01 April 2015

Cgap calls on mobile remittance operators to move into savings market

30 September 2009  |  8336 views  |  0 iPhone on top of Keyboard

World Bank think tank Cgap is calling on telecomms operators in emerging markets to work with the banking industry and begin offering savings products on the back of their mobile remittance offerings.

A recent CGAP brief on Safricom's successful M-Pesa service found that nearly one in three of the informants in Kibera (an informal settlement in Nairobi) kept a balance in their M-Pesa accounts. A survey conducted in 3000 homes in Kenya found this number to be even higher. A majority of users stored money with M-Pesa. Some used the stored value for daily consumption. Others made frequent deposits of "small money" to accumulate a larger amount.

The author of the brief, Olga Morawczynski, a docoral candidate at the University of Edinburgh says: "The fact that M-Pesa is being used for savings illustrates the latent demand for appropriate savings products in Kenya."

However, since Safaricom is not registered as a financial service provider, providing interest on savings is not an option.

"This is a shame," says Morawczynski. "The electronic value stored in M-Pesa is backed by cash in the Central Bank of Africa (CBA). This account is generating a significant amount of interest for Safaricom. What the mobile operator plans to do with this money is yet to be seen. But one thing is clear-it should be poor Kenyans that benefit from the interest on their savings and not Safaricom."

For this to occur, M-Pesa wallets should be linked to accounts managed by formal financial institutions, she says, pointing to the path taken by Zap, Zain's mobile money service.

Safaricom is not alone in shying away from the savings opportunity. This year's Cgap/GSMA Mobile Money Market Sizing Study claimed that by the end of this year there will be 120 mobile money deployments (live or in pilot) around the world.

Says Morawczynski: "There are currently billions of dollars stored under mattresses in the developing world. This means that the market for savings could be just as lucrative as the one for remittances. Perhaps the mobile money industry needs to shift its focus."

Comments: (0)

Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board, sign up now.

Related blogs

Create a blog about this story (membership required)

Related stories

18 September, 2009
26 August, 2009
30 July, 2009
23 June, 2009
24 April, 2009
08 April, 2009
09 March, 2009
23 February, 2009
18 February, 2009
17 February, 2009
17 February, 2009
05 February, 2009
12 January, 2009
08 December, 2008
Your browser is unable to support Flash files.

Top topics

Most viewed Most shared
Europe sets the pace as fintech investment...
6510 views comments | 30 tweets | 20 linkedin
UK online banking fraud losses soar 48%
6124 views comments | 16 tweets | 19 linkedin
Future Money Focus: Mariano Belinky, Santa...
5862 views comments | 12 tweets | 12 linkedin
Barclays and PayPal join Government ID acc...
5143 views comments | 11 tweets | 11 linkedin
Apple Pay users running into checkout prob...
4917 views comments | 12 tweets | 15 linkedin

Featured job

New York City, NY (USA)

Find your next job