Mobile Money – Liberia opts for bank-centric approach but gets low take up

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In August 2011, the Central Bank of Liberia (CBL) officially issued guidelines for mobile money services that will serve as the legal framework for the future rollout of mobile money services in the country. It is a laudable step forward for a country that has one of the lowest GDP per capita in Africa and a banking sector that is as shallow as a paddling pool. Following conversations with various stakeholders, Isabelle Gross reports on how mobile money services have been so far rolled out

The guidelines for mobile money services issued by CBL prescribe a “financial institution-led model whereby money mobile services are provided only by financial institutions and their agents”. CBL has favoured a “bank centric” model versus a “mobile centric” model or a “neutral/agnostic” model. The success of the former model has yet to be demonstrated while the mobile centric model has been successfully rolled out in several African countries. Of course, the case of Kenya springs straight into everybody mind. According to CBL’s guidelines, the local mobile operators are mere transmission pipes. It is sad that CBL doesn’t understand where the real dynamic and innovations lie when it comes to mobile money services. It is definitely not with African banks.

Since the publication of the guidelines, two banks have announced partnerships with mobile operators: United Bank of Africa with Cellcom and Ecobank with MTN/Lonestar. Last year in September, the latter couple rolled out commercial services. So far, how has the mobile money model prescribed by CBL been implemented? According to a discussion with an Ecobank’s representative, the mobile money services offered by Ecobank and MTN/Lonestar runs entirely on the MTN Money platform which the mobile operator has already rolled out in several of its other African operations. It looks like that there is a big gap between the principle of a bank centric model and what is really being developed on the ground. It is not Ecobank that “runs the show” but MTN/Lonestar. Beside the contradiction between what is written on paper and what’s happening in reality, there is further a lesson for CBL, the banking regulator which prescribed a business model for mobile money services that totally ignored the underlying factors that made mobile money services a success in other African countries. 

As of February 2012, they had 50,000 registered users to the mobile money services. If you start to drill down further and assume that between 5% and 10% of the registered users actually use the service this comes to between 5,000 and 10,000 users. If your drill down even further and assume that among the mobile subscribers that have used the service, there are about 10% among them that use the service on a regular basis that equates to between 500 and 1,000 regular users. MTN/Lonestar claims to have about 800,000 mobile subscribers and thus regular mobile money users represent less than 0.1% of its subscriber base. Of course, it is early days but to just reach 1% would mean a ten fold increase in the number of regular users. This will require a considerable financial investment in awareness and marketing campaigns. There is a long way to go before reaching any critical mass in Liberia.
Not everything is bad in CBL’s guidelines for mobile money services. The guidelines prescribe a “many to many model which allows several banks and several GSM companies to entertain each other’s customers”. Exclusive partnership or monopolies are explicitly prohibited by CBL. This principle is a first step towards interoperability between mobile money services and it is a good thing. It has further the potential to boost the financial viability of rolling out mobile money services in a very small country. Liberia’s total population is around 4 million and the addressable market for mobile money services (above 15 years old) is roughly about 2.5 million. Any entity that wants to launch a mobile money service has to bear in mind this last figure if it wants to roll out a sustainable business. 

Interoperability between mobile money systems is inevitable and it will further boost the adoption of mobile money services. The question is more how soon it will come. In Liberia, in principle, when a second mobile payment service will launch, it would be allowed to interconnect with the existing mobile money service operated by Ecobank and MTN/Lonestar as stipulated by the “many to many model”. So, CBL has to prepare itself to having to take some tough decisions in the future if it wants to stick to the principles that it stated in its guidelines for mobile money services.

Are mobile money services doomed in Liberia? Not necessarily, if CBL acknowledges that successful mobile money services have been driven by mobile operators rather than by banks. It is all about reaching the unbanked population to allow it integrate into a more formal transfer and banking system. The overall economy will benefit from it too because moving money via a mobile phone is fast, reliable and cheap


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