Ecosystem Development

Ecosystem Development

Six development challenges for Fintech in Senegal

Ecosystem Development

Six development challenges for Fintech in Senegal

By Bery Dieye Kandji, KM Consultant in Senegal
December 13 , 2017
Dakar, SENEGAL - 

« Fintech », contraction of «technology» and «finance», refers to a structure that offers innovative financial products and services without itself being a financial institution (bank, microfinance institution...). In Senegal, Fintechs are entering into the market, offering various products and services that could contribute to the growth of digital finance in the market. However, they are having to experiment in an environment that is not necessarily set up to favor them.  

If you're a Fintech start- up be prepared for the following challenges:

  • As a Fintech, you must develop innovative offerings, in accordance with the existing legal, financial and tax regulations in Senegal. But who are the authorities with whom you need to validate this compliance?  Identifying them will be your first big challenge. There is more than a dozen in the country: Bank of West African States (BCEAO), Directorate of Money and Credit (DMC), Regulatory Authority for Telecommunications and Posts (ARTP), Directorate of Micro Finance (DMF), just to name a few.
  • You will also have to deal with regulations that are not always aligned with your commercial realities. For example, if crowdfunding is your core business, you may suffer from banks’ monopoly on providing credit and the regulatory context around public offering.
  • The regulatory framework on electronic signature, set up by the Agency of Information of the State (ADIE), can be complex for Fintechs to understand. To dematerialize contracts, you will need a lot of time and patience. This may be tough for a structure whose originality is its ability to develop instant and digital offers.
  • A Fintech needs to build partnerships to expand its offerings. In Senegal one of the difficulties in this area is the weak bargaining power with big billers and incumbent financial institutions and operators. This may impose constraints for Fintechs whose business models are mainly based on the aggregation of services. This leaves little room for them to maneuver which could in turn affect the viability of their business model.
  • Despite robust growth potential, finding financing remains a challenge for Fintechs. The banks are still reluctant to finance emerging business models. And even if there are guarantee funds, their processes are often too long and unsuited to the development cycles of Fintechs.  
  • Another problem, you must be aware of, is the lack of an ecosystem fostering the development of Fintechs. There is almost no framework in Senegal to share your projects with research centers, large companies, public actors, and investors, and develop partnerships.

This last point probably includes all the obstacles to the development of the Senegalese Fintechs. So where does this leave Fintechs? Is there a future for these new market players?

Yes, because innovation, the main added value of the Fintechs is one of the core drivers of digital finance. When it comes to digital financial services, people are hungry for innovative services tailored to their needs and aspirations

Fintechs in Senegal need assistance to overcome their challenges, whether these are related to regulation, funding or establishment of partnerships.

The MM4P program whose mandate is to act as a neutral broker in market and bring together all the relevant stakeholders in digital financial services, is actively working on assisting Fintechs in the regard. A first meeting was organized on the 7th of September2017, in the offices of MM4P, to broker an exchange with Fintechs on their current projects, challenges and perspectives. The next step will be to formalize a framework to assist them in the market. 

Pour lire en français, cliquez ici.

For more information, please contact
Bery Dieye Kandji
KM Consultant, Senegal
Additional Information
Bery Dieye Kandji
KM Consultant, Senegal

Zambia Annual Monitor 2016

Ecosystem Development

Fri, 08/04/2017 - 16:31 -- anna.ferracuti

While Zambia was the earliest adopter of digital financial services (DFS) in Africa in 2002, it had lagged behind in leveraging those services to advance financial inclusion in the country for many years. Years of inertia have shifted to a period of momentum, which is reflected in an exciting 2016 for DFS.

MM4P Infosheet 2017

Ecosystem Development

Mon, 07/31/2017 - 11:27 -- anna.ferracuti

The Mobile Money for the Poor (MM4P) programme launched in 2012 because UN Capital Development Fund saw that the gains in digital financial services (DFS) were not reaching the least developed countries (LDCs). MM4P was created to demonstrate how the correct mix of financial, technical and policy support can build a robust DFS ecosystem that reaches low-income people in LDCs. In doing so, it has helped accelerate growth in several countries, identified some of the levers to help markets develop and supported efforts to reach the last mile.

