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Finance Forward Volume 3 Issue 2
To formulate informed strategies, individuals and institutions aim to understand the recent trends, driving forces and issues within the context of their work. However, in the current globalised world with its intrinsic interconnectivity and complex systems we suffer from the dilemma of an increasing amount of information available and a diminishing amount of time available to absorb it. Enter Finance Forward, which approaches the field of inclusive financial services in Africa and synthesises disparate ideas and information from business, economic, social, technological, political, and physical environments, which are constantly at work behind the scenes, co-producing global change.
In this fourth edition of Finance Forward we take a step back and scan the larger, interlocking environments from which trends and issues emerge through a large number and wide variety of articles (academic and popular) that were published during the second, third and fourth quarter of 2012. The selection has included articles with an outlook toward the future or articles that carry implications for how the future will develop. They have been shortened to less than 50 percent of their original length and in most cases have been directly quoted (with the exception of a few longer articles). This edition presents four themes, which build upon those themes found in the first, second and third editions.
Mapping the Retail Payment Services Landscape in Zimbabwe
There remains a large percentage of Zimbabweans who are “previously banked” (estimated to be at least 12% of the population)
A recent study Mapping the Retail Payment Services Landscape in Zimbabwe managed by Cenfri commissioned by FinMark Trust and conducted by Bankable Frontier Associates finds:
- The Reserve Bank of Zimbabwe (RBZ) has taken a “test and learn” approach to new innovations and currently assess applications for new product innovations on a case-by-case basis
- There is no regulatory framework for electronic money or stored value or specific rules on the development and management of agent networks for mobile banking
- Electronic infrastructure is still relatively limited with inconsistent power and mobile coverage in many rural areas
- The National Payment System (NPS) Act does not sufficiently address the growing trend towards complex retail payment mechanisms over electronic channels is currently considering developing an e-payment act to cover issues such as e-signatures and other
- Customers highlight sensitivity to cost rather than knowledge as a barrier
- Both people who use banks and those who have never had an account reported that bank charges have increased and are prohibitively high
Mapping the Retail Payment Services Landscape in Mozambique
41.14% of the adult population Mozambique has either never heard of a bank (22.5%) or does not know what it is (18.9%)
A recent study Mapping the Retail Payment Services Landscape in Mozambique managed by Cenfri commissioned by FinMark Trust and conducted by Bankable Frontier Associates finds:
- Lack of availability and access prohibiting customers from using financial and payment services
- Poor infrastructure to support cash distribution networks
- Unreliable electricity services and wireless communications
- Limited interoperability amongst banks and also between mobile network operators
- Unfamiliarity with electronic or innovative payments among the poor
- Lack of second-level rules or clarity of the regulators’ positioning with regard to some innovation payment services
- Limited options for remittances in general and excessive document for international remittances
- The payment channels currently in use, mostly cash, are available and accessible, but remittance payments for example, are very expensive, with 20% of the money sent charged for transport
Mapping the Retail Payment Services Landscape in Malawi
In Malawi, 81% of people do not have access to formal payment services or mobile phones.
A recent study Mapping the Retail Payment Services Landscape in Malawi managed by Cenfri commissioned by FinMark Trust and conducted by Bankable Frontier Associates finds:
- Few financial institutions (public or private) actively pursue the unbanked market through technology and new distribution channels
- New interest in the unbanked market results from Airtel’s mobile money aspirations
- Two critical obstacles to increase access and usage of formal payment services: (i) improving infrastructure to support cash distribution network (ii) providing greater interoperability amongst providers
- There is high demand for more proximate financial service, but banks and money transfer services are far away
- There is an astonishing number of complex and innovate transfer systems that rely on social networks
- Trust in financial institutions is there but consumers feel the banks are inconvenient, overcrowded, expensive and therefore out of reach for poorer Malawians
Finance Forward Volume 3 (2012)
History teaches us that many times breakthroughs in science, art, business and technology originate not in finding exactly what we’re looking for, but through serendipity – that combination of accidents and sagacity that leads us to discover new ideas in places we were not looking – or perhaps where we were looking for something else.
The Finance Forward series has embraced this concept by not focusing specifically on the topic of financial inclusion, but taking a step back to scan the larger, interlocking environments from which an understanding of recent trends, driving forces and relevant issues can be shared. By doing this, the reader is afforded the opportunity to interpret the contents based on the context of his or her own institution’s projects and aims, ultimately enabling him or her to drive appropriate institutional strategies.
Click here to download volume 3 of Finance Forward
Standards Setting Bodies (SSBs) and Financial Inclusion (2011)
The Global Partnership for Financial Inclusion (GPFI) commissioned a study to investigate the challenges and opportunities to financial inclusion faced by five different developing countries in applying international standards as set by five main Standards setting bodies (SSBs). The countries covered in the study were Brazil, Kenya, Mexico, the Philippines and South Africa while the SSBs considered include the Basel Committee on Bank Supervision (BCBS), the Financial Action Task Force (FATF), the Committee on Payments and Settlement Systems (CPSS), the International Association for Insurance Supervisors (IAIS) and the International Association for Deposit Insurance (IADI). The Alliance for Financial Inclusion (AFI), on behalf of the GPFI, contracted Cenfri to produce three of the five case studies (South Africa, Kenya and Brazil). In addition, Cenfri was responsible for the drafting of a document that draws together the impacts of the SSBs and their standards in the five countries, as well as how regulators in the five countries are choosing to respond to the SSBs and their standards in order to create room for financial inclusion.
Below we provide links to the above documents on the GPFI website:
Conservative compliance behaviour (2011)
Cenfri managed a FinMark Trust funded study to investigate the reasons for the apparent lack of universal response by financial insitutions to the flexibility allowed by South Africa's anti-money laundering (AML) and combating of terrorist financing (CFT) regulatory requirements in relation to low-risk clients.
Financial Inclusion in Mozambique (2010)
Finmark Trust participated in an exposure visit conducted by Cenfri to Maputo, Mozambique from the 15th to the 17th of September 2010. The visit was part of the Finmark Trust’s mandate of promoting financial inclusion and regional financial integration within the SADC region.
The Finance Forward series (2010 & 2011)
We are happy to present the second edition of Finance Forward, an environmental scanning document which looks at forces shaping inclusive financial services in Africa (and beyond).
The benefit of periodically scanning the business, economic, social, technological, physical, and political environments in the background of the “system” of financial inclusion is that we can continue to monitor and understand the implications of further developments in these trends and act upon our learning. We scanned a large number and variety of articles (academic and popular) that were published during the fourth quarter of 2010 and first quarter of 2011 to produce this issue of Finance Forward. In these edition we present six themes which are built upon those found in the first edition.