Telecoms leverage mobile money services to expand revenue base


Central bank chief John Rwangombwa withdraws at an I&M Bank ATM using Airtel Money. The card-less withdrawal is facilitated by RSwitch’s e-payment services (File)

The recent decision by Tigo Rwanda to render 70 workers redundant, and the expected laying off of dozens of employees at Airtel Rwanda capped what has been a year full of mixed fortunes for the country’s telecom industry.

The latest developments have almost overshadowed the gains made by the sector over the past 11 months, especially with the roll out of 4G network to more districts outside Kigali, including Musanze, Rubavu, Huye, Rusizi, Rwamagana, Ruhango, Karongi, Nyagatare, Bugesera and Nyanza; as well as scrapping off of cross-border roaming fees for voice among Northern Corridor states – Rwanda, Uganda, Kenya and South Sudan. Over the year, particularly in the past six months, the sector has moved to improve the mobile money transfer systems by adapting interoperability of mobile money services that will significantly boost efficiency and promote a cashless economy. Interoperability systems allow the establishment of a seamless platform that enables subscribers to send and receive money across networks.

A deal inked by Airtel and Tigo to this effect is seen as set to enhance mobile money transfer services, a sector that has become one of the growth areas for telecoms in Rwanda and in the region generally. The first electronic-money interoperability, between Airtel and Tigo telecom companies, was facilitated by RSwitch, Rwanda national payment switch. Daniel Barrientos, the RSwitch chief executive officer, said at the launch of the interoperability platform, that system will also reduce the cost of transactions, as well as help boost efforts to achieve a cashless economy.

According to the central bank, mobile money transactions increased from 20 million in March 2014 to 35.1 million in June this year. This represents 122 per cent growth in monetary value, from Rwf115.7 million to Rwf257.4 million.

There are 6.5 million mobile money subscribers across networks in Rwanda, more than half of the country’s population.

Another key development in the sector is the introduction of cross-border mobile money transfers by MTN Rwanda between Rwanda, Kenya and Uganda. Tigo Rwanda, which pioneered cross-border mobile money transfers in the world when it launched the service in February last year with Tigo Tanzania, added the DR Congo last month, making it possible for Rwandans to make transactions involving the two neighouring countries. These developments are tipped to greatly enhance trade between the Great Lakes region states and strengthen economic ties, besides easing way of doing business.

Last month, MTN Rwanda entered into a partnership with Kenya’s biggest telecom firm, Safaricom, to facilitate cross-border money transfers, allowing MTN Mobile Money and Safaricom M-Pesa subscribers to send and receive money between Rwanda and Kenya. MTN has no operations in Kenya, making the partnership with Safaricom key to enable convenient and affordable regional remittances, as the MTN Rwanda chief executive officer, Gunter Engling, put it.

He said direct cross-border mobile money transfer services improve safety of cash transactions, among many other benefits, arguing that when money changes hands, three to four times, the risk increases.

Airtel Rwanda, which says it is “technically set to launch cross-border money transfers with Uganda, Kenya and Tanzania once they receive authorisation from the respective countries,” is yet to launch the service among the Northern Corridor states.

However, customers of Airtel Rwanda are currently able to send and receive money from Democratic Republic of Congo, Malawi, Niger and Zambia.

Experts see the growth of mobile money services in the country and the Great Lakes region is playing an essential role in promoting financial inclusion among the population, especially the hard-to-reach communities that have been shunned by the banking sector.

3G Direct Pay Limited, a firm that offers turnkey cross-border mobile payment solutions on one platform which is directly integrated with multiple mobile money wallets, says demand for mobile cross-border payment services is growing in the region, owing to the popularity of mobile money wallets such as M-Pesa, Airtel Money, Tigo Pesa, Vodacom, MTN Mobile Money. “Cross-border payments and e-commerce in Africa still have challenges ahead. However, mobile-enhanced payments are helping more people enjoy the benefits of being able to spend money internationally,” the firm said.

According to statistics released in August, East Africans are channeling cash equivalent to a third of the value of goods and services produced in the region through mobile money platforms.

Over $45.75 billion was transacted through mobile phones across the region (Kenya, Uganda, Rwanda and Tanzania) last year, translating into 32 per cent of the countries’ combined gross domestic product - up from $4.86 billion or 3.4 per cent of GDP in 2009.

The annual growth in volumes means that East African consumers are moving an average of $3.8 billion monthly or $125 million per day compared with the $13.3 million a day they transacted five years ago. There were 82.3 million mobile money subscribers across the four countries in December last year, up from 29 million customers in 2009, the report indicated.

The gains registered this year by the telecom industry are partly thanks to the One Area Network, an initiative by the Northern Corridor countries aimed at creating uniform rates and seamless systems to boost communication and trade along the corridor. However, industry experts say it could take longer for the One Area Network to deliver harmonised charges for data while roaming, saying the different systems and technologies used by telecoms presently cannot allow this to happen.

Northern Corridor states set 2017 for telecoms to have implemented uniform data rates among member states. The challenge notwithstanding, telecoms have encouraged customers to use data by offering free data packages, as well as affordable Internet bundles for daily, weekly and monthly use. MTN, for instance, has free Wikipedia and Facebook Zero, while Airtel Rwanda subscribers can access Facebook and Twitter on the network without using the Internet.

Meanwhile, more service providers, including public transporters, the Rwanda Revenue Authority and the Rwanda Energy Group, have embraced mobile payment options to improve service delivery and efficiency. With the growth of the sector, it is now possible for MTN customers can now buy electricity tokens (cash power) and pay back later through MTN Mobile Money. MTN subscribers also can pay for fuel (at any of the 25 SP petrol stations across the country) using the mobile money service.

Airtel and MTN subscribers can also move money between their mobile money wallets and their bank accounts (for Bank of Kigali – MTN; and I&M Bank – Airtel account holders).

“The mobile money platform has significantly contributed to the national economic strategy on enhancing cashless transactions that offer convenience and security. We believe this development opens a new frontier in accessibility and usage of electronic payment solutions,” one industry expert noted recently.