DIRECTOR, FINANCIAL INTEGRATION

E. N EGBUNA (PhD)

DIRECTOR, FINANCIAL INTEGRATION

WEST AFRICAN MONETARY INSTITUTE (WAMI)



Being the text presented in the Panel discussion on Regulation of international Remittances and Central
Banks’ co
-
operation on Cross Border Mobile Payments

1

AGENDA



Introduction


What is Cross Border Mobile Payments and its
Significance to WAMZ and WAMI Mandate?


Overview of the situation and Current status of Mobile
Payments development in the WAMZ region.


Associated Challenges


The way Forward

2

1. INTRODUCTION
-

THE WAMZ PROGRAMME


The West African Monetary Zone consists of six
countries:


-

The Gambia, Ghana, Guinea, Liberia, Nigeria and
Sierra Leone.


The primary objective of the programme is the
establishment of an economic and monetary union of
the member countries.


The expected date for the launch of the Union is
January 2015

3

1. INTRODUCTION
-

THE WAMZ PROGRAMME


The West African Monetary Institute (WAMI) is the
Administrative Organ of the WAMZ Programme.



-

Undertakes multi
-
lateral surveillance exercises to

ensure the attainment of set primary and secondary

macro
-
economic convergence criteria;



-


ensures the attainment of structural and institutional

benchmarks;



-

performing activities that will lead to the

establishment of the:




West African Central Bank (WACB);


West African Financial Supervisory Authority; and


West African Monetary Zone Secretariat




4

1. INTRODUCTION CONTD.


About

300

million

mobile

phone

subscribers

in

Africa
-

the

WAMZ

accounts

for

about

half

this

number



New

technologies

offer

improvements

to

remittance

services

and

reduction

in

transactions

costs
:

mobile

phones

should

hold

the

greatest

promise

for

Africa



Remittances

–

Important

source

of

income

to

developing

countries

like

the

WAMZ
:


Poverty

alleviation


Stimulation

of

development



1. INTRODUCTION CONTD.



Most of the funds are sent through informal channels
with attendant risks


Most of the remittances fall outside the regulatory
monitoring scope


Money laundering


Exchange control monitoring



2.CROSS BORDER MOBILE PAYMENTS
–

WAMZ &
WAMI MANDATE
.






As a working definition,
cross border mobile
payment is a real time mobile payment, which is
crucial for both remittances(person to person),
and for formal/informal cross border trade
(business to business) transfers/settlements






7

2.CROSS BORDER MOBILE PAYMENTS
–

WAMZ &
WAMI MANDATE



Strong regional financial markets and institutions play
an important role in supporting economic development




The formalization and efficiency of cross border
remittance and trade flows is an important development
goal




WAMZ/WAMI
–

confronted with the promotion of cross
border mobile transfer, but not at the expense of
financial stability

8

3. CURRENT STATUS OF MOBILE PAYMENTS
DEVELOPMENT IN THEWAMZ


Slow rate of evolution of mobile payments resulting
from the following:



Shallowness of the financial system


Absence of a common regulatory framework within
the region


Formal barriers to the provision of payment and
transaction services by non banks


Formal and informal trade barriers


9

4. SOME CURRENT ACTIVITIES OF WAMI TOWARDS
PROMOTING THE WAMZ INTEGRATION AGENDA


ADB financed payments system development
project



The Gambia: Already live


Guinea: End December 2012


Liberia; End December 2012


Sierra Leone: End December 2012

10

4
. SOME CURRENT ACTIVITIES OF WAMI TOWARDS
PROMOTING THE WAMZ INTEGRATION AGENDA


Cross border banking regulation



Establishment of the College of Supervisors
(CSWAMZ), leading to:

Capacity building

Information sharing

Corporate governance

Harmonization of banking supervision processes

11

4. SOME CURRENT ACTIVITIES OF WAMI TOWARDS
PROMOTING THE WAMZ INTEGRATION AGENDA


Capital Market Integration



Progressing towards a common regional capital
market

Lower cost of capital

Increase access to capital

Stimulation of growth





12

4
. SOME CURRENT ACTIVITIES OF WAMI TOWARDS
PROMOTING THE WAMZ INTEGRATION AGENDA



Harmonization of supervisory and reporting
standards



Risk Based Supervision (RBS)


Implementation of eFASS technology

13

4. SOME CURRENT ACTIVITIES OF WAMI TOWARDS
PROMOTING THE WAMZ INTEGRATION AGENDA



Trade Integration



ECOWAS
-
WAMI joint task force on trade integration



ADB assisted national trade policies formulation for
The Gambia, Sierra Leone and Liberia

14

5. ASSOCIATED CHALLENGES



Development of non proprietary mobile banking
solutions


Removal of entry barriers to potential new
entrants with the attendant risk of disrupting
lucrative business models of banks and mobile
operators


Ensuring high levels of security and trust


Bank led/non bank led model?



15

5. ASSOCIATED CHALLENGES


Are Consumers adequately protected?


Fraud


Loss of privacy


Service failure



How does it impact stability in the banking
system and national/regional payments system?



Are payments and deposits adequately
distinguished?



Are there laws backing e
-
money issuance?

16

5. ASSOCIATED CHALLENGES



Are there legally backed agencies for cash
deposits and withdrawals?



How do we manage AML/CFT risks?


17

6. THE WAY FORWARD


Completion of the ADB funded payments system
development project in the WAMZ with the
possibility of the following adds
-
on



National Switch


Mobile money banking facilities
eg
, POS


Other e
-
banking channels



Installation of eFASS technology






18

6. THE WAY FORWARD


Capacity building

I.
WAMI

Cross border payments and integration issues:



Choice of model for the WAMZ

II.
CSWAMZ


Supervisory roles for cross border mobile payments

III
. Member states’ Central banks and
Telecommunications operators


Design of regulatory and legal framework

19

THANK YOU FOR YOUR ATTENTION


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