News
8 May 2007 (Updated 12 February 2008)
DFID’s support to mobile phone banking (m-banking) for the poor
DFID supports m-banking as a means of tackling the barriers that prevent poor
people from accessing financial services. DFID has led the way among donors in
working to ensure that m-banking includes and benefits the poor.
In 2005, DFID led a participatory process in Kenya and South Africa, working
with regulators and mobile banking providers to map out what an enabling
environment for mobile banking would look like and the issues that needed to be
addressed. This culminated in a report -
The Enabling Environment for Mobile
Banking in Africa
(399
kb). The report led to increased regulator and donor attention
towards m-banking and continues to be central to discussions by regulators,
donors and the private sector in both developed and developing countries.
Given the increased interest in mobile banking, in 2006 DFID produced a
report - Mobile Banking - knowledge map & possible donor support strategies(279
kb)
- which set out where public support is required and how it can best be
coordinated in order to catalyse the sector in a way that includes the poor. The
report, which was widely consulted on by other donors, has served to catalyse
donor interest and has led to greater coordination in donor support for
m-banking.
In 2007, DFID partnered with the
Consultative Group to Assist the Poor (CGAP) and the GSM Association to
conduct diagnostic reviews of the regulatory environment for m-banking and other
forms of branchless banking in seven countries. The resulting focus note -
Regulating Transformational Branchless Banking: Mobile Phones and Other
Technology to Increase Access to Finance (442
kb) - is designed to assist policy-makers
in developing appropriate regulation that allows innovation but protects
consumers. Read more about regulating
mobile phone banking.
DFID’s support for m-banking initiatives
DFID believes that mobile phones offer a low cost, accessible transaction banking platform for poorer customers who are currently under- or un-banked. In addition, as mobile networks expand their coverage, m-banking provides the opportunity to provide payment and remittance services in areas without conventional banking services.
In 2003, DFID’s
Financial Deepening Challenge Fund (FDCF) provided a one-off
grant to Vodafone through its subsidiary Safaricom, to pilot and launch a mobile
banking solution in Kenya called M-PESA (which means mobile money). The grant
helped to bring about a substantial shift in Vodafone’s internal strategy
towards mobile banking. Without FDCF support, Vodafone would not have started
this initiative. Vodafone has now successfully launched its M-PESA mobile
banking product commercially across Kenya and has recently announced a joint
initiative with Citigroup to roll this model out internationally.
In addition, Vodafone, in partnership with Safaricom, was recently granted an award by Financial Sector Deepening Kenya (FSD Kenya) and CGAP, under the Kenya Social Protection Payments Challenge Fund. Vodafone, in partnership with Safaricom, is developing prototypes to extend the recently launched M-PESA mobile payments solution to areas of the country where there is no cell phone reception. This is in an effort to determine whether M-PESA could be used to distribute social payments to poor families in remote areas.
In June 2007, DFID with other donors launched the
Africa
Enterprise Challenge Fund (AECF) which will invest in projects that will
help to increase access to financial services for poor people in rural Africa.
