REGIONAL INTERGRATION : Mobile money is the start of a revolution in finance

The Central Bank was cautious when mobile operator, MTN Rwanda, announced its plans to roll out a new package called “mobile money” that will allow quick and easy money transfers for customers. This is a typical reaction from a cautious Central Bank, but they have little to fear. MTN should be commended for delivering a service that will drive the development of this nation for decades. The technology was developed by a firm called Sangentia, for Vodafone but sponsored by the Department for International development (DfID) in Britain. They wanted a quick way to deliver microfinance loans to farmers and peasants, the functional aspect made it possible for people transfer money between each other. I first encountered this in Kenya in 2007, a trader in Eldoret showed me $16,000 savings on his phone. I looked at an empty bank branch and realised a revolution had happened without us even knowing it. Today M-pesa has 6.5 million users in Kenya, 2 million transactions a day, some $20 million a day is transacted sometimes. M-pesa has increased liquidity to the masses by some 20 percent, representing 25 percent of money transferred nationally. For banks, it has relieved the burden of administration costs, now they can provide more targeted services in conjunction with M-pesa. For the Central banks, it provides an electronic trail of transactions that is almost fraud-proof. The Central Banks are trying to move us from a cash economy to one which is based on electronic transfers, like debit cards and payment cards. This raises a very pertinent question, because all truth be told; Simtel is instantly nullified if this mobile money scheme goes through. We have prevaricated and doggedly tried to mould our switch system, national payment card and the banking sector into one monolith. The simple answer was looking in us in the face all the time; the mobile phone is the most important invention in Africa since independence. It is a credit or debit card that everyone can have tomorrow, provided the government has the software it can monitor, what we are spending on, how much , and even when and why. This can allow us to better control inflation since electronic payments are more traceable than cash. It allows liquidity and credit to flow. It helps the poorest and it drives development, connects markets, and can deliver fiscal policy in ways that gives a Central government more control. Rwanda should have been the first nation to implement this, we have the social structure and national security to make it secure. In Kenya, we cannot deny that M-pesa and similar services were used to pay tribal militia during the post-election unrest. A new technology can act as catalyst for whatever change is happening in society. In Kenya it has had more good than any negative effects. Any risks in this system are massively outweighed by the potential benefits of it. Farmers will be able to be paid fairly and quickly, goods and services will be traded more efficiently. It is what is called a win-win situation. ramaisibo@hotmail.com