Session 4: Final panel

The Minister of Finance opened the final discussion with an overview of the opportunities provided by mobile money, and argued that we need to apply such approaches to the provision of other public services. For example, a UNICEF initiative to equip midwives with mobile phones to text in birth details is helping to expand the proportion of babies provided birth certificates. Mobile money has helped to decrease the proportion of people without bank accounts from over half to under a fifth in just a few years, and has helped to increase productivity. Parliament needs to be pressed to pass the new mobile money legislation.

Godfrey Mutabazi, from UCC, responded to a question on the cross-border regulatory challenges of mobile money, linking into the recent elimination of roaming tariffs in the northern corridor. He responded that this tariff elimination has been associated with a 200-300% increase in traffic in just two months, but that Uganda has different regulatory structures to its partners. For example, the UCC needs approval from parliament to make regulations, and there is no consumer protection law or competition law.

Godfrey Masajja, from BoU, highlighted how, in the absence of evidence that mobile money is affecting inflation, the benefits dominate: 18 million users in Uganda and tens of thousands of agents. The BoU is currently assessing a number of applications for cross-border mobile money providers, but the region’s central banks have not yet come together on this topic.

Juliet Tumuzoire, from MTN, responded to a question on the management of agents. MTN have recently modified their training programme to become cyclical, with frequent agent conventions, and a robust internal framework to both electronically and in-person monitor their agents to minimise fraud.
Julius Kipng’etich, from Equity Bank, outlined the need for all new players in the sector to participate in a framework of a shared prosperity ecosystem. Exclusion would have negative downstream effects.

Billy Jack, from Georgetown University, argued that it will take a long time for the effects of mobile money to be felt on overall poverty levels. The ubiquity of the service significantly predates material impacts on incomes that can be traced. However, evidence from the broader insurance literature – which mobile money facilitates through rural shock smoothing – suggests that individuals are likely to take riskier, higher return gambles.

Chris Adam asked whether there was a role for mobile money to play in the government’s revenue mobilisation. Increasing the tax base would permit the eradication of taxes that are distortionary at the margins. In response, it was argued by Billy Jack that transaction taxes would kill mobile money, though the slim excise taxes in Kenya have not slowed down M-PESA. The Minister contended that mobile money might provide a good way to identify under-the-radar citizens outside the formal sector who still earn significant amounts of money.

In concluding the conference, the Minister emphasised the rapid spread of the service: over 18 trillion shillings transacted last year, even larger than the government’s annual budget. This uptake has demonstrated that the bottom of the pyramid is perfectly bankable, and the Ministry of Finance remains fully committed to providing a sound macroeconomic environment to further deepen the financial system.