‘Deposit insurance must cover mobile money users’

The regulator of mobile money services, the central bank, has been urged to come up with an urgent policy that offers protection to consumers of mobile financial services in the event of any service provider’s collapse.

Isabelle Barres, VP of the Center for Financial Inclusion and Director of Smart Campaign – speaking to the B&FT on the sidelines of a consumer protection workshop, said it is important that various regulations which border the mobile financial services sector evolve with time.

Although Parliament last year passed the Depository Protection Act, 2016 (Act 931), which seeks to protect the funds of depositors in the event of their financial institution’s collapse, the Act is not explicit as to what benefits await mobile money users in the event of a mobile money operator’s collapse.

According to Ms. Barres, it is not too late for the central bank to initiate steps that will put the needs of consumers first.

“I think that the laws need to evolve as provisions of financial services evolve.  As there are new players entering the market, and financial services no longer just deliver through formal financial institutions but also through financial technology companies, it is important that laws do evolve also to address these new business models.

“For regulations, it is also important to strike the right balance between allowing innovation to take place and regulating and protecting consumers. It’s about finding that sweet-spot, where you can let the market evolve and figure out what works and what doesn’t for consumers before you rush to regulate.

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“Yes, there are new issues that are coming up and the attention on consumer protection focus needs to take into an account those additional risks and new mitigation strategies that need to be put in place to address them,” she said.

Rising mobile money users

According to the central bank, the value of all mobile money transactions for last year was GH¢78.5billion – a more-than 120 percent growth compared to the GH¢35.4billion recorded in 2015.

The bank in its latest Payment Systems Statistic report indicated that the number of registered mobile money customers of the four mobile money network operators—MTN, Tigo, Airtel and Vodafone— reached 19,735,098, showing a growth of 50.42 percent over the 2015 figure of 13,120,367.

The total float balance – monies in the wallets of customers – was GH¢1.2billion, indicating a growth of more than 129 percent over the 2015 figure.

Again, the number of active mobile money customers increased by 70.75 percent – from 4.8 million in 2015 to 8.3 million in 2016.

The Smart Campaign – Keeping Clients First

Ms. Barres was speaking at a one-day forum dubbed ‘the Smart Campaign’ that highlights the need to keep clients first in efforts to promote and sustain financial inclusion.

The global campaign, she said, is committed to embedding client protection practices into the institutional culture and operations of the financial inclusion industry.

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Protecting clients, she added, is not only the right thing to do; it’s the smart thing to do.

“When microfinance institutions implement the Campaign’s Client Protection Principles into their operations, they build strong, lasting relationships with clients, increase client retention, and reduce financial risk.

“Similarly, by incorporating client protection principles into their investment criteria and due diligence, microfinance investors can build a healthier, more client‐focused industry that will foster a stronger portfolio and ensure healthy returns,” she added.

The one-day event was organised in partnership with the Financial Inclusion Forum (FI Forum Africa) – a network of professionals who provide solutions to promote financial inclusion in Africa.

As the world’s first financial consumer protection standard, the campaign maintains a rigorous certification programme, elevates clients’ voices, and convenes partners to effect change at the national level.

The one-day event held in Accra was attended by representatives from financial technology companies, players in the microfinance industry, and government functionaries as well as those from the central bank among other key stakeholders.

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