This article is the first part of a series of two publications on mobile money in the DRC. It is first of all a matter of taking stock of the industry before discussing future prospects in the second part.
In 2017, only 26% of Congolese aged at least 15 had access to one of the traditional payment methods (Global Findex, 2018). Despite the immensity of its potential, the Democratic Republic of Congo is taking small steps in the area of financial inclusion. It has one of the lowest rates of financial inclusion in the world.
In its report for the third quarter of 2020, the Post and Telecommunications Regulatory Authority, ARPTC in acronym, relating to the mobile telephony market, the ARPTC identified less than 8 million subscribers to virtual currency services in the Congolese population. estimated at 92 million (INS, 2020). The authors of this report also note that the number of subscribers to this service fell by 17.67% compared to the previous quarter. These figures are both a disappointment and a sign of an immense growth opportunity for the country.
In nine years of service in the Democratic Republic of Congo, the virtual currency service is struggling to reach the mark of 15 million subscribers, a number that the Kenyan M-Pesa crossed in less than a year. This success allowed Kenya to increase the usage rate of virtual payments from 7.5% in 2006 to 32.9% in 2013 (FinAccess, 2013).
Another cold look at the figures achieved globally and the successes that have been recorded in several African countries, such as Ghana or Uganda, in this area, force us to ask ourselves new questions relating to the poor performance of the currency service virtual currency in the Democratic Republic of Congo: what are the factors that explain that virtual currency, one of the alternatives for recruiting those rejected by the traditional financial system, is advancing at a snail's pace in our country?
We will try to answer it in two parts. Starting with an overview of the adoption of virtual currency around the world, in Africa and the DRC in particular.
Traditionally, commercial banks, like microfinance institutions, are at the center of the economy. They participate in collecting public savings, and in return, offer their customers means of payment and other services to meet their multiple needs.
But the traditional banking system continues to exclude the poorest with often discriminatory access conditions. It was to compensate for this weakness that payment by virtual currency was born in 2002. That year, the first global experience of payment by virtual currency was introduced by the Russian company Yandex with its Yoo Money service.
In Africa, it was the Kenyan operator Safaricom which attempted innovation in 2007 with its M-Pesa service. In the Democratic Republic of Congo, it was not until March 20, 2012 that Airtel SA became the first operator to introduce this service, airtel money, on the market.
There are more than 310 registered virtual currency services around the world with more than 1.2 billion users, including 300 million active users, generating more than 767 billion US dollars annually, or a daily traffic of 2 billion of US dollars (GSMA, 2021).
Africa produces, over the same period, around 500 billion US dollars, or $495 billion in 2020, which is equivalent to 65% of global income (GSMA, 2021).
Table I: Mobile Money in Africa (2020)
East Africa remains the driving force of this business in Africa. It accounts for more than half of the subscribers, or 52%, and generates 55% of African income in this sector. To date, in Kenya, there are 65.26M users and 273,531 active agents. They generate more than 174.11 million transactions per month, which correspond to KSh 528 billion, or approximately $5 billion per month (Kenya Central Bank, 2021).
The success of virtual currency in Kenya finds its essence in regulation and other economic factors such as controlling inflation and introducing new incentives on the interoperability and interconnection of different payment platforms. Although it has a low mobile phone penetration rate compared to China, in Kenya, transactions via mobile and telephone wallets represent 87% of the national GDP (BCG, 2021).
The Kenyan example shows that a flexible legal framework adapted to local realities can easily contribute to the development of the mobile money sector.
In the Democratic Republic of Congo, several legal texts govern the mobile money sector. The regulatory authority, the Central Bank of Congo, in its instruction No.24 relating to the issuance of electronic money and electronic money establishments, unfortunately grafts virtual currency providers to credit establishments.
The conditions of access and exercise of the activity of issuing electronic money as defined in the instruction cited above in its articles 5 and following cannot neither operationally nor technically encourage new partners to invest in this sector.
In this country where the majority of citizens live in rural areas, i.e. 55% of the population (World Bank, 2021), and in which basic infrastructure is almost non-existent, the Central Bank of Congo should encourage competition by relaxing its measures to grant approval for electronic money in order to allow local microfinance structures, with limited capital, to issue and distribute electronic money without requiring them, in return, an initial capital of 2.5M US dollars.
Table II: Mobile Money Service in Congo
The GSMA was recently able to construct an indicator to measure the contribution of regulation in the growth of virtual currency. Although it is a composite measure, its in-depth interpretation of the different targets used allows the countries concerned to adapt their legal framework to the needs of their consumers.
Table III: Dimensions of virtual currency regulation in Congo.
In view of the above table, the technical infrastructure, the business environment and consumer protection should be improved. Also, the various instructions, as measures taken by the Central Bank of Congo in this area, suffer cruelly in its applications.
The interoperability and interconnection of the various payment services as defined in Laws N.003/2002 of 02/02/2002 relating to the activity and control of credit institutions are struggling to be implemented. Like promoting competition, this saving measure will allow users of virtual currency to have access to several offers, and possibly to make rational choices likely to maximize their uses, and satisfy their needs.