Nepal Annual Monitor 2016

Ecosystem Development

Thu, 07/27/2017 - 10:43 -- anna.ferracuti

The digital financial services landscape in Nepal is changing, as the Nepal Rastra Bank starts issuing licences to non-bank payment service providers. Non-banks are actively engaging to set up agent networks and develop partnerships to co-create products, and many mainstream financial institutions are investing in new digital channels to deepen their services. 

UNCDF-MM4P leaves Liberia but the country cannot be left behind

Ecosystem Development

UNCDF-MM4P leaves Liberia but the country cannot be left behind

By Anna Ferracuti and Anne Duijnhouwer, UNCDF-MM4P
July 21 , 2017
Monrovia, LIBERIA - 

Broken lives and severed ties: the tragic reality of Liberia, where forgetting the 2014 epidemy is impossible. “Ebola is real” reminds a sign in Monrovia’s airport.

After two civil wars between 1989 and 2003 and the Ebola outbreak in 2014, Liberia is a country working to get back on its feet. 69% of the population live in extreme poverty[1], access to basic services such as health care, water and electricity is limited, particularly outside the country’s capital Monrovia, and there is lack of a middle class. Very rich or very poor, inequalities persist in this country where paved roads are a luxury for fancy compounds protected by barbed wire.

The country embarked on ambitious economic reforms that brought steady economic growth from 2005 to 2013. However, as a result of the Ebola outbreak, combined with a collapse in iron ore and rubber prices, Liberia’s economy came to a halt: closed businesses, barred schools, hospitals on tilt, travel restrictions, and a drop in foreign investments and trade. Between 2014-2016, the average annual growth rate of the country’s economy was 0%.

In 2013 UNCDF-MM4P launched in Liberia, a country with low banking penetration rates (3.2 bank branches per 100,000 adults) and 28% financial inclusion rate. With a primary focus of contributing to the development of an enabling environment for mobile money, the program worked closely with the Central Bank of Liberia (CBL) and GSMA to revise the Mobile Money Regulations to allow non-bank actors to enter the digital financial services (DFS) market, encouraging competition and interoperability.

But before activities could really take off, the Ebola outbreak occurred and the travel and assembly restrictions forced UNCDF-MM4P to cease its projects. The Programmme and the Better Than Cash Alliance joined forces with the United Nations Mission for Ebola Emergency Responses and shifted focus on digitizing payments to healthcare and other response workers. From early 2015, UNCDF had no presence on the ground in Liberia until May 2016, when the MM4P program reengaged in the market and stationed a full-time DFS Expert in Monrovia, Mr. Ali Akram.

Since then, UNCDF-MM4P has stimulated the DFS market and coordination among stakeholders by promoting partnerships, dialogue and awareness in a previously fragmented and uncoordinated DFS ecosystem that could not reach beyond the capital city. Today, Liberia is member of the Better Than Cash Alliance with a financial inclusion strategy, and regulators are enthusiastically seeking to learn from other countries and private actors. To facilitate dialogue, UNCDF-MM4P helped establish the DFS Working Group, a platform that brings together the DFS stakeholders to identify and address the challenges faced by the sector, and where the two DFS operators sit at the same table despite competition. As Massa Dennis, Senior Manager of Mobile Money at Lonestar, summarized:

There are challenges that are worthwhile addressing together, but given the competition in the market, Cellcom (Orange) and Lonestar would not have sat at the table together and have a meaningful discussion without the Working Group.

Another example of increasing integration is the CBL National Electronic Payment Switch commissioned in July 2016, which hosts four member banks that share their ATM networks; interbank fund transfers and bill aggregation services will soon be added. Moreover, the Agent Banking Regulations issued by CBL in April 2017 allow financial institutions to leverage agents to distribute their services more widely and cost effectively.

Between 2016-2017 UNCDF-MM4P also assisted BRAC Liberia[2], the largest microfinance provider in the country, to prepare and successfully launch a mobile money loan collection service. The customer uptake of the service has grown ever since, showing the appetite for DFS in Liberia.

