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Is it not time for business model innovation talk in mobile money services?



Mobile money is emerging as a common source of financial inclusion. The reach of mobile money innovations is promising, but still challenging.
Mobile money is expanding at different paces globally and is becoming a critical driver of financial inclusion, and as a consequence, of development especially in underserved communities.
Extraordinary achievements demonstrating the power of mobile have been witnessed around the world. There exist around 411 million global mobile money accounts with mobile money services available in 85 percent of countries where the vast majority of populations is challenged by lack of access to a formal financial institution.
This success is underpinned by the important role mobile network operators (MNOs) have played in building this industry, although it can be argued that MNO-led mobile money models have perpetuated market monopoly and stifled competition, to the detriment of the consumer.
Mobile services have seen a tremendous uptake in the past few years with 82 percent of developing markets having launched mobile money services globally and Sub- Saharan Africa accounting for 52 percent of the services, according to the GSMA 2015 State of the Mobile money Industry Report.
The industry has been growing at an astonishing rate in Africa, a continent where financial inclusion is a massive challenge, especially in rural areas where there is limited investment in infrastructure.
However, more than half of new services were launched outside this region in 2015. Although there are signs of mobile money industry maturing, the launch of new services has been slowing each year.
In East Africa alone, mobile money transactions reached 32 percent of GDP in 2014, telecompaper reported. The success of Kenya’s M-PESA, the poster child of the mobile-money boom, has been proclaimed the world over.
The country leads in mobile money accounts, having more active accounts than adults in its population. By 2013 already, its total value of transactions made by mobile phone in 2013 was around $24 billion, according to the Economist.
In the past decade, Tanzania emerged as another early mobile money success story, but progress is happening elsewhere — specifically in Rwanda and Ghana.
In both Kenya and Tanzania, more adults are reported to have mobile money accounts than bank accounts. A similar trajectory is following in other countries, although emerging at a slower pace than in two market leaders.
The Consultative Group to Assist the Poor reports that Ghana is experiencing faster market growth, with active accounts more than doubling between 2014 and 2015, and transaction volume tripling between 2013 and 2015.
With regards to Lesotho, mobile money has had significant milestones, which included plugging in insurance premium payments and cross-border remittances.
Earlier in the year, the Central Bank of Lesotho (CBL) Acting Governor, Dr Masilo Makhetha, had reported a collective total of M67 948 397 circulating through the networks of the two telecoms companies, Econet Telecom Lesotho and Vodacom Lesotho, via their Ecocash and M-PESA platforms respectively.
As of December 2015, mobile money managed to process a total of 751 743 in airtime purchases, 243 169 customer cash withdrawals, 321 768 bill payments and
221 257 domestic money transfers.
However, while the progress to date is to be celebrated, the future success of mobile money depends on the industry’s capacity to grow the ecosystem — creating more space for other players to facilitate innovation around mobile money business models and services. Mobile money ecosystems span a wide range of different players with different assets and capabilities, incentives, roles, and constraints.
Such players include mobile network operators, banks, airtime sales agents, retailers, utility companies, employers, regulators, international financial institutions and donors, and even civil society organizations, as well as end users.
Traditionally, the mobile money business has been championed by the telecommunications sector, specifically mobile network operators (MNOs).
However, while MNOs have used smart mobile money business strategies to capture and dominate the market, they have also limited their ability to compete and grow their market share with their closed business models.
For many countries in these emerging economies, the current mobile money model requires that to be a customer of an MNO’s mobile money system, a customer has to be a subscriber of the parent mobile network operator.
By definition and consequence, this limits the mobile money business customer subscribership to the parent MNO’s market share in the mobile telephony sphere.
The growth potential of that mobile money service can only go as far as the network subscription numbers — unless the business model changes.
In Lesotho, for example, despite the inroads made, more still needs to be done to strengthen the customer value proposition (CVP), especially in the rural areas. In a country where the majority is rural population, with limited reach of infrastructure and access to services, mobile money holds great potential.
It is only about 48 percent of adult population who own mobile phones that use mobile money services.
Yet a potential exists to do more especially in the face of limited

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