FINANCIAL INCLUSION AND MOBILE BANKING IN GUINEA. Presentation for IBFI

Transcription

1 FINANCIAL INCLUSION AND MOBILE BANKING IN GUINEA Presentation for IBFI

2 Subject : Financial inclusion and Mobile Banking in Guinea Presentation for IBFI

3 Table of Contents Short presentation of the financial sector in Guinea Presentation of the regulatory framework Presentation of the situation of EMIs Challenges and prospects Case study Presentation for IBFI

4 Presentation for IBFI

5 Short presentation of the financial sector in Guinea Number of inhabitants: 10 million Number of banks: 15 Number of Microfinance Institutions: 18 Number of Electronic Money Institutions: 3 Presentation for IBFI

6 Why use a mobile phone for financial inclusion? Rate of financial inclusion: less than 10% Penetration rate of mobile telephony : more than 70% The emergence of enabling technologies for offering financial services over a mobile phone represents an incredible opportunity for mitigating financial exclusion. Presentation for IBFI

7 What's in it for the users? Transactions are seamless and secure Guarantees consumer protection Facilitates financial insertion Presentation for IBFI

8 What's in it for the traditional banks? Provides an affordable access to financial resources (deposits are entrusted to a bank or a microcredit institution) Broadens the potential customer base (banks and microcredit institutions alone are allowed to grant loans and pay interest on a savings account.) Presentation for IBFI

9 What's in it for the regulator? Promote financial inclusion via the mobile phone ensures financial integrity and stability via : improvements in risk control connected with the issuance of electronic money consolidating non prudential supervision (consumer protection) better control over money stock less money in circulation and lower costs for producing fiduciary money being a part of the drive by the Central Bank to implement a financial inclusion strategy Presentation for IBFI

10 What's in it for the other stakeholders State transaction transparency and traceability, increase in tax revenue, reduction of expenses etc. Companies seamless transactions, time saving, improved productivity, economic benefits Presentation for IBFI

11 The regulatory framework Observation: it is the entity that the Central Bank has not authorized which, in effect, performs financial transactions Putting in place a working group on mobile financial services The draft decision covers all of the issuance and distribution activities of electronic money by non bank entities, regardless of the distribution channel or the medium used for that purpose Presentation for IBFI

12 The regulatory framework (continued) Obligation to create a financial institution exclusively dedicated to issuing electronic money A decision concerning EMIs was made in March 2015 The decision focussed on risk management (prudential and non prudential) Presentation for IBFI

13 The main risks with EMIs Operational risks Technical errors, network failures, fraud.. Mitigating money laundering and the financing of terrorism a requirement to identify customers, limit transactions Consumer protection initiatives for protecting and educating consumers, (financial literacy) Network of intermediaries or agents liquidity management procedures, managing withdrawals and deposits, training intermediaries, securing intermediaries against theft, etc. Financial risks a minimum capital requirement and own funds requirement, managing deposits, covering commitments with liquid assets. Liquidity risks intermediaries lack experience with managing liquidities Presentation for IBFI

14 Part I Contents of the regulations General provisions. Part I deals with conceptual definitions including the subject and the scope of the decision This chapter helps to clarify for stakeholders the activities connected with issuing and distributing electronic money according to regulations. Presentation for IBFI

15 Contents of the regulations Activities authorised for EMIs issuing electronic money ; making electronic money available to members of the public ; managing electronic money ; Presentation for IBFI

16 Contents of the regulations (continued) Forbidden activities Granting loans Paying interest on deposits Crossborder payments (unless otherwise allowed by the Central Bank) Presentation for IBFI

17 Content of regulations (continued) Part II Conditions of access. Part II deals with the conditions for licensing and the diligence required for being an electronic money issuer it defines the roles and the responsibilities of the parties involved. Its sets the conditions of access and conduct of business and lists the documents required for obtaining a license Presentation for IBFI

18 Contents of the regulations (continued) it sets the prudential framework for EMIs the conditions governing the refundability of electronic money, internal control, mitigating money laundering and the financing of terrorism supervision and oversight for the sector. Presentation for IBFI