The participation of Massa Dennis from Lonestar to the #DFS4Women event, organized by UNCDF-MM4P, inspired the launch of the MoMo Market Women Initiative. The initiative aims at reducing the gender gap in the uptake and usage of mobile money. Regarding the event, Ms. Dennis said “The event was an eye opener. In this sector, we don’t talk about gender, and it never occurred to us that there is a value proposition in focusing on women”.

To facilitate the shifts from cash to digital payments, specifically those that are performed regularly in one batch, UNCDF-MM4P conducted an analysis of high-volume (or bulk) payments flows in Liberia. The resulting diagnostics will enable the development of evidence-based policies and business models as well as provide a baseline for tracking the evolution of digitization in the country.

UNCDF-MM4P also supported Lonestar and the Ministry of Finance and Development Planning to sign a memorandum of understanding for payment of civil servant salaries through mobile money. Compensation of employees account for more than 50% of Liberia’s recurring budgetary expenditure, and government payments form a large component of high-volume payments. Shifting these payments to digital will accelerate the speed towards Liberia becoming cash-lite.

Overall, the DFS market in Liberia has made significant progress between 2014 and June 2017. The percentage of adult population with an active registered DFS account has risen from 0.6% to 11% and agent distribution has improved from less than 1 to 29 per 100,000 adults. However, the market is still very much at the beginning stages of development. Products offered in the market are restricted to basic first generation and providers are struggling to deploy an active agent network, particularly in rural areas. Poor infrastructure, lack of DFS awareness and low levels of financial literacy are still major obstacles regulators and providers are facing.

It is with great reluctance that we announce that the UNCDF-MM4P programme will not be in-country to support further development. A lack of funding meant the Programme has had limited resources and time to support Liberia to build a robust DFS ecosystem.  We will continue to pursue different avenues for funding but, at present, there are no clear medium or long term options to make a true impact with our current partners.

Even though it is too early to say how these efforts will translate into further progress of the DFS market and increases in the adoption and usage, the achievements are a testament to the potential of DFS in Liberia as well as the appetite of stakeholders in the country. The DFS sector in Liberia requires continued support not only to accelerate its development but also ensure that growth is equitable and targets poverty alleviation.

The Programme would like to thank all the stakeholders for the fruitful collaboration, in particular the Government of Liberia.

UNCDF hopes that the bond we have made with this country will continue despite MM4P’s disengagement. As a first step, Liberia will be invited to participate in the Better Than Cash Alliance peer exchange on e-government hosted in Rwanda next October.

We are open to staying and we welcome ideas on how to continue to fund our presence for the longer term. Liberia cannot be left behind.

 

[1] International poverty line of US$1.90 per day

[2] BRAC entered Liberia in 2008 with UNCDF-MicroLead support.

For more information, please contact
Anna Ferracuti
Knowledge Management and Communications Consultant, UNCDF MM4P
Sabine Mensah
Regional Technical Specialist, Digital Finance
Additional Information
Anna Ferracuti
Knowledge Management and Communications Consultant, UNCDF MM4P

MM4P strategic plan 2017 for Benin

Ecosystem Development

MM4P strategic plan 2017 for Benin

Involving the Government in the development of digital financial services
May 08 , 2017
Cotonou, BENIN - 

The digital finance sector in Benin, which is largely dominated by mobile network operators (MNOs), is expanding rapidly.  There were over 400,000 active digital financial services (DFS) users in 2015, according to the Central Bank of West African States (BCEAO). This was accompanied by a noticeable improvement in awareness of mobile money services and an increase in the activity rate of clients.

The market is in the start-up phase, with potential for partnerships between MNOs and financial institutions, and notably the launch of new solutions by microfinance banks and institutions. Involving the Government in the implementation of digital finance projects therefore appears to be a good way of boosting momentum in DFS and achieving concrete results.

With this aim, UNCDF MM4P organized a two-day retreat at the Millenium Popo Beach Hotel in Agoué on 23 and 24 March 2017, for the Benin's national authorities. The meeting brought together representatives from the Ministries of the Economy and Finances, Digital Economy and Communication, Agriculture, Livestock and Fisheries, Planning and Development, and from the Digital Agency.

