IFC MOBILE MONEY SCOPING COUNTRY REPORT: RWANDA Margarete Biallas (with assistance from Alana Fook) RWANDA SUMMARY CURRENT MOBILE MONEY SOLUTIONSCurrently 6 mobile money solutions offered; 3 MNO offerings (largest), 3 Bank offerings. POPULATION 12.98 million MOBILE PENETRATION 9 million mobile subscribers (80% penetration according to RURA) FINANCIALLY INCLUDED POPULATION 38% through financial institutions, 42% overall, 18% through mobile accounts [Source: World Bank FINDEX] PERCENT UNDER POVERTY LINE 39.1% (2015) [Source: CIA] ECONOMICALLY ACTIVE POPULATION Labour force: 5.9 million (2015) [Source: CIA] ADULT LITERACY 70.5% (2015) [Source: CIA] MOBILE NETWORK OPERATORS MTN 34% market share Tigo 31% market share Airtel 20% market share KT Rwanda Networks 6% market share OVERALL READINESS RANKING 3 (moderate) Market Readiness Rwanda’s regulation and policies promote digital financial Regulation 4 services and discourage the use of cash. Financial inclusion in the country has shown significant Financial Sector 2 improvement in the last 4 years, primarily because of Telecom Sector 4 mobile money. However, the financial sector currently Distribution 3 does not offer competitive agent banking solutions. Market participants all agree that strong customer Market Demand 3 education and marketing is required. Macro-economic Overview Regulations Financial Sector Telecom Sector Other Sectors Digital Financial Services Landscape MOBILE BANKING MARKET POTENTIAL Key Country Statistics Insights ▪ Population: 12.98 million1 ▪ Two-thirds of the adult population is younger than ▪ Age distribution: 41% (0-14 years), 19% (15 -24 35, the majority is also rural and a significant years), 33% (25-54 years), 4% (55-64 years), 3% share lives below the poverty line.3 1 (over 65 years) ▪ The Government of Rwanda (GoR) has taken a 1 ▪ Median age: 19 number of key steps that are conducive to the 1 ▪ GDP (PPP): $20.4 billion (2015) development of mobile money; ▪ GDP per Capita (PPP): $1,900 (2015)1 ▪ Set the ambitious target to become a ▪ Urban/Rural split: 28.8% of population lives in middle-income country by 2020 (Vision urban areas (2015)1 2020)3 ▪ Population below poverty line: 39.1% (2015)1 ▪ Literacy Rate (age 15 and over can read and ▪ Signed an agreement with Ericsson to write): 70.5% total, 73.2% male and 68% female develop a Rwanda Interconnect Switch 4 (2015)1 (RIS) ▪ Account Penetration: 42% all transaction ▪ Signed an MoU with MasterCard to accounts, 38% account with financial institution, meet Rwanda’s 2020 Vision of a 18% mobile account2 Cashless society5 ▪ Net Recipient of Remittances: Outflows $126 ▪ Entered into a PPP with kt – kt Rwanda million (2014), Inflows $128 million (2015) Networks - install and activate a wide- [Source: World Bank] ranging high-speed broadband network 1 ▪ Labour force: 5.9 million (2015) ▪ Signed the Maya Declaration 2011, ▪ Mobile Money Subscribers: 7.6 million (2015) committing to increase the proportion of [BNR] Rwandan adults with access to formal ▪ Mobile Penetration: 80% (2015) [Source: BNR] financial services from 21% to 80% by ▪ Internet penetration: 18% (2015) [Source: World 2017 Bank] 1 Data as at 2016, unless otherwise noted. Source: CIA World Factbook accessed October 13, 2016. 2 Data as at 2014. Source: World Bank Global FINDEX 3 Financial Inclusion Insights – National Survey Report Rwanda (CGAP, 2015) 4 Ericsson and Rwandan Government collaborate on financial inclusion (Ericsson Press Release, May 13, 2016). 5 MasterCard Press Release (MasterCard, May 2016) Macro-economic Overview Regulations Financial Sector Telecom Sector Other Sectors Digital Financial Services Landscape REGULATORY BODIES INVOLVED IN MOBILE BANKING Roles & Responsibilities Implications • Article 6, 4º of the Law Nº 55/2007 of • The BNR has licensed 10 Payment Service 30/11/2007 outlines National Payment Providers (PSPs) and 2 Payment System System oversight as one of the key Operators. functions of the BNR. • In 2015, the National Bank Rwanda (BNR) National Bank of • BNR oversees all payment and securities approved cross-border mobile money.1 settlement systems, including those it Rwanda (BNR) • BNR published an interoperability policy in operates and those operated by other June 2014, with the stated aim to promote entities, payment service providers, high levels of effective and efficient payment system operators, payment interoperability in all significant payment instruments and remittances. streams. The stance may range from simply encouraging, to guiding how it can be accomplished and, only where necessary, • RURA regulates certain public Utilities, mandating underlying requirement in the telecommunications. form of directives.2 • RURA’s mandate is to license, monitor and Rwanda Utilities enforce license obligations, manage scarce Regulatory resources, advise policy makers on ICT related issues. Authority • Issued 2013 regulation requiring SIM card (RURA) registration, the establishment of a database of all registered subscribers and outlined hefty fines for non-compliance.3 1 Rwanda: Telecoms – 2015 a year of innovation, tight competition and uncertainty (allAfrica, December 29, 2015). 