Imagine you sending money to your relatives and friends through your mobile phone without moving an inch from the comfort of your home; paying electricity bills, your DSTV subscription without rushing to their various offices. This is no longer wishful thinking but a reality in Sierra Leone.
Cashless transactions are now happening all over the country with the aid of mobile phones. Just take a walk to Electricity House in Freetown and see how people are paying their electricity bills. The way we send and receive money is changing and sometimes getting complex for those not following the digital trend. You do not need to go to a bank to send and receive money. You do not need to carry a sack of Leones to look for Dollars for your trip to Europe or America. You can shop with your UBA Visa Master Card abroad for instance as the Managing Director and Chief Executive Officer Ndubuisi Ejiofor told United Bank of Africa (UBA) customers on 19 November in Freetown. Just move around and see the many mobile money agents. This is why the Governor of the Bank of Sierra Leone Momodu Kargbo launched the “Guidelines for Mobile Money Financial Services” in Freetown on Tuesday 17 November to regulate the process and protect both the consumer and service providers.
How would the National Ebola Response Centre (NERC) have paid the more than 20,000 frontline health workers fighting Ebola especially those in remote areas where there were no banks? Mobile money service was the answer. These health workers were paid through this process. This happened at a time when there were accusations of fake names among the list of Ebola workers. It was also the period when stories about people asking for money before helping friends or family members secure jobs in Ebola treatment centres were flying high. The flow of weekly allowances through this cash transfer method turned out to be effective.
Governor Momodu Kargbo noted how mobile money transfers forestall delays in the payment of weekly incentives. The launching of the guidelines is to regulate the mobile transfer services. The objective is to protect the consumer as well as letting the operators work in a safe environment. Mobile money transfer services have been effective in countries like Kenya and Zimbabwe and others following that success are Uganda, Tanzania, and Burkina Faso among others.
Mobile money works well for the unbanked in rural communities. The reason for this is the high rate of illiteracy in the country. About 60 percent of the people are uneducated and they sometimes shy away from having bank accounts. In some parts of the country there are no banks and they depend on Airtel Money or Splash to send and receive money needed for their children’s school fees or pay medical bills. When Ebola struck and the paranoia was forcing people to move away from places like Kailahun where the outbreak started, First International Bank, the only commercial bank in Kailahun had to move its operations to Kenema. Those who have travelled to Kailahun know how rugged and muddy the last 17 miles to the town is. Because of the nature of the road, transport fares have increased. So moving from Kailahun to Kenema for banking transaction was really not a readily accepted alternative. The community banks and the Financial Service Associations (FSAs) became the alternatives. But Mobile Money transfer became the preferred option. A small kiosk around the roundabout in the center of the township became the point for sending and receiving money.
Mobile phone penetration across the country has grown at a speed unimaginable. More than half of the country’s 6 million people own mobile phones. The women and girls among others who own mobile phones are becoming part of the financial system with the help of that portable handset they have in their hands. The United Nations Development Programme (UNDP) is partnering with the Bank of Sierra Leone to increase opportunities for them and is supportive of the scheme because it leads to financial inclusion. The success stories in Africa are often cited to illustrate why Sierra Leone needs a transfer of this innovation into its economy.
The history of mobile money in the country also illustrates the needs for this transfer system. In 2012 Splash was the only company doing mobile money transfer but it was not regulated by the central bank. It started with 30 outlets and 10,000 clients. Six months later the outlets grew to 150 and registered clients were 50,000.
Because of that success, Airtel and Africell are now part of the mobile money business. It is creating employment, growing Small and Medium Enterprises (SMEs) and providing banking services for the unbanked.
Airtel is supporting the innovation and has designed about a thousand solar powered kiosks that the company will be distributing across the country. They will serve like bank branches wherever they are. Looking at the spread and speed of mobile money transfers it is necessary that the central bank has come up with guidelines to regulate the market. Soon it will be one of the ways to calculate the country’s Gross Domestic Products (GDP). It will be good to know how much percent of the GDP is transferred through this method.
This cashless flow will soon be one of the major ways we shop in supermarkets, pay for agricultural produces and pay for services in the country. The synergy to make it work between the mobile phone operators and the banks gives one clear reason why the Ministry of Information and Communication and the National Telecommunications Commission (NATCOM) should fast-track liberalising the gateway.
The conventional banks have transferred some of their products online. You can see transactions on your account, bank balance and a host of other services sent to you through your email and SMS alerts. Imagine you are in Kabala a district headquarters with no commercial bank and have run out of cash. You will definitely rely on mobile money to make things happen faster. Now we are talking of mobile wallet.
The need for regulations cannot be over emphasized. Neither the companies nor the clients should take advantage of each other. This method could even be recommended for the payment of salary for some category of workers. A cocoa farmer in Kailahun could be paid through this method. The vegetable farmer or cattle rearer in Koinadugu could also be paid likewise. The promotion of mobile money transfer services is in no way meant to replace conventional financial institutions but a product of their efforts. The financial institutions and telecoms operators are working using innovative technologies to reach out to their clients in a convenient and efficient way and bridge the formal and informal economy. Such inclusive growth strategy is most needed for the economic growth the country yearns for.
Friday November 20, 2015
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