19 Contents of the regulations (continued) Part III sets the framework for issuing and distributing electronic money. It deals with controlling risk connected with the distribution network (agents) consumer protection collecting statistics (reporting) the conditions governing the termination of issuing electronic money Presentation for IBFI

20 Contents of the regulations (continued) Part IV : Interoperability The regulatory requirements must be «technologically neutral» in order to enhance innovation and interoperability. This part seeks to encourage technical interoperability between operators Presentation for IBFI

21 Contents of the regulations (continued) Part V : Sanctions This part refers to the sanctions in the event of non observance of prescribed obligations contained in the decision Presentation for IBFI

22 Contents of the regulations (continued) Part VI Transitional and final provisions These provisions seek to provide a deadline for compliance with structures already being implemented and render these regulations enforceable for newcomers to the market (6 months + possible extension) Presentation for IBFI

23 Situation of Electronic Money Institutions Three of them (3) have been licensed by the Central Bank: Orange Money (Mobile Money) PayCard (prepaid cards) MTN Mobile Money (Mobile Money) To remind you that before these regulations were implemented, Orange Money and MTN Mobile Money were covered by partner banks that were licensed Presentation for IBFI

24 Situation of Electronic Money Institutions On 31/12/2016 Number of customers Transaction amounts Number of agents Orange Money USD 100 Million 6800 MTN Mobile Money Guinea USD 3 Million 1200 Total USD 103 Million 8000 Presentation for IBFI

25 Indicators N Indicators number amount observations I Number of customers on file (they opened an account) a. Customers that do not have an account in a financial institution a. Customers that do have an account in a financial institution II Number of active customers* III Total number of Agents IV Quarterly total amount of financial commitments connected with EM V Account balances of EMI agents or distributors VI Account balances of EMI customers VII Total balance of financial commitments connected with EM VIII Total number of transactions during the period (c+d+e+f) a. Transfers a. Deposits a. Withdrawals a. Payments IX Total amount of transactions during the period (g+h+i+j) a. Transfers a. Deposits a. Withdrawals a. Payments X Average amount of transactions per month (IX/VIII) XI Average of daily transactions XII Transactions pending** XIII Number of overrides for transaction limits during the month XIV Suspicious transactions XV Complaints received Frozen account, reinitialize PIN codes, errors on transfers XVI Complaints processed XVII Fraud detected (state the nature) Presentation for IBFI

26 N Administrative region Number of agents Total ID number Name of agent Region Prefec ture Commu ne CRD/Qua rter District/Se ctor Line of business Start date Observati ons Presentation for IBFI

27 Situation of fiduciary account GNF amount Observations Amount available on the fiiduciary account (N-1) Total deposits on the fiduciary account Total withdrawals on the fiduciary account Balance available on the account (N) Presentation for IBFI

28 Challenges and prospects Build a digital payment ecosystem (keep the money longer in the system) Promote government payments (incentives and other payments) Promote crossborder payments Spark more interaction between the EMI and other financial institutions (financial inclusion pathway) Presentation for IBFI

29 Challenges and prospects (continued) Develop interoperability Reduce the «gender gap» Improve liquidity management, Put in place an effective supervision framework ( staff capable of supervising FinTechs and RegTechs to mitigate fraud and other financial offences) Presentation for IBFI

30 Challenges and prospects (continued) Consolidate consumer protection(deposit insurance) Put in place a financial literacy programme ( the problem being how do we fund it) Finalizing the draft new legislation on financial inclusion (factoring in the EMIs and other alternative financial services) A revision of the National Strategy for Financial Inclusion is underway (factoring in the EMIs) Presentation for IBFI

31 Case study The Guinea Rural Credit project as an example Orange Money crossborder payments The customer identification problem (document reliability) Bank involvement: ecobank app Role of EMIs during the EBOLA crisis Presentation for IBFI

32 Conclusion Taking part in AFI Africa Mobile Policy Initiative, AMPI Membership application for the Better Than Cash Alliance (BTCA) Presentation for IBFI

33 Thank you for your kind attention Presentation for IBFI