2 Interoperability Policy (BNR, 2014). 3 Regulations on SIM Card Registration (Regulatory Boa\rd, RURA, January 2013) REGULATORY FRAMEWORK, SLIDE 2 Current Regulations Implications • Defined as any entity providing services • Market open to all and requirements are enabling cash deposits, withdrawals, execution functional – based on the type of service of payment transactions, issuing and/or offered, not the type of entity offering the acquisition of Payment Instruments, money service.1 Payment remittances or any other services functional to • Important pieces of legislation include: Service the transfer of money.1 • Law Nº 18/2010 of 12/05/2010 relating Providers • BNR, through its oversight function, aims to to electronic messages, electronic achieve access, risk control, transparency, fair signatures and electronic transactions (PSPs) pricing, and system reliability.1 • Law Nº 03/2010 of 26/02/2010 • There are 10 PSPs licensed by BNR, including concerning Payment Systems (BNR mobile money providers such as MTN can regulate bank and non-bank FIs Rwanda, Tigo Rwanda, Airtel Rwanda, • Regulation Nº 06/2012 governing Mobicash. Payment Service Providers • Defined as entities that operate/own payment Payment systems and may be BNR, commercial banks, System MFIs, switches, telecoms or other entities. • The BNR has licensed 2 Payment System Operators Operators: (PSOs) •Rswitch Ltd •VISA Rwanda Ltd 1 Oversight Policy Framework for Financial Market Infrastructures in Rwanda (BNR, 2014). REGULATORY FRAMEWORK, SLIDE 3 Current Regulations Implications • An entity providing to participants of • Funds are operationally ring-fenced from systems (payment, clearing or securities MNO accounts but there is no legal Settlement settlement systems) settlement accounts framework to protect these deposits, through which Transfer Orders within such particularly against bankruptcy.3 Agent systems takes place and, as the case may be, extending credit to those participants for settlement [Law Nº 03/2010] • Exclusivity agreements are not permitted, • PSPs are responsible for training their unless specifically authorized by BNR agents and can be considered to be liable [Article 23]1 for the actions and omissions of their Agents agents. • Some entities allow agents to perform KYC and open accounts on their behalf. • PSPs are required to conduct KYC prior to • Given the coverage of the Rwandan opening accounts – a national ID card is National ID system, this is unlikely to place required. undue constraints on consumers. KYC/AML • Transaction limits (RFW 500,000/ day, • Limits are likely sufficient for individuals. FRW 3m/ month) refer to remittances, and • Regulation also allows for higher limit do not specifically apply to mobile money, users (like businesses paying salaries) but but in absence of specific regulation, these requires more reporting. guidelines are followed [Article 22]1 1 Regulation Nº 06/2012 governing Payment Service Providers (National Bank of Rwanda, 2012). 2 Law Nº 03/2010 of 26/02/2010 concerning Payment Systems (National Bank of Rwanda, 2010). 3 The regulation of Mobile Money in Rwanda (International Growth Centre (IGC), August 2013). Macro-economic Overview Regulations Financial Sector Telecom Sector Other Sectors Digital Financial Services Landscape FINANCIAL INCLUSION AND THE ROLE OF DFS Access Ownership/Usage Key Insights • Mobile money agents were • The increase in the • Only 4% of adults consider more accessible – as percentage of adults who were mobile money a trusted as a measured by time taken to formally served, though not place to save – lower than reach destination – across all banked, from 19% in 2012 to both banks (27%) and provinces and overall (31 42% in 2016 was largely Umurenge SACCOs (57%) – minutes vs 50 minutes or driven by uptake of mobile but 84% consider it safe for more for Bank agent, bank money and Umurenge remittances1 1 branch, MFIs or ATMs1 SACCOs • Usage of mobile money is • Penetration of financial access • Rates of ownership among limited to airtime top ups and 4 points (per 100,000 adults)2 Ugandan adults (age 15+) P2P transfers; • commercial bank • Account 42.1% • 1 in 3 adults only use branches 4.1 • Mobile account 18.1% their mobile money • ATMs 5.3 • FI account 38.1% account to remit money • 87% adults have an ID that • Debit cards (4.5%) are more or buy airtime and only would allow them to open an common