The ecosystem for digital financial services (DFS) in Senegal is transitioning from Start-Up to Expansion, a phase characterized by a predominance of first-generation DFS (e.g., money transfers, e-top-ups, bill payments) offered on a competitive basis by multiple providers. Three complementary models coexist: (i) OTC leads the market with money transfer companies (W@ri, Joni Joni); (ii) e-money is a distant second, mostly dominated by mobile money (Orange money, Tigo Cash), and: (iii) agent banking offered by one bank (Sociétés Générale de Banques au Sénégal SGBS via subsidiary Manko) and one microfinance institution (Microcred). While the market is dynamic and features a large and growing number of non-exclusive agents, it has limited interoperability and limited services. Over-the-counter (OTC) transfers and bill payments through agents dominate the market.
BCEAO (Banque Centrale des Etats de l’Afrique de l’Ouest) issued new and better regulatory instructions for e-money issuers in May 2015 that address some of the gaps in the 2006 instructions. However, there are still opportunities for improvement, particularly in regards to know-your-customer, interoperability, agent banking, customer protection, market conduct, and supervision.
Where We Are
- Dominance of OTC transfers and bill payments challenging active usage of e-wallets
- OTC agents not allowed to do deposit collection, credit disbursements or reimbursements
- Emergence of agent banking models in the market
What We Did So Far
- Provided a training on agent network on digital finance facilitated by the Helix Institute (MNO, Money Transfer Companies, MFIs, Technological providers)
- Facilitated a training on payment diagnostic methodology
- Provided a workshop on strategy in digital finance involving main market stakeholders (MNO, Money Transfer Companies, MFIs, Technological providers)
- Facilitated a workshop on Microfinance Institutions and Digital Finance
- Facilitated the participation of representatives of the Central Bank and the Ministry of Finance in a G2P exposure visit on digitizing social benefits payments in South-Africa
- Invited BCEAO headquarter staff to a conference in Australia organised by the University of New South Wales UNSW on regulatory innovations in DFS
- Conducted quantitative research on client adoption of DFS with Intermedia
- Carried out an Agent Network Assessment with Microsave
- Initiated a Financial Services access point mapping with the MIX market
- Analysed the needs of the Microfinance sector with PHB Development
- Signed a technical assistance agreement with one market provider for a pilot project on secondary generation of digital financial services.
- Officially launched the Digital Finance Services Working Group in partnership with the Ministry of Finance
- Actively involved in the CGAP expert committee on Mobile Banking set-up for the central bank (BCEAO).
What We Plan for 2019
- 30% active registered DFS users as percentage of adult population (total 2,552,100)
- Provide a second training session on agent network management facilitated by the Helix Institute in July 2016
- Organize “Microfinance & Digital Finance” workshop on the different DFS business model options for Microfinance institutions in Senegal
- Conduct the payment flow diagnostic and recommend a roadmap to shift payments from cash to digital
- Disseminate the results of the quantitative and qualitative researches on customer adoption
- Disseminate the MicroSave Agent Network Assessment survey results
- Conduct in collaboration with DFS providers Human Center Design approach to client
- Improve Financial Service Access point Map of providers with the MIX Market
- Provide technical assistance for G2P pension payment pilot: the Government of Senegal has requested MM4P support / technical assistance to shift the payment of 30 000 retired civil servants’ pensions from cash to digital (Project description conception, ongoing between the Government and MM4P)
- Provide technical assistance / grants to service providers (MNO, MTO, MFI, Bank, Post Office) to develop innovative products and services and to improve agent networks
- Organise Digital Financial Service Working Group meetings at the national level in Senegal to provide a forum for stakeholders to share, learn and grow the digital finance ecosystem