Dakar Dispatch: Mobile Money and Financial Inclusion

CGAP and the Alliance for Financial Inclusion (AFI) just cosponsored the first branchless banking seminar for Francophone Africa in Dakar. The seminar was for high-level policymakers, and featured delegations from Burundi, Cameroun, Côte d’Ivoire, Democratic Republic of Congo, Madagascar, Mali, Mauritania, Niger, and Sénégal. The first day of the two-day seminar was also open to the private sector and included representatives from mobile network operators, banks, MFIs and technology providers.

This seminar was a timely one given the flurry of activity going on in the region. Orange Money is now active in Côte d’Ivoire, Sénégal and Mali. MTN Mobile Money is available in Côte d’Ivoire and Benin. Société Générale is on the verge of offering some type of branchless banking service in Sénégal. Zain is preparing to launch Zap in Burundi. All three mobile operators are knocking on the central bank’s door in Madagascar. And there are three technology companies (in Sénégal, Côte d’Ivoire and Burkina Faso) that have been given the approval of the regional central bank (the BCEAO) to function as electronic money issuers. It is clear that the subject of branchless banking is on the minds of policymakers in Francophone Africa.

The last session of the seminar was a forum for debate among policymakers regarding specific issues of branchless banking which had been discussed and presented over the course of the seminar. The questions guiding the debate were:

•  Does financial regulation and financial inclusion always go together?
• Should regulators be one step behind market innovators?
• Are the objectives of AML-CFT and branchless banking always compatible?
• Are non-bank based regulatory models more advantageous to clients than bank-based regulatory models?

For most of the questions, the policymakers were somewhat divided. Some people saw a conflict between financial regulation and financial inclusion, while others were convinced that the two always went hand in hand. Some participants eloquently argued that policymakers should not “regulate simply for the sake of regulating” and therefore should respond to innovations in the market. But others argued that there was danger in trailing the market. Most participants were confident that the objectives of AML-CFT were compatible with branchless banking, but doubt remained in a few specific cases. Finally, while some policymakers were willing to argue that non-bank based regulatory models may be more advantageous for clients (in terms of ease of access and use), many were not comfortable with the model unless a bank had a stronger presence.

The regulatory questions around branchless banking are often not black and white, but usually gray. What is quite clear, however, is that the private sector is raring to go in many Francophone African markets, and policymakers need to be informed now more than ever on the appropriate ways to respond. The recent seminar in Dakar was hopefully one step closer to getting there.