‘Mobile money bridges banking gap’
THE Central Bank of Lesotho (CBL) says mobile money is changing the way banking is done in the country, although there was still a long way to go before financial inclusion is a reality.
On Monday, the CBL led local financial institutions and mobile money operators in launching a campaign aimed at driving up the usage and uptake of the service for the unbanked population as a safe and convenient platform.
Among the activities planned for the campaign, which runs from 9 to 13 May 2016, are radio and television shows as well as roadshows in Leribe, Mafeteng and Maseru.
Mobile money is a financial transaction service where money is transferred electronically using a mobile phone without the need of a bank account.
Its functions include balance checking, funds transfer, depositing and withdrawing of cash, savings, bill payments, airtime purchase and long-distance remittance of funds. Mobile money platforms first entered the Lesotho financial sector in 2012 when Econet Telecom Lesotho introduced EcoCash, with Vodacom Lesotho launching M-Pesa the following year.
Speaking during the launch, CBL Acting Governor, Dr Masilo Makhetha, said interest in the service had been remarkable to date.
He said the two telecoms companies had collectively seen a total of M67 948 397 circulating through their networks since December 2015.
“As a developing country, Lesotho has kept abreast with this new regional, continental and global development of embracing modern technology through the use of mobile money,” Dr Makhetha said.
He said mobile money in Lesotho was currently being used by many organisations including banks, mobile network operators, insurances, public and private institutions; as well as members of the public for a range of services.
“As of December 2015, mobile money has managed to transact a total of M751 743 for airtime purchases, M243 169 for customer cash withdrawals, M321 768 for bill payments and M221 257 for domestic money transfers,” the acting governor said.
He said significant mobile money milestones in Lesotho included being used for paying insurance premiums, as a saving tool for people without bank accounts and also for cross border remittances.
Dr Makhetha, however, noted that there were a number of challenges the platform was experiencing in its growth.
Some of these, he said, include low levels of financial literacy which slow down the uptake in rural areas, and poor liquidity management by some agents, which leads to them running out of cash for withdrawals.
Dr Makhetha also said mobile money agents were still concentrated in urban areas to the detriment of remote communities. He said there was also low uptake for salary payments using mobile money and lack of full inter-operability between mobile money operators as well as between mobile money operators and banks.
“In order to address these limitations, we need to strive to reduce the amount of time people spend waiting in queues and traveling to pay their bills in cash,” he said.
“Airtime top-ups, bill payments and even merchant payments are not enough. Most importantly, we have to increase collaboration between banks, mobile operators, retailers and independent companies.
“In this context, payment and banking must be available everywhere for people to trust it. That is a huge challenge, from both a technical and business perspective.”
The acting governor added that there was a need for more improvements to be made on the legal and regulatory framework.
“On a similar vein, we have to strengthen the legal and regulatory framework. To this extend, e-money regulations have been drafted,” he said.
“There is also need to promote mobile money literacy among low income people and agents. CBL should also continue to support appropriate market and product development for the low income and under-banked population.”