Caleb M Fundanga: Setting new standards for cellphone banking
Opening remarks by Mr Caleb M Fundanga, Governor of the Bank of Zambia, at the Celpay
2010 Mobile Payments Conference, Lusaka, 27 October 2010.
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The Chief Executive Officer Celpay International BV
The Managing Director - Zain Zambia Limited
Managing Director, Celpay Zambia Ltd, Mr Miyanda Mulambo
The Conference Chairperson, Mr Maxwell Banda
Representatives of Commercial Banks and Financial Institutions present
Representatives of International Organizations present
Representatives of Zambian business associations
Distinguished invited participants
Members of the Press
Ladies and Gentlemen,
It is an honour and privilege for me to officiate at the 2010 Mobile Payments Conference.
This year's conference follows the success of the inaugural 2009 conference and it is
therefore my earnest anticipation that as in 2009, you will find the 2010 conference
productive and beneficial. The conference provides an excellent opportunity for the exchange
of views and sharing of ideas on how to continuously improve the functioning of our financial
systems against the backdrop of the global financial turmoil.
Mr Chairman, Allow me to begin by commending Celpay Zambia Limited, for making the
mobile banking conference an annual event. I hope that the Conference will provide a forum
for long-term collaboration in the area of Mobile banking to provide sustainable banking
solutions to our people. The Bank of Zambia applauds this initiative which is collaborative
and consultative. It is only through such collaboration and consultation involving key
stakeholders that we are able to improve our local situations as we seek to have a stable
macroeconomic environment and an inclusive financial system. These are preconditions for
achieving economic development and accordingly, one of the principal tenets of economic
development is access to financial services. in this regard, a national payment systems
development has a fundamental role to play to enhance access.
Chairperson, I have noted that the theme for this year's conference, "Setting New Standards
for Cellphone Banking" is very fitting for Zambia as we face the challenge of ensuring that the
majority of our adult population has access to formal financial services. As you may be
aware, a large component of the work being undertaken under the Financial Sector
Development Plan (FSDP) and the National Payment Systems Vision and Strategy
2007-2011 is focused on improving financial access and contributing to the establishment of
inclusive financial markets in general. The recent Finscope Survey revealed that only 37.3%
of the adult population have access to formal financial services leaving 62.7% of adult
population financially excluded. Although significant strides have been made to improve
financial access and introduce more convenient services, more work needs to be done.
Ladies and Gentlemen, this state of affairs hinders people's ability to establish financial
transactions. Effectively, lack of financial access stifles entrepreneurship and holds back the
country's economic growth. For instance, as at June 2010, there were only 258 bank
branches and agencies in the whole country. In most cases, these branches or outlets are
located in urban centres, with rural areas having few if any branches. Conversely as at June
2010 the three mobile phone operating networks in Zambia had a total of about 4.6 million
subscribers.
Distinguished participants, this situation grants us an opportunity to develop innovative
approaches of extending financial services. It will no doubt involve remodelling of traditional
products, service delivery channels and regulatory frameworks. It is important that all
possible alternatives are critically examined for viability, safety and efficiency. Some of the
alternatives that need urgent examination include bank partnerships with non-bank agents to
provide wider distribution outlets for payments and other financial services, and leveraging
new technologies such as a common national switch to extend financial services.
Mr Chairman, the Mobile Money Transfer has the potential to act as the fulcrum of
branchless banking, which allows provision of transactional banking services without the
need of a "brick-and-mortar" branch. Individuals are allowed to remotely access cash using
different technologies, which may include automated teller machines, point of sale devices,
mobile phones, payment cards or other smart technologies. To ensure that payment service
providers take full advantage of the benefits that come with implementation of a Mobile
Money Transfer, they must develop and embrace new business models. These models may
be built around the existing large financial flows such as remittances, salary and wage
benefits, pensions and other government social benefits transfer system.
although Mobile Money Transfer provides a solid platform upon
Ladies and Gentlemen,
which to anchor expansion in the coverage of financial services, this goal will not be realised
unless all stakeholders participate and play their respective roles effectively. Accordingly,
banks and other payment system businesses need to utilise this infrastructure to the fullest
extent possible by ensuring that various products are developed to extend financial services
coverage. At the same time, households and businesses need to change their attitude
towards non-cash payment methods. It therefore goes without saying that financial education
will be critical in shifting public attitudes and ensuring that the non-cash payment methods
are widely utilised by the target market. In this regard, I am pleased to inform you that the
FSDP has prioritised financial education so as to increase the level of financial literacy and
awareness of alternative payment methods. I would like to urge all financial service providers
to not only take advantage of this initiative but also to design their own programmes to
sensitise their customers of the innovative products they offer or plan to offer which promote
financial inclusion.
Furthermore, as Bank of Zambia we welcome the innovations by the banking sector and
other financial service providers aimed at enhancing financial inclusion. However, it is our
responsibility to ensure that these services are provided in a safe and efficient manner. In
this regard, the Bank of Zambia reviews these banking products before their introduction to
ensure that they comply with the existing prudential and statutory financial sector
requirements. In particular, the Central Bank's review process focuses on adherence to Risk
Management Guidelines and the Anti-Money Laundering Regulations as well as Prudential
Guidelines that detail minimum, "Know Your Customer" requirements that financial
institutions should adhere to. The overarching objective of all this is to ensure that our
financial system is safe sound and stable. In a nutshell, there is an existing supervisory
framework to ensure the safety of mobile banking solutions. This framework will continue to
be reviewed in line with the changes in the mobile banking space. As you may be aware,
some of these innovations may require collaboration with the regulators in the
telecommunication sector. As such it is our intention to work closely with the Zambia
Information and Communication Technology Authority in promoting safe and sound mobile
banking services.
Mr Chairman, it is also worth noting that since the last Mobile Banking Conference in 2009,
a number of positive developments have occurred in the telecommunication sector. For
instance the partial privatization of the Zambia Telecommunications Company (ZAMTEL) will
result in intensified competition in the sector. This will no doubt lead to better quality service
for the consumer. Further, following the liberalization of the International Gateway, we have
already seen mobile service companies reducing their rates significantly. This, coupled with
the now affordable cell phone handsets, will enhance access to mobile phone services and
an opportunity for many of our people to be financially served.
given the innovations around mobile banking and its
Finally, Ladies and Gentlemen,
attendant challenges, it is our expectation that this workshop will encourage dialogue
between different market players in Zambia and within the region. This Conference provides
an opportunity for such dialogue and I am glad that it takes cognizance of a dynamic market
environment, paying special attention to innovation that may have significant macroeconomic
benefits to all involved. We are therefore keen to draw on the policy debate arising from this
Conference to move financial services in Zambia to new frontiers. As Bank of Zambia, we will
play a catalytic role and facilitate private sector led developmental initiatives.
I thank you.