• P2P Transfer

• Bill Payment

• Receive Bulk Payments


Dimensions of Financial Inclusion

Access

Usage

Quality

Availability of formal, regulated financial servicesPhysical Proximity Affordability

Actual usage of financial services and productsRegularity Frequency Duration of time used

Products are well tailored to client needsAppropriate segmentation to develop products for all income levels


Barriers to Adoption of Mobile Financial Services

• Need to provide status for electronic transactions

• Flexibility in the application of CDD requirements for technology based solutions

Stringent Regulations

• Hindering wide spread access

• Less than 20% of the products are fully or partially interoperable

Limited Interoperability

• Most agents lack knowledge & ability

• Well qualified agents not easy to findScarcity of

Qualified Agents

• Lowest Literacy rate in the world

• Risks and benefits of MFS needs to be articulated well

Low level of Financial Literacy &

Income


Transformational Approaches for Financial Inclusion

Access to a range of quality financial services at affordable prices, delivered with convenience and

dignity, can change the course of an individual’s, family’s, or business’s future.

Mobile Initiatives

Individuals

SMEs

Women

• Provide innovative products & services beyond payments

• Savings, credit , insurance, rewards etc

• Access to finance (working capital, bridge finance, bank guarantees etc)

• Credit Scoring and increase in the borrowing limits

• Insurance for protection against unforeseen events/ exigencies

• Access to income generation loans (beyond micro-loans)

• Support for entrepreneurship

• Financial Literacy

Utilities &

Essential

Services

• Access to energy, clean water, education, health etc

• Mobile Markets for agriculture

• Informational services (weather, commodity price, best practices etc)

So

cia

l & E

co

no

mic

Dev

elo

pm

en

t


Retaining the tapped and targeting untapped customers

• Small percentage of households enjoy formal banking

• 90 % of transactions are in the form of cash

• Lack of savings, asset creation and protection tools – savings less than 15% in Africa

Current State

• Limited information available about

• Nature & size of market

• Investment required

• Risk involved

• Customer needs & preferences

Barriers for Financial Access

• Government adopting digital payments

• Offering customers with tools to keep digital money within the ecosystem

• High scope for Mobile Savings, Loans and Microinsurance products

Opportunity

Source: Publication on Financial inclusion in Africa by African Development Bank


Reach out to SMEs

• There are 50 million SME’s in Africa

• 69% of them operate in informal sector

• Contributes to 58% of employment and 33% of GDP

Current State

• Considered high risk by banks

• Lack of wide range of financial products that suite their business

• Poor customer information and knowledge


• MSME (Micro-Small Medium Enterprise) market worth USD 150 billion

• Innovative, tailored and technology – enabled intervention

• For e.g. M-Pesa’s recent micro insurance product for farmers “Kilimo Salama”

Opportunity



Reach out to Women

• One third of the firm owners are women

• Women account to 20% of the banked population in the continent

• Financial gap more acute in rural areas where women benefit from only

•One tenth of the credit to small farmers and less then 1% total credit to agriculture

Current State

• Economic barriers

• Social Cultural barriers

• Unfavourable environnent


• Financial inclusion for women has social benefits (helping in children's nutrition, clothing, health

and education)

• Microfinance Institutions have a large scope in increasing financial adoption for women

• Help build credit history for easier access to loans from banks

Opportunity



Access to Utilities & Essential Services

• 600 million of the population is part of agriculture

• 5% of the budget and 10% of the commercial bank lending goes to agriculture

• Only19% of the rural population is banked

• Agriculture contributes to 40% of the GDP and provides livelihood to 70% of the population

Current State

• Limited level of finance

• Lack of access to credit, payment services and insurance products

• Lack of engagement by commercial banks


• Significant potential in offering MFS for

• Mobile Market Place, Informational, agricultural loans, energy, water, health, education etc

• Microfinance Institutions

• Provided 7.8 billion loans to 6.1 million borrowers, but the untapped opportunity is larger

Opportunity



Mobile is the gateway to Financial Inclusion


Innovative Mobile Financial Services for Financial Inclusion

Bill Payments

Send Money

Airtime Purchase

Receive bulk Payments

Micro Insurance

Savings

Credit

Loyalty/Reward Programs

Online Payments

Credit Scoring

ProximityServices

First Generation Services

Second Generation Services

Next Generation Services

Ticketing

Retail Payments

International Remittance

Salary Payments


mFino MFS platform ensures that

cash remains within the system

The platform connects both the

source and destination with an

integrated first mile to last mile

mobile wallet

All sources of funds can be routed

to the mobile wallet and payments

can be made using the mobile

mFino Mobile Financial Services Platform

Any Phone Any Payment Method Any Channel


Questions..???


Thank You