unctad.org | Mobile money for business development in the East African Community: A comparative study of existing platforms and regulations
Mobile money for business development in the East African Community: A comparative study of existing platforms and regulations
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In 2006, the Council of Ministers of the East African Community (EAC) identified the creation of a regional enabling legal and regulatory environment as a critical enabling factor for the effective implementation of e-Government and e-commerce strategies at national and regional levels. Under its mandate to offer technical assistance to developing countries in the area of legal and regulatory reform related to information and communication technology (ICT), the United Nations Conference on Trade and Development (UNCTAD) has since been assisting EAC in building a harmonized framework for cyberlaws across the five Partner States. As a result, EAC Legal Framework for Cyber Laws Phase I – covering electronic transactions, electronic signatures and authentication, cyber crime as well as data protection and privacy – was adopted in 2010 by EAC Council of Ministers on Transport, Communications, and Meteorology. It is being implemented at national level. Phase II of the Framework is expected to be examined and adopted in 2012, covering intellectual property rights, competition, e-taxation and information security.

Adoption of harmonized cyberlaw frameworks and transposition of such frameworks into national laws are essential to ensure an adequate legal response to challenges and opportunities raised by the increasing adoption of information and communication technologies (ICTs). The rapid spread of mobile phone services in money transactions, which are a potentially great contributor to the region’s economic development and establishment of the common market has added urgency to the need for an effective and robust legal and regulatory framework. EAC has been ahead of other parts of the world in electronic money transfers, with M-PESA which started operating in Kenya in 2007, having taken the lead in terms of innovation for providing more inclusive access to finance to a large part of the population who hitherto had been without a bank account.

Mobile commerce at large is gaining importance in many developing countries. From the perspective of small businesses, mobile solutions can be applied to facilitate money transfers as well as merchant, bill and salary payments. More sophisticated financial services, such as credit, savings and insurance schemes, are also likely to expand in the coming years. Their successful implementation will require that mobile network operators enter into effective partnerships with banks, micro-finance institutions, insurance companies or other organizations. It will also require that consumers and business users be able to trust the systems on offer.

In this context, Governments must address a range of policy challenges and issues to ensure positive outcomes from the introduction of mobile money services. Developments in East Africa or of particular relevance in this context, as countries in this region are at the frontier in terms of mobile money deployments and are actively seeking to draw maximum benefits from this new opportunity.

This comparative study of existing mobile money platforms and regulations in EAC contributes to our pool of knowledge in this area. It was conducted as a part of the work on ICT for development conducted by UNCTAD. The principle consultant responsible for drafting the study was Ali Ndiwalana. The study was prepared by a team from UNCTAD comprising Torbjörn Fredriksson and Cécile Barayre, under the direct supervision of Mongi Hamdi and overall guidance of Anne Miroux. Statistical, administrative and secretarial support was provided at various stages by Smita Barbattini and Agnes Collardeau-Angleys.

Valuable comments and inputs were received from Robert Achieng, Luca Castellani, Xavier Faz, Shruti Kashyap, Diana Korka, Rémi Lang, George Lwevoola, Stephen Mwaura, Michael Tarazi, Dr. Jovita Okumu and Ian Walden. Special thanks are also given to the members of EAC Task Force on Cyberlaw, as well as the many representatives of Government ministries, financial and regulatory institutions, universities and the private sector in EAC who were interviewed and gave feedback during the course of the study.

Financial support from the Government of Finland is gratefully acknowledged.


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