#notes Old Mobile Money Blog Posts and other links

African startups raised at least $1.3b in 2020, according to Briter Bridges: AfricArena, an African tech accelerator, said African VC investments might drop from $2b to between $1.2b and $1.8b; year-on-year growth calculations are based on scarce historical data, which often results in drawing inaccurate conclusions about the nature and trajectory of their growth

******

Mpesa: the costs of evolving an independent central bank – But often forgotten is Kenya’s unique circumstances. The M-pesa mobile money system, owned and operated by Safaricom which is 40 per cent owned by Vodafone, was allowed an unchallenged monopoly in the country for a very long time.

To the contrary, if M-pesa has proved useful in Kenya it’s because it has brought digital payment services to areas that were previously unbanked, something that has arguably unlocked trade relationships which never existed before. This in turn has generated new economies of scale which have led to productivity and output growth.

Which leads to the obvious conclusion that mobile money tends to increase the velocity of money, and with it inflationary effects, as much as it increases trade and output.

Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.comT&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found here.
https://www.ft.com/content/a09870cb-771e-3d3d-bc16-2b429af647aa

To begin with, there’s the issue of liquidity management and the additional cost to the consumer (or someone) of having to hop between multiple platforms. The slow take-up of M-pesa-like systems in other African countries is in part related to the poor economies of scale for users and providers operating in competitive frameworks.

Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.comT&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found here.
https://www.ft.com/content/a09870cb-771e-3d3d-bc16-2b429af647aa

When the limit is reached — unless the government is prepared to keep borrowing, putting the quality of its own collateral at risk — a telco like M-pesa would either have to entrust its own agents to issue liabilities against newly forged assets in accordance with quality-control and data/information capture conditions or, alternatively, absorb only those assets from the banking network which met its quality and data criteria. On the latter point, M-pesa might even be inclined to share its own data with the banking network, to help them make better loan decisions, and withhold M-pesa liquidity from those that fail to make the grade.

In August 2015, the Kenyan government ended this practice by establishing a formal legal framework for mobile money which banned e-money issuers from earning interest or any other financial return from funds held in its trust and forcing them to hand it over to charity.

There are plenty of EM governments seeking to mimic the “M-pesa” miracle on their own turf in a competitive framework. What few understand is that, unless, like in Kenya, the tech firms are allowed to achieve monopolistic control over the money supply, in a way that cedes state control of state scrip to an external private authority, none of them will prove successful.

Our simple point is M-pesa is not a technology. It’s a stealth political coup by a private operator which profits only from enforcing discipline, control and transparency (via massive data capture) over a wayward system.

*****

Turning mobile money into M0

Mobino’s system aims to cut out as many intermediaries from the debit process as possible by getting you, the customer, to strike up a single direct debit agreement with itself. The company then charges the customer for transactions conducted with partner vendors, whilst the customer deals only with Mobino rather than a multitude of online or retail vendors.

*****

India’s payments revolution

Aadhaar put simply is one of the biggest banks of biometric data in the world. Back in 2010, the Indian government decided it would take full digital fingerprints and an iris scan from each citizen to create a digital identity — this taking the form of a twelve-digit number. About 1.2bn Indians now have a digital identity.

Think of Aadhaar as an “identity rail”, giving banks and fintech companies a secure means to identify would-be customers

*****

Kenya’s mobile money fraud problem

(a.k.a. a type of mobile credit checking system)

*****

M-euro, a lesson in money supply from Kenya (2012)

RAndom thought: Europe is a cathedral, USA is wild west, Africa could be a space ship

There’s actually an element of money creation here. Its origins come from shrewd cell phone users realising there was value in the pre-paid airtime credit they purchased on their phones. So say you bought 60 minutes of airtime on your phone, rather than redeem it you could use it to pay for goods and services elsewhere simply by transferring the credits via the mobile network.

Airtime in this way became base money in its own right, due to its more liquid characteristics. A competing currency to the national shilling, issued not by the central bank but by Safaricom, the company.

So rather than redeeming the credits for talk time, Kenyans abstained to use them as a form of money instead.

You could say, they had created airtime-backed money as a result.

Businesses can operate more effectively: shop-owners don’t need to carry a lot of cash, or to stand in long queues at Banks to transfer money to suppliers. Urban dwellers no longer need to make overnight trips to their rural homes to pay their children’s school fees (or give money to relatives). Women have been empowered because their husbands have a harder time taking their money away. Even macroeconomic policy has become easier because the Central Bank has a better handle on the money in circulation, as mobile money helped to move cash from the mattresses to the market.

In other words, it acts not like a bank, but like a utility.

And since there’s no incentive to hoard, either in a mattress or in a deposit account (because there is no interest), the velocity of M-pesa rises all the time, enriching everyone as it goes.

Indeed, if there’s enough faith in the system, one might envisage a day when Kenyans opt not to redeem M-pesa units for shillings at all. A day which, of course, would probably make Safaricom the single biggest corporate name in Africa (if it isn’t already).

******

A National Grid for Banking – radical thinking by Errol Damelin, founder, CEO of Wonga.

Radical does not, however, mean it is impossible to achieve. The idea, is in essence, the reverse of privatisation and suggests that the infrastructure, the backbone, the networks of the banking system be placed in public ownership (or at least independent ownership from incumbent FS companies) thus creating a level playing field for businesses to build services on top this infrastructure. A little like the National Grid – for bits, bytes and packets rather than for electricity and Gas.

You could think of this super-bank in the same way as iOS, the operating system for Apple’s iPhones. It is always there, running smoothly in the background, and most people don’t even know about its existence.

LOL, all roads lead to credit: https://en.wikipedia.org/wiki/Wonga.com

*****

Mobino Wants to Prevent M-Pesa from Robbing Kenya’s Government

https://www.benkuhn.net/emco/ : emphasizes honesty, transparency and autonomy

https://wave.engineering/about/

https://www.vox.com/future-perfect/21420357/kenya-mobile-banking-unbanked-cellphone-money

*****

Why central banks should take charge of their digital currencies (2013)

Furthermore, unless you have a good working knowledge of “money”, you might miss the most obvious thing about them, and that’s that in many cases they privatise money issuance and charge you, the customer, a fee for the privilege of using money that already belongs to you (rather than for credit, the way credit cards do).

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s