Over two days, participants immersed themselves in the basic concepts of digital finance, to acquire shared understanding around its key elements. The main strategies in the Government of Benin's digital action plan were introduced and clarifications provided on the roles of the various entities managing digital development. The participants were then given an overview of the theory of change at the heart of the UNCDF MM4P strategy, before hearing about the programme's achievements in Benin last year and the strategic plan for 2017.The workshop thus identified the Government’s priorities for digital finance (e-commerce, government payments and the agricultural value chain) and the stakeholders in the process. A roadmap was also introduced to monitor implementation of the strategic plan. 

“These two days of work enabled us to have a shared vision of the nature of digital finance, to harmonize our initiatives and to better prioritize projects to boost momentum in the digital finance sector in Benin” stated Ms Sabine Mensah, Regional Technical Specialist for UNCDF MM4P in West Africa, in her closing remarks. “Our next steps to draw on the results of this meeting are to continue bilateral discussions and refine our work plan, which will be our compass for delivery in 2017” she concluded.

This first retreat, which was productive on all fronts, has demonstrated the clear willingness of the Government to promote DFS in Benin, supporting MM4P in its commitment to increase the use of DFS in the country by enabling access to more than 12 percent of the adult population by 2019. This objective will be achieved through the involvement of all actors, especially the national authorities. 

For more information, please contact
Sabine Mensah
Regional Technical Specialist, Digital Finance
Additional Information
Sabine Mensah
Regional Technical Specialist, Digital Finance

Creating an enabling environment for mobile money in Liberia

Ecosystem Development

Creating an enabling environment for mobile money in Liberia

Blog post by Ali Akram, DFS Expert for UNCDF MM4P Liberia
January 18 , 2017

Picture #1: DFS Working Group Session

Picture #2: MoU signing by Ministry of Finance and Lonestar Cell MTN for payment of civil servant salaries through mobile money

Monrovia, LIBERIA - 

With approximately 3.4 bank branches for every 100,000 adults, Liberia is among the countries with the lowest banking penetration in the world. This penetration is set to shrink even further as commercial banks reduce their presence in the country due to severe infrastructural challenges that make traditional banking unsustainable outside the country’s capital Monrovia. Banks also face challenges linked to the aftermath of the Ebola epidemic and falling global commodity prices that have ravaged Liberia’s already fragile economy.

UNCDF’s MM4P programme has been assisting the Liberian government’s efforts to increase access to formal financial services since 2014.  Just before the Ebola crisis in 2015, it partnered with the Central Bank of Liberia (CBL) and the GSMA to develop mobile money guidelines to enable the proliferation of mobile money services. UNCDF’s activities, as many other development initiatives, were stalled during the Ebola crisis and shifted to support the fight against Ebola. In May 2016, UNCDF re-initiated its activities by placing a fulltime DFS expert to implement its ecosystem approach to accelerate the development of Liberia’s digital financial services (DFS).  UNCDF’s goal is for at least 10% of the adult population to actively use DFS by end of 2019 (from the current level of approximately 3%).

Starting with policy and regulatory support to the CBL and the Ministry of Finance and Development Planning (MoFDP), MM4P’s initiatives have encouraged the government to become a member of the Better Than Cash Alliance. With its Alliance membership, Liberia endorses the guiding principles of the alliance and commits to the full transition of government salaries from cash to digital payments.

With CBL, MM4P established the first DFS Working Group.  As Mr. Milton A. Weeks, Executive Governor CBL, stated in his opening remarks at the inaugural session on 20th September, 2016

“… we as regulator(s) seek to learn from the policy and regulatory approaches that have been successfully tested and implemented in other countries. The DFS Working Group therefore will actively support these peer-to-peer learning efforts and provides an ideal platform for exchanging knowledge and experiences”

The event drew over 40 participants from the industry.  Private and public sector as well as the donor community initiated a dialogue on working collectively. Speaking at the event, Mr. Anthony Chan the USAID Liberia Mission Director underlined the importance of MM4P’s interventions and said;

“We are aligned with UNCDF and other development partners on achieving the financial inclusion goals set by the central bank governor. The Working group is crucial to achieving these goals because it will promote the use of the central bank’s new payment systems infrastructure to bridge the digital divide”

