Making Finance Work for Africa

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Mfwa_2007“When have you ever seen something this big come from a book?” Moses Thompson, our facilitator, is taking a friendly jab at Thorsten Beck, the co-author (with Patrick Honohan) of the now well-known research report, Making Finance Work for Africa (pictured). Looking down and waving his hands as if to push back all the fanfare, Thorsten can’t hide from the 300-some central bankers, regulators, donors, financiers and press who rise to give him a standing ovation. We gathered at the Partnership Forum on Making Finance Work for Africa in its second day in Accra. We’re amazed, too, that a research report grew into regional dialogues last spring, and then donor negotiations, and then a donor partnership, and a pool of funds, and a movement across the continent to expand access to financial services in Africa.

The past two days have been a busy ‘marketplace of ideas,’ as the organizers promised. Rotating discussion groups, booths, networking breaks, and group voting exercises have kept us moving around, listening, prioritizing—what can be done now to make finance work in Africa?

Naturally, in an ideas-market, the people with the most charisma get all the attention. The ideas market has been going on all week, and I’m still idea-ating at the final cocktail. Susie Lonie has caught my attention before, and I’m listening to her again. She works for Vodafone, a mobile phone operator in London, heading up their work on MPESA, which transfers value from one cell phone to another in Kenya, Tanzania, and a number of other countries.

Harry Ndambala, from the Bank of Tanzania, isn’t sold on the virtues of MPESA—ordinary African people sending small sums of money using cell phones. “What about air time?,” he asks Susie. “Why did you say that e-money buys airtime, but airtime doesn’t buy e-money? My mother lives in the countryside. I want to send her money, so I send her 10,000 shillings in airtime, and she gets it to her phone, and sells it to the telecom. Why isn’t that the same thing?”

Susie has heard this question before. “First, Harry, think about the transfer of goods—there’s about a ten percent tax, so that’s 9,000 shillings.” We’re all leaning in—this could be my mom. “Then somebody’s taking a cut in the service—that’s the agency fee—another ten percent. In Kenya or Tanzania, your mum’s getting about 8,000 shillings for the airtime you sent her. You might have sent her a sack of oranges to sell.” Harry looks defeated. “MPESA is money.” So is there an agency fee? “Of course there’s a fee! We’re a business!” Susie has heard that question before too. She must feel like an oddball in a meeting of donors and government employees. But the Vodafone-MPESA prices for transfers aren’t big. For a business exchanging its e-money accounts-received into cash, there’s no fee; and for an individual cashing in on a transfer at an ATM, the fee is around US$0.70. (Wondering how to receive money at an ATM using only your mobile phone? Just think ‘request money’, ‘account number’, and ‘MPESA cash point location code’.)

“That’s less than what I’m paying at the ATM in the IFC building in Washington!” I respond. Susie smiles.

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