The studies noted that infrastructure expansion and upgrade, particularly international connectivity and bandwidth, coupled with the convergence of GSM networks and IP infrastructure, means that increasingly, sophisticated m-commerce applications are becoming a reality across African countries. However, the nature of a number of constraints (e.g. cost, literacy, handset specification) means that use of m-commerce is likely to remain the preserve of the well off for some time, hence exacerbating the digital divide.
Most of the m-commerce/banking examples are based on partnerships between a bank and an operator and the product is offered as added value of that bank or operator. This gives the players a competitive advantage over their rivals in the sector. It has been observed that initiatives towards open standards, enabling all mobile operators to provide access to m-banking services would enable more people to benefit from these services.
The studies reveal that m-commerce or m-banking is one of the sectors that can have a significant impact on the lives of the poor in Africa if properly and effectively managed within an enabling environment. The findings show that the different African countries could enable M-commerce or m-banking to reach its full potential through the generation of inclusive policies that put more emphasis on rural coverage in terms of both infrastructure and banking services, balancing the market and consumer protection through effective regulatory policies and also through recognising information services as a vital component in the sector.
8.5.1 Generate inclusive policies
The situation in each of the three countries is significantly different, but in all the poverty reduction strategies there is an acknowledgement that reduction of poverty can be enhanced if communication services reach to the remote rural areas, and are affordable and accessible by both the rural and urban poor.
Regarding information, it was observed that there is an increasing demand for generalised information services. The National Media Group (NMG) and Sonatel Media cases from Senegal, illustrate how their offerings are being taken up by customers. Sonatel Multimedia has proven that an information-based solution is viable but only operates this in the cities particularly in Dakar. This does not address the needed inclusion of the rural areas. Banks like CBAO and telecommunications operators such as Sonatel Multimedia do not want to take risks with the rural areas (seeing them as illiterates with no bank accounts), and they do not plan in the foreseeable future to target the rural areas. Only the company Manobi has included the rural areas (businessmen, farmers etc.) in their products, offering a consultation by WAP on the price of agricultural products in various markets (Xam Marse, the market in real time on SMS). The country study concludes: - “The rural areas remain the poor areas while they constitute the majority of the population and should therefore be virgin areas to be exploited by operators and service providers with the resources.”
In contrast, Kenya and South Africa have a considerable number of initiatives, most of which include a focus on the rural poor – who the proponents see as new potential markets. Figure 8.1 below illustrates the distribution on how people keep their money in the three countries.
Figure 8.1: How people without Bank Accounts keep their money
From their responses we can note that: -
• Key to the inclusion of the poor is a proportionate response to the identification and associated risk for registration of new customers. Kenya and South Africa have taken steps down this road, and hence enabled the innovative propositions. However, it would be helpful to bring together good practice regarding this initiative.
• Similarly, the other major key to an inclusive response is enabling agents to accept deposits and be the cash in and cash out points. Again, Kenya and South Africa have enacted some proportional measures, enabling agents to represent financial institutions. There is a need to identify best practices for this and take regulators on board.
• Regarding telecommunication inclusion, Universal Access Funds levied from the mobile network operators have been used to promote the reach and access of the network into remote areas in some of these countries. In this new converged space, which includes both telecommunication and financial services and with the diminishing need for subsidised universal access, governments might seek instruments to encourage reach and access of financial services into remote areas.
8.5.2 Balancing the Market
In responding to demand, particularly in Kenya, it is clear that mobile operators are critical in the success of mobile applications, especially for small businesses. This is because of the dominant or strong bargaining power of the mobile operators. For example, in the Kenya’s Equity Bank case study, it was found that the technical support of the mobile operators was making its mobile banking application expensive. The increasing power of the mobile operators puts them in a strong bargaining position – even when negotiating with banks. It was therefore suggested that the ICT regulator could regulate partnerships between the businesses and mobile operators to ensure fair play. For example, the value-added mobile application providers should be protected from the dominant power of the mobile operators especially in sharing the revenues from such services. There is also need to expand the
mandate of regulators so that the new laws should not only regulate e-commerce but also regulate spam or fraudulent SMS’s as well as the partnerships between the different licensees at the different layers of ICT.
8.5.3 Consumer protection
The study noted that each of the three countries had policies and bills in waiting regarding customer protection and security. These needed to be enacted as soon as possible in order to increase the trust among people and businesses especially with reference to the recognition of the electronic signatures necessary in mobile and electronic commerce transactions.
There was need to transform the business culture in order to promote e-commerce and mobile commerce applications. At present, there was low trust between businesses and customers because of lack of transparency in business transactions with regards to e-commerce or m-commerce. There were also many fraudsters who took advantage of mobile commerce applications, as was the case with the Nakumatt Supermarket chain case study in Kenya63.
8.5.4 Recognise that information services are important.
Mobile phones play a significant role in people’s everyday lives as they reduce costs, enhance interactivity and can be used to access specific vital information.
The Nokia research study indicates that the most important types of information to users are news (local and international), health (how to prevent and treat illness and diseases), education (education and training opportunities), income generation (job opportunities, market information, availability and price of resources) and information on new products and services64. This indicates to the different countries that these are some of the generic areas in which m-content services could make a significant contribution towards economic development.
In conclusion, the study findings reveal that Africa is well placed for exploring and exploiting the new opportunities presented by m-commerce. It has the core demand for such services and in this sense is better placed than Europe where consumers have a wide range of alternatives. There is need to put more emphasis on key infrastructure development especially in the rural areas where the majority of the population lives and to formulate inclusive policies that enable m-commerce.
63 Nakumatt retail supermarket group experienced lots of fraudulent cases with the customers when they used SMS based promotional services.
64 Nokia 2008 “Towards Effective E-Governance -The delivery of public services through local e-content”, Nokia 2008