MM4P engages directly with providers through technical assistance on projects, trainings and exposure visits to expand and improve their digital financial services in the market. One of these technical assistance project brought together MTN Lonestar and BRAC - the largest MM and Microfinance providers in Liberia - to pilot the first mobile loan collection service in the country. The uptake of the service is steadily growing with more than 100 loan repayments being made during the first few months of the pilot. Mr. Tapan Kumar Karmaker, Managing Director, BRAC Microfinance Liberia & Sierra Leone acknowledged MM4P’s support in launching the pilot by stating

“BRAC Liberia recognize the outstanding contribution MM4P provided in conducting the survey on the mobile money pilot launched for collection of small loan from micro-entrepreneur"

MM4P is also assisting MTN Lonestar in expanding and improving the management of its agent network to isolated rural communities and capture high-volume transaction streams by facilitating access to industry best practices and technical assistance. Sharing feedback on MM4P’s assistance, Ms. Massa Dennis, Head of Mobile Money at Lonestar Cell MTN said

‘UNCDF has provided tremendous support to the growth and expansion of Mobile Money in Liberia. Through the technical assistance of MM4P, we have been able to sign on some major bulk payments deals, most notably, the civil servants payments with five key ministries set to kick off in Q1 2017. We will be launching the “MoMo Market Women” Initiative in January 2017 which was an outcome of the DFS4Women conference I attended in October 2016 organized by UNCDF.’

These achievements are a testament of the potential of DFS in Liberia and the appetite for such innovations by providers in the country. MM4P hopes to build on these achievements in the coming years. The programme aims to promote Human- Centered Design (HCD) principles for addressing the unique financial needs of Liberia’s poor and rural communities. MM4P also hopes to support the development of next-generation pay-as-you-go products (PAYG), including solar electricity, to help Liberians overcome critical infrastructure gaps. DFS and technology driven solutions can also play a huge role in helping tackle health and education challenges that plague the progress and stability in Liberia.


About MM4P

Mobile Money for the Poor (MM4P) is a programme launched by UNCDF in partnership with the Swedish International Development Agency (Sida), the Australian Department of Foreign Affairs and Trade (DFAT), the Bill & Melinda Gates Foundation and The MasterCard Foundation. MM4P provides support to digital financial services (DFS) in a selected group of least development countries (LDCs) to demonstrate how the correct mix of financial, technical and policy support can build a robust DFS ecosystem that reaches low income people in LDCs.

For more information, visit https://mm4p.uncdf.org or follow @UNCDFMM4P and Mobile Money for The Poor

About UNCDF

UNCDF is the UN’s capital investment agency for the world’s 48 least developed countries (LDCs). With its capital mandate and instruments, UNCDF offers “last mile” finance models that unlock public and private resources, especially at the domestic level, to reduce poverty and support local economic development. This last mile is where available resources for development are scarcest; where market failures are most pronounced; and where benefits from national growth tend to leave people excluded.

“The DFS Working Group therefore will actively support these peer-to-peer learning efforts and provides an ideal platform for exchanging knowledge and experiences” - CBL Executive Governor Milton A. Weeks

For more information, please contact
Ali Akram
DFS Expert, Liberia
Additional Information
Ali Akram
DFS Expert, Liberia

MM4P Infosheet 2014

Ecosystem Development

Thu, 11/24/2016 - 15:01 -- anna.ferracuti

Mobile Money for the Poor (MM4P) is a programme launched by the UN Capital Development Fund in partnership with the Swedish International Development Agency (Sida), the Australian Agency for International Development (AusAID), the Bill & Melinda Gates Foundation and The MasterCard Foundation.

MM4P Infosheet 2016

Ecosystem Development

Mon, 11/07/2016 - 18:46 -- anna.ferracuti

Mobile Money for the Poor (MM4P) is a programme launched by United Nations Capital Development Fund (UNCDF) in partnership with the Swedish International Development Agency (Sida), the Australian Department of Foreign Affairs and Trade (DFAT), the Bill & Melinda Gates Foundation and The MasterCard Foundation. MM4P provides support to DFS in a selected group of LDCs to demonstrate how the correct mix of financial, technical and policy support can build a robust DFS ecosystem that reaches low-income people in LDCs.

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