EFInA Mobile Payments Services Regulatory Framework Dissemination Workshop

January 25, 2010

1 Introduction

Modupe Ladipo Chief Executive Officer, EFInA EFInA Overview EFInA Overview

About EFInA . Enhancing Financial Innovation & Access (EFInA) is an independent, professional and non- profit organisation funded by the Department for International Development (DFID) and the Bill & Melinda Gates Foundation. EFInA was set up in late 2007 and its purpose is to promote pro-poor Financial Sector Development and Financial Inclusion in Our Approach . EFInA’s aim is to become an innovation centre targeting catalytic change across Nigeria’s financial sector, to make markets work for those currently excluded from formal financial services Key Objectives EFInA focuses on three distinct but mutually reinforcing sets of activities: RESEARCH . Providing credible market information on the Nigerian financial sector . Supporting projects which will augment the development of Innovative Inclusive Financial POLICY INNOVATION Services for the unbanked and under-banked through our ADVOCACY Innovation Fund . Engaging in policy related advocacy to promote financial inclusion Banking Banking Profile of the Adult Population

. Banking penetration is relatively low . 85% of adult females are unbanked . 86% of rural population are unbanked

21% . Only 21% of the adult population has a bank account, which is Currently Banked equivalent to 18 million people . 74% of the adult population have never been banked, which is equivalent to approximately 64 Previously Banked 5% million people . About 4 million other adults are previously banked, in other words, have left the banking Never Banked system 74% Reasons for not having a bank account

 For the unbanked, the third main barrier for not having a bank account is distance to the bank (24%)

Reasons For Not Having A Bank Account %

I Don't Have Enough Money To Open An Account/I Borrow From Other People/Don't Have Much 48%

I Don't Have Regular Income/Not Presently Working 30%

Bank Is Far Away 24%

It Is Expensive To Have A Bank Account 16%

Lack Of Information About Bank Products And Services 14%

Don't Know How To Open An Account 12%

Never Thought About It/ No Need For It 11%

Literacy/Can't Read Or Write 11%

It Costs Too Much To Reach A Bank 10%

I Prefer Dealing In Cash 9%

I Don't Have An Identity Document 7%

Interest Is Low 7%

Other 20% What is the average time it takes to get to the bank?

. For those who are currently banked, 38% indicated that it takes an average of 15 minutes to get to the bank

About 15 Minutes 38%

About 30 Minutes 28%

About An Hour Or More 19%

Under 5 Minutes 14% How do you most often get to the bank?

. 80% of those who are currently banked indicated that they take public transport most often to get to their bank

Public Transport 80%

Private Car 10%

Walk 9%

Others 1% Average Transport Fare to the Bank based on a one way trip

. Of those who are currently banked and use public transport, 25% spend between N21-50; 26% spend between N51-100 and 25% spend over N100 on a one way trip to the bank

30% 25% 26% 25% 25%

20%

15% %

10%

5% 3% 1%

0% Up To N20 N21-N50 N51-N100 Over N100 Don't Know Mobile Financial Services Access to Technology

. 75% of the adult population living in urban areas and 39% of them living in the rural areas have access to a prepaid mobile phone

Prepaid Mobile Phone 49% 39% 75% Contract Mobile Phone 4% 3%8% Telephone At Roadside Kiosks 36% 30% 49% Public Telephone 10%12% 9% Telephone At Home 2% 1%5% Total Urban Rural Telephone At Work 2% 1%3% Internet/E-mail At Business Centres 4% 10% 2% Television 49% 39% 78% Satellite/Cable TV (DStv/HiTv) 7% 4% 14% None Of The Above 34% 10% 43% Mobile Phone Access, Usage and Ownership by Banking Status

. Large market for people who are unbanked but have a prepaid mobile phone. Over 42 million adult Nigerians (49%) have access to a prepaid mobile phone and over 25 million of these are unbanked . . . .

Total Banked Unbanked 70% 60% 60% 57% 54% 49% 50% 45% 43% 46% 40% 42% 40% % 30%

20%

10%

0% Have Access Regularly Use Own Nigerian Telecommunications Industry

According to the NCC as at the end of September 2009: . Total subscriber base was 70,337,600 . Nigeria has attained 50% teledensity . The Nigerian telecoms sector has gone from a teledensity of 0.4% in 2000 to 50% in September 2009 . Mobile telephones has been the main driver of market growth in the Nigerian telecoms sector

. The estimated total subscriber base of is about 280 million Equity Bank teams up with – Jan 2010

. Kenya’s Safaricom, which operates the M-PESA mobile payments service, has signed an agreement with Equity Bank to allow M-PESA customers to use the bank’s ATM network . More than 8.5 million M-PESA customers will be able to use their mobile phones to withdraw cash from Equity Bank’s network of over 550 ATMs . Customers no longer need a bank or debit card to withdraw cash from the ATMs, which means the service is accessible to those who do not have a bank account . When a customer is at the ATM, the individual chooses the M-PESA menu and enters an Equity Agent number. At this stage, the customer receives a one-time ATM authorisation code on their mobile phone. The consumer then enters this onto the ATM screen, along with their mobile phone number and the amount of cash to be withdrawn . The service will enable registered M-PESA customers to withdraw amounts ranging from KShs 200 (N380) to KShs 35,000 (N66,000) from any Equity Bank ATM . In a breakthrough from previous ATM services, consumers of financial services do not need a bank card to access the service, making it available to many hitherto unbanked Kenyans . ATM withdrawal charges will apply

WHY NOT IN NIGERIA?? Equity Bank teams up with Safaricom – Jan 2010

Benefits to Equity Bank . The new service lays a strong base for low cost banking and also enables many unbanked Kenyans excluded from the formal financial system to access their money using mobile phone technology . Fulfils the bank's social responsibility to reach more Kenyans through mobile banking and allowing them to access financial services with ease . Reduces congestion caused by M-PESA queues in Equity bank branches, increase volume of ATM transactions and overall bank revenues . Gives customers a revolutionary money transfer service and enhanced convenience attributable to 24 hours money transfer window Benefits to Safaricom . Presents a novel way of dealing with the "liquidity" challenges customers may experience when withdrawing money from M-PESA agents, given they will now have access to their cash countrywide 24 hours a day, seven days a week . M-PESA customers can enjoy faster processing of withdrawals at more than 550 Equity cash machines in towns all over Kenya . Increase the number of access points where M-PESA customers can withdraw money

WHY NOT IN NIGERIA?? Panellists and Guest Speakers Guest Speakers

. Abayomi Atoloye, Ag Director, Banking Operations Department, Central Bank of Nigeria . Emmanuel Obaigbona, Deputy Director, Banking Operations Department, Central Bank of Nigeria . Evelyn Stark, Senior Programme Officer, Bill & Melinda Gates Foundation . Ahmed Dermish, Associate, Bankable Frontier Associates . Michael Tarazi, Senior Policy Specialist CGAP/World Bank Group . Gerald Nyaoma Arita, Director, Banking Services, Central Bank of Kenya . Chowdhury Mohidul Haque, Executive Director, Payment Systems, Bangladesh Bank . Dela Selormey, Director, Banking Supervision Department, Bank of Ghana (Retired) . George Held, Director, Zap Holding BV . Hannes van Rensburg, Chief Executive Officer, Fundamo Thank You