| Abstract: | The aim of the study is to assess the development status of Mobile and Agent Banking services in
Ethiopia by taking the experience of three selected microfinance institutions (MFIs), such as: Addis
Credit and Saving Institution (ADCSI), Oromiya Credit and Saving Share Company (OCSSCO)
and Amhara Credit and Saving Institution (ACSI) and 12 sample agents participating in the
development of the M-BIRR Mobile Money Service (MMS) provision as a case study. The study
identified and examined the MMS regulatory framework in Ethiopia.
The significance of 24 factors for MFIs and 29 factors for agents that determine the viability of the
M-BIRR MMS business model for both the agents and the MFIs were categorized and assessed
under 5 variables in the study. Qualitative and quantitative primary data from the 12 sample agents,
the 3 sample MFIs and 12 sample key informants were collected and used in the study. Relevant
secondary data were also collected and analyzed by employing descriptive statistical tools and by
using an agent/MFI revenue model developed on the basis of secondary data.
According to the results of the study, among the five variables, the amount of revenue is the highest
significant factor whereas role related factors are least significant in determining the viability of the
M-BIRR MMS business model for both the MFIs and the agents. Time specific factors are
considered as having highest significance for the sample agents where as it has a higher
significance for the MFIs. Exogenous factors and other variables both have higher significance in
determining the viability of the M-BIRR MMS for both the MFIs and the agents according to the
results of the study. According to the results of the study the M-BIRR MMS business model faces
regulatory challenges. Some key informants from the NBE and the MFIs argue that the technology
provider is assuming the role of financial institutions which they claim is beyond its expected role
according to the NBE regulation directive.
The M-BIRR MMS business model suffers from the provision stated under Article 6.2 of the NBE
Mobile and Agent Banking Services directive that deals with the relationship of financial
institutions with third parties, including technology service providers and telecom companies. In the
M-BIRR business model, the TP entered in to a revenue sharing agreement with the MFIs that
limits the MFIs’ and Agents’ commissions from the service for 18 months on all FtFts following
customers’ subscriptions while allowing the TP to be entitled to all commission earnings from
nFtFts indefinitely. In the M-BIRR business model, it is the TP who has a contractual relationship
with the MNO. However, the existing directive requires financial institutions (not TSPs) to enter
into written agreement or contract with Telecom Companies for the provision of mobile and agent
banking services. In the existing system, the M-BIRR data center is located in the premises of
Ethiotelecom with other related infrastructures which are used for the provision of mobile and agent
banking service located in the premises of the TP, which is against the NBE’s requirements.. In
addition, the directive obliged TSPs to be completely deprived of access to database and datacenter
unless authorized by financial institutions only for specific period and for purposes related to
system support and/or maintenance services. This, however, is not found to be the case in the
current M-BIRR scenario according to the findings of the study.
There NBE directive also does not cater for ‘Business Customers’. Even though it does not literally
mention the term ‘Business Customer’, it refers to it when the directive stipulates that agents can
only register ‘natural’ customers, i.e. not ‘business customers’. The limits stipulated by the
directives are adequate for individual customers but inadequate for Business customers. |
