Competition in Mobile Financial Services: Lessons from Kenya and Tanzania

Abstract

Mobile financial services (MFS) are the main drivers of financial inclusion in many developing countries, where they provide low-income consumers with access to transfers, payments, and increasingly more complex products including credit, savings, and insurance. MFS channels can provide the advantages of convenient, secure, and cost-efficient product offerings to consumers. In several markets, MFS have helped to significantly increase the portion of the population with access to formal financial services. To promote both quality and diversity in MFS products, and in turn financial inclusion, it is important to ensure a competitive ecosystem that facilitates entry into the market, the development of innovative MFS products, and high-quality, value-for-money services. This article aims to provide insights into the role that effective competition and competition policy play in developing MFS, and in promoting financial inclusion, using Kenya and Tanzania as case countries.

E-payment instruments and welfare: The case of Zimbabwe

“…Although consumers benefit from an increase in the number of users of the same or complementary goods or services, this can lead to market concentration, and in turn result in a poor infrastructural set-up that limits consumer choice and the quality of services that consumers get. 5,18 Related access channels critically affect competition and thus the quality and diversification of products received by consumers. 5 E-payments in the context of a developing country are, to a large extent, in the form of mobile payments rather than card payments.…”

“…Adequate regulation protects investors, consumers and governments, but must also ensure the existence of competition for the development of efficient, quality and diverse financial products. 5 Finally, there is a need to provide an array of financial products relevant to consumers. Whilst a wide range of services have been developed, most of these are in the formal sector.…”

Regulatory Imperatives for the Future of SADC's "Digital Complexity Ecosystem"

“…The SADC regional economy has a strong bias towards services and agriculture as the largest contributing sectors to GDP, sectors in which innovative digital applications and platforms can be adopted with relative ease, provided that the economic and social environments are reasonably well regulated and governed. IoT applications are already in operation for urban management in a few cities (example Windhoek) (NUST, n.d.), and appetite for mobile financial services has been observed (Mazer & Rowan, 2016;Robb & Vilakazi, 2016).…”

“…It is widely recognised, at both a global and SADC regional level, that the attention of regulators is required with respect to: competition and interoperability across providers in the mobile money ecosystem (see, for example, Bourreau & Valletti, 2015); cross-border remittances and money transfers (see, for example, Mazer & Rowan, 2016); licensing or approval of service providers (see, for example, Evans & Pirchio, 2015); regulating to advance innovation (see, for example, Blechman, 2016); and regulatory harmonisation with respect to all of these issues within regional and continental blocs. Some of these responsibilities are the role of central banks, some the role of electronic communications sector regulators, and others the role of competition authorities.…”

“…Contemplating the take-off of mobile financial services, Evans and Pirchio (2015) suggest that heavy regulation may stifle development, e.g., via a requirement for a banking licence for mobile money transfer even if there is no banking involved, or via the level of personal identification and know-your-customer (KYC) data required for basic transactions where small amounts of money are transferred. In the recent Tanzanian experience (CGAP, 2016;Mazer & Rowan, 2016;Roberts, 2016), the central bank allowed light touch regulation for the three MNOs who held significant mobile money market share, leading to rapid growth in the numbers of registered mobile money users, active users, and active agents.…”