By Ashnah Kalemera

According to data from the IER 2011, the 51 mobile money deployments in Africa as of April 2011 are creating new opportunities for small businesses to access financial services. The real time money transfers and payment transactions are enabling small enterprises to better manage their cash flow and speeding up the delivery of goods and services. 

Furthermore, the platform through mobile phones is proving an incentive for lenders to process and administer small loans to small businesses at low costs. Traditionally, MSEs are poorly served and extended credit by lending institutions.

Musoni, a Micro Finance Institution (MFI) in Kenya, is cited as the world’s first MFI to rely entirely on mobile money for both disbursement and collection. 

Also in Kenya, Orange Money, fourth in a market dominated by Safaricom’s M-PESA, is offering mobile money services in partnership with Equity Bank. Orange’s Iko-Pesa is linked directly to a bank account and allows consumers to load and send money, and to deposit it and withdraw it into/out of their Equity bank account. In addition, customers are able to apply for, process and receive loans, via their mobile phones. 

IER 2011 stresses that mobile money systems can be further tailored to suit the needs of small businesses. The challenges of interoperability across different mobile operators, security, transaction limits and cross border transfers can be addressed by governments enacting appropriate legislation and regulations. Acknowledging that developed countries have limited experience in mobile money systems policy design and implementation, UNCTAD recommends dedicated research and a “test and learn” approach. This way, governments and their central banks could observe market developments and evolve their laws and policies.