MobileActive.org

Editor's Note: This guest post is by Janet Gunter, a anthropologist and blogger, an ex-“aid worker” interested in communication, technology, and new economies. She is currently working as an adviser at @Verdade newspaper in Maputo, Mozambique. 

Mobile money arrived in Mozambique earlier this year, after the larger of the two mobile operators, the state-owned mcel, rolled out a service called mKesh (close in pronunciation to mCash). mKesh “soft launched” the service in 2009, but has intensified its efforts this year, with an official launch in September. The service now claims to have 41,000 registered customers and 2,700 agents across the country.

So far, however, the story of mobile money in Mozambique is a cautionary tale which provides clues about the adaptability of the lauded operator-led model.

Like with mPesa, Kenya’s Safaricom-led service, mcel’s 4 million plus subscribers can use the service, creating a “mobile wallet” which is designed to be used to collect cash from participating agents and make payments. 

For mcel customers, the service is free to join but charges for transactions. Fees total roughly 1.7% for up to $100 transfers which is very economical compared to mPesa and other services in Africa. 

The Mozambican government has long lamented the slowness of international banks in providing services to the unbanked. While banks are finally reaching poorer suburbs and covering provinces more than ever before, a large portion of the population still lives with no financial services. 

Yet, the television ads for the service have mostly portrayed salaried people or center-city dwellers using the service. These ads convey the idea that mKesh is designed to be a convenient backup to cash or a bankcard, but do not present it as a way for families or microentrepreneurs to transfer money. 

Voices from the Field: We Have Yet to See mKesh As Our Own

We went out to talk to potential users and those who had posters indicating they were agents of mKesh, in Polana Caniço, one of Maputo’s sprawling and densely populated informal settlements. What we found was that the "unpaved" outer neighborhoods of Maputo have yet to see mKesh as their own. 

People are quite used to sharing phone credit and even using mCel’s “Please-call-me” service. Young people living in Maputo’s poorer, outlying neighborhoods say that mobile money could, in theory, be useful. 

Yet the only person we found who had made a payment with mKesh was Pedro, an owner of a small Internet café who made his last payment at a stylish café in central Maputo.

Most merchants in Polana Caniço have not yet begun to receive payments via mobile, nor have they begun to allow mobile money customers to "cash out" their mKesh, limiting uptake. As many have pointed out, success of mobile money services hinges on a robust agent network.

One pharmacy reported that they sell between 600-900MT (US$20-30) of airtime via a new mKesh channel, but have few customers making payment via mobile. Other smaller businesses reported a similar situation - they were only selling airtime via mKesh. 

One of the merchants, who sold sacks of rice, chickens, and other consumer goods, said that in order to become a two-way agent both selling and buying mKesh, he was told he would have to leave a deposit of 30,000MT (roughly US$1000). He said he could not afford to leave this deposit. 

mKesh on its Gradualist Strategy

mKesh spokesman Aurélio Matavale responded that this merchant was mistaken, that the only requirements were the ability to maintain a balance of a little under US$100 and show a reasonable cash flow in existing business. In mKesh’s official written conditions for agents, it requires “a good reputation in the local market” and “financial and management capacity.” 

Matavale claims that mKesh’s strategy from the beginning has been to convince merchants to become agents - to create a large enough network of agents before focusing on drawing in customers. 

At the beginning, he says, there was huge skepticism with merchants and it took some investment. He estimates that each additional agent requires $1000-2000 investment in terms of recruitment, training and equipment (mKesh requires agents use a dedicated “mobile wallet” phone). 

He admits that “full agents," those that allow customers to cash out and make payments, only constitute about 40% of the total 2,700 that mKesh cites, and most are concentrated in Maputo.

What seems to have convinced both agents and customers to use mKesh so far has been the introduction of SMS incentive for customers. But the service has yet to become a vibrant network of mobile money users and agents. 

For 2012, mKesh has big plans, including a simplified auto-register system. The mobile money company hopes to partner with companies like utilities for payments and even rural employers like tobacco and cotton companies to pay wages via mobile money to expand its reach. It has also bid to help INS (the Social Security adminstration) pay out certain kinds of pensions via mobile.  These kinds of cash transfers and benefits also tend to increase uptake as customers get used to using and trusting the service. 

Competition with Expanding Banking Services

An owner of a small fast-food business told us it would be a "hassle" to convert mobile money to cash - simply another queue to join. His attitude indicated that few see mKesh as currency. Instead, many view mobile money as another bank account, further complicating their financial lives.

Many potential clients of mKesh in outer Maputo have just opened their first bank account, and have rather bad associations with institutional banking, including long lines at ATMs and frequent failure of ATMs to access their cash. 

These same people were more favorable to a bank-led model of mobile money: they would like this mobile money to be integrated into existing banking services, helping them avoid hassles with banks.

Overall, there was little awareness about mKesh's comparatively competitive pricing. Banks levy a number of charges on their savings account customers. They even charge to check their bank balance at ATMs.

Inconsistency of the System

Serious dependability issues threaten the growth of mobile money in Mozambique. As the largest operator with the greatest geographical reach, mcel has suffered a number of extended network failures in recent weeks, one caused by a fire in its headquarters. 

A commenter on @ Verdade newspaper Facebook wall wrote: 

I am of the opinion that Mcel before investing in new services, should solve its technical problems. Then they can offer new services. One example is Mkesh, the system is never up and running, so why did they create this service? Tsk

Another customer at a eating place in Polana Caniço had a similar reaction, saying “the system is always down.”

Matavale says mKesh as a service is running on a reliable system owned by a subsidiary of Visa, Fundamo. But in the end, the mobile wallet depends on a functioning mobile network.

In Summary: Slow Beginnings

The apparent slow beginning of mobile money is disappointing for many who had hoped to use these systems to reach the rural unbanked overnight. An unscientific poll of international NGOs, for example, revealed that a number are keen to work with mobile money, probably based on best practices elsewhere.

Judging by the challenges presented by mcel’s gradual approach, it would not be surprising if the other operator, Vodacom, (related through the Vodafone family to Kenya's Safaricom, inventor of Mpesa) entered the game. 

Also, given our conversations with people on the street, the market seems ripe for potentially more expensive, bank-led mobile services.

End Note: More resources on mobile money and branchless banking can be found on the excellent CGAP website. For instance, CGAP features an Agent Management Toolkit for operators to develop and nrture a vibrant agent network. We especially recommend Mark Picken's blog here and Sara Rotman's blog here. Both provide key insights into critical success factors for mobile money services, analyze business models, and assess innovation in the branchless banking sector. 

Photo courtesy of flickr user Rosino.