Banking the poor opens floodgate of innovation - in interesting places

African continent offers opportunities and challenges in equal measures

FOR Stephen Kehoe, the African continent offers opportunities and challenges in equal measure. The Global Head for Financial Inclusion at Visa sees the continent in terms of individual countries each requiring a different approach.

It is only recently that a coordinated global push to increase financial inclusion - a method of improving the range, quality and availability of financial services and products to the under-served and financially excluded - to nearly everyone in the world by 2020 has gained momentum.

“We at Visa have always been in the business of providing financial inclusion [it] has always been part of our DNA,” Kehoe says.

Visa Inc is itself a product of years of trial and error and building consensus amongst various players.

Progress made in mobile technology has proved to be a major asset in the company’s efforts. It has recognised the need to partner with various mobile operators and technologies but also with efforts by various groups such as regulators and aid groups to drive financial education among the poor.

“It was very hard to reach people outside of banks, but with new technology, such as mobile, when we look at Africa we see a well of opportunity. Mobile can help drive that strategy,” Kehoes says.

Indeed, across the continent from West Africa, Southern Africa and East Africa, mobile is central to these strategies.

Women are key

In Nigeria, the company is working with the First Bank of Nigeria to train over 2,500 women to act as agents for the bank and sell financial services in the villages. By partnering with the women, the company sees possibilities of greater adoption and trust from the people who will be targeted.

In Ghana it is working with CARE International, the global humanitarian agency, to encourage “group saving” within communities in remote areas using mobile phones to access full banking services.

And in Rwanda, using a new product called “MVisa”, the company is scaling various operators and banks to create a seamless financial system that is proving to be a hit.

Kehoe says while pushing these different efforts, there is a strategy to it.

“We are making innovations in three different areas - actual product innovation, new partnerships that we create, and around distribution, the last mile to the consumer or merchant,” he said.

Game-changer technologies

In Nigeria, with an estimated adult population of 100 million and only approximately 30% banked, Visa sees great opportunity for agent banking given that mobile phone subscriptions in the country stand at 159 million.

“We are working with agent networks. We are investing in programs that help them,” Kehoe said.

“These agents in turn will bring branchless banking and mobile financial services to at least 75,000 Nigerians living in rural and underserved communities,” said Kehoe describing the partnership with the bank, that also includes the Cherie Blair Foundation for Women and the Youth for Technology Foundation.

In Ghana, Visa is partnering with telco MTN, CARE and Fidelity Bank to provide village loan associations with a basic bank account over the mobile phone.

CARE estimates that over 30% of Ghanaians, especially those in the northern regions have no financial services in their communities, with 78% of them lacking any sort of relationship with a financial institution.

“To open an account, representatives from a CARE VSLA need only visit a Fidelity Smart Bank agent in their village. The agent snaps photos of their identification cards and sends it over the MTN mobile network to a processing agent,” CARE’s Access Africa programme director, Lauren Hendricks, said at a press briefing on the partnership earlier this year.

“Within five minutes, the remote processing agent opens the account. It’s a secure, convenient system that’s among the first of its kind in West Africa. In rural farming communities that are hours, if not days, from the nearest bank branch, this technology is a game-changer.”

For relatively more mature markets like South Africa and Botswana, Visa is looking more at partnerships.

“In South Africa and Botswana we have partnerships with Orange, MTN and Vodacom to provide their subscribers with a prepaid Visa account. You can do all sorts of transactions or you can send money from your phone,” Kehoe says.

Vodacom SA, which launched its M-PESA Visa card in August this year, is targeting the 240,000 merchants in South Africa that accept Visa.

For a one-off fee of $0.87 subscribers can go to an M-PESA outlet and register for the card which incorporates chip and pin technology. MTN and Orange also have similar cards.

Innovating from scratch in Rwanda

It is in Rwanda where Visa has innovated from scratch with its “MVisa” mobile money service.

After signing a partnership for collaboration with the government of Rwanda, the company then connected all of the country’s ATMs to its network before setting up a “Visanet” presence to settle local transactions in country.

This allowed it to set up Africa’s first interoperable mobile money service. “It is the first interoperable mobile money system,” Stephen Kehoe says.

“We spent three years developing the product in Rwanda. It doesn’t matter which bank you’re with, with MVisa you will be able to save and send money, go to any agent and they will be able to give you money. Two hundred merchants now accept MVisa”.

The company has partnered with World Food Programme to send aid to 3,500 people through MVisa. Kehoe attributes the success of MVisa to the regulatory framework in Rwanda.

“One of the reasons we chose Rwanda is because the Rwanda government had a very aggressive IT policy and they were very willing to work out the right kind of legislation,” he said.

The Rwandan government recognised that interoperability was key to financial inclusion and put in place laws to enable it.

Kehoe said Visa will continue to work with various regulators as well as through the Alliance for Financial Inclusion to encourage regulations that enable financial inclusion and interoperability of services.


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