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Africa is widely seen as ground zero in the mobile money revolution that’s sweeping the developing world. On June 17 and 18 in Johannesburg, South Africa, the Mondato Summit Africa brought some of the continent’s key mobile financial services (MFS) players together for a lively, at times controversial discussion of the challenges and opportunities facing the sector.

The conference hosted over 100 representatives from more than 50 stakeholders across the MFS spectrum. Guests listened to speakers representing 14 countries, with backgrounds in telcos, banks, retail, social media and financial inclusion, as they discussed the theme “Re-defining Mobile Financial Services in Sub-Saharan Africa.” (NextBillion was a media partner for the event.)

Day One

Mondato CEO Judah J. Levine kicked off the event with a presentation on how to “Navigate the Uncertainty” of a period where mobile financial services are on the rise. He emphasized the dynamic nature of the MFS space across different markets, whether in terms of regulations, competition, technologies or otherwise. More broadly, he noted the three themes of universal interest on the Summit agenda: how to drive innovation; how to move beyond transfers; and how to overcome barriers to MFS adoption.

He was followed on stage by Michael Joseph, former Safaricom CEO and current director of Mobile Money and Mobile Payments for Vodafone Group Services Ltd. – and that’s when sparks began to fly. In voicing his strongly held opinions on the recipe for success in mobile money – and the reasons a telco like Safaricom, rather than a bank, is the prime example of that success – Joseph didn’t shy away from ruffling a few feathers.

He expressed his belief that financial inclusion was a human right – one that was being denied to many of the world’s poor by the inherent conservatism of banks and regulators, who focus on the profitable market segment made up of those who were already “banked.” “For 300 years banks have specialized in screwing their customers,” he said. “In any bank-led environment mobile money will not take off.”

Nonetheless, the need for effective but realistic partnerships came to the fore. Joseph, for example, ascribed the failure of M-KESHO (a mobile phone banking and savings platform launched with Kenya’s Equity Bank) to a lack of realistic execution of what was a fundamentally good idea. (Click here to read a NextBillion analysis on M-KESHO). Joseph also detailed the five factors behind M-Pesa’s success:

1. The distribution network (“Mobile Money is like insurance. Nobody actually buys insurance, you have to sell it. It’s like Starbucks – you need a mobile money agent on every corner.”)

2. Strength of brand (“M-PESA will emotionally bind customers. In four years of number portability, 0.07 percent of customers have moved.”)

3. Technology (“In mobile money every transaction has to be successful, when you are dealing with poor people’s money.”)

4. Regulatory regime

5. Management buy-in (“If you want mobile money to be successful you have to keep your CFO in another room. Even better another country.”)

Unsurprisingly, representatives of Africa’s banks were not willing to take full blame for the failure of mobile money services to reach scale in markets other than Kenya. Ilze Wagner of Nedbank in particular noted that part of the problem was that in other markets, the regulators required a more cooperative approach than the one that had worked in Kenya, but that “MNOs and banks are used to being gorillas in their negotiations,” with the result that when you put them in a room together, things got interesting. Joseph countered that the problem was that banks viewed MNOs as competitors, whereas the reality is that the average M-PESA transaction is $7. But Christopher Pruijsens of Sterio.me pointed out that when it comes to their own core business, MNOs played a similar role to the negative one that Joseph had sought to pin on the banking sector.

After an analysis of why mobile money had failed to take off in Nigeria by Olugbenga Adams of FirstBank (it had become just a payment option rather than part of the value chain), the potential of productive partnerships between retailers and MNOs was put on display by André de Wet of PriceCheck and Pieter Verkade of MTN Group. Bullish on its future, de Wet emphasized that he felt the rise of m-commerce set the stage for the biggest wave of retail innovation since the advent of the Internet created the need for multi-channel retail. The key was ownership of the search process which, he asserted, meant ownership of the purchase decision as well.

Two areas with huge potential for MFS, agriculture and education, were the subject of presentations by Lee H. Babcock and Pruijsens. “We need to embed MFS inside the value chain to unlock the potential in agriculture,” said Babcock. When this happens, he asserted, mobile money’s effect on agriculture in Africa could be as important as the effect of commercial banking on the industrial revolution.

Wrapping up a day was a panel that looked at one of the most critical, but sometimes overlooked, elements of scaling MFS across Africa: how to move beyond payments. Most of the panelists rallied around Grameen Foundation’s Henry Maloba’s idea that the key to expansion beyond peer-to-peer payments was to take P2P and use it as a tool to make BoP consumers visible to financial institutions and stakeholders.

Day Two

The second day’s proceedings got underway with presentations from the six finalists for the Mondato Awards, three in each of the two categories of African MFS Innovation of the Year, and African MFS Social Impact of the Year. Mobile payment service MHit won the former award, while Spottm, a social networking platform focused on making neighborhoods safer, took the latter.

The lawyers present were all ears during the presentations of Raadhika Sihin, formerly of the South African Reserve Bank and Alliance for Financial Inclusion, and Genna Robb of the University of Johannesburg, who discussed the regulatory and competition aspects of mobile money in certain African markets. When questioned as to whether MFS and branchless banking in South Africa was over-regulated, Sihin replied that “If you play in the sand box, you must follow the same rules” as the banks. She noted, however, that she had the impression that the South African Reserve Bank was perhaps open to relaxing some of the more stringent Know Your Customer/Anti-Money Laundering measures it had in place. That’s partly because of indications from the international community that the bank would face no opposition to doing so.

BitPesa, a Kenya-based start-up that seeks to use the bitcoin cryptocurrency as a remittance rail for Kenyans abroad, officially launched at the conference. Before the launch, BitPesa CEO Elizabeth Rossiello and her colleagues gave out small amounts of the world’s favorite digital currency as part of their demonstration of how bitcoin and BitPesa work. There’s nothing like free money to grab the attention of a hungry audience.

The next panel featured a discussion on remittances, which still dominate so much of the MFS space in Africa to this day. Whether and how money transfer operators could adapt to the challenges posed by offerings like bitcoin or M-PESA was a topic of huge debate, although all participants agreed that digital currencies and mobile wallets were exerting huge downward pressures on the margins of the big players, Western Union and MoneyGram. Jonathan Johannesen, a Western Union Master Agent in the Democratic Republic of Congo, asserted that the company’s fees had dropped to 9 percent from 12 percent in light of the competition, and predicted that they would drop further.

And then it was all over! Many attendees asked whether Mondato would be holding another Africa Summit in 2015. The answer is a resounding yes, though whether it will be in South Africa or in another African country has yet to be determined. So stay tuned… and in the meantime, Mondato’s Mobile Financial Services in Emerging Asia is coming this November 11 and 12.

Chris Connolly leads Mondato’s media efforts and provides research and analysis to support its reputation as a thought leader, as well as assisting Mondato’s work in the field of MFS regulation.