AudiencScapes

By Peter Goldstein
Project Director, AudienceScapes

5 May 2010

Lusaka, Zambia - A recent visit here highlighted that the mobile money space in Zambia is busy now and likely to get busier soon. In addition to current services offered by Celpay and the Xapit service from Zambia National Commercial Bank (Zanaco), Bharti Airtel (which recently purchased Zain's Africa operations) is eyeing a launch of mobile money service soon, while South Africa's MTN also appears to be mulling an entry.

Zambia's population of around 13 million does not make for a huge market compared to the likes of Kenya (40 million), South Africa (50 million) or Tanzania (42 million), but service providers are nonetheless encouraged by a relatively friendly regulatory and commercial environment in Zambia and an open if cautious reception from officials to further expansion of mobile money services.

Mobile Transactions Zambia Ltd. was an early entrant in the Zambian field and has focused the bulk of its efforts on bottom-of-the-pyramid customers by offering relatively low transaction fees, tiered pricing models and sender-only fees. 

An interesting offshoot of their focus on the low end of the market is their electronic voucher system aimed at the development sector. These vouchers are transferred via mobile devices to farmers who use them to purchase inputs and services from private firms, or, in the case of the poorest rural dwellers, to purchase food. The system ensures that funds are used for their intended purpose and that the farmers receive financing directly as opposed to through intermediaries.

According to  Brett Magrath, founder and managing director of Mobile Transactions, the vouchers are being used by the World Food Program and CARE in Zambia as part of a pilot program. Mobile Transactions is working with a group called African Enterprise Partners, which is building a local agent network for the voucher system for the CARE half of the project, as well as providing outreach and training to smallholder farmers and "vulnerable households."

The system seems to address development organizations' growing concern about and need for strict financial accountability as they distribute funds to the neediest people in developing countries. Rather than rely on intermediaries that can create frictional losses as well as delivery delays, the mobile vouchers provide a more direct line to recipients.

Magrath said the voucher project was a complementary offshoot to the company's focus on spreading mobile money options to those who only operate in the cash economy and who may not even have access to a mobile phone. For example, Mobile Transaction's payment service system allows companies to pay employees and others by mobile phone but through an agent system which only requires the payee to have a 4-digit PIN they can enter into the agent's phone, not an actual phone (see diagram below).  

Diagram Sourced From Mobile Transactions, Zambia Limited- MTZL
Available at http://www.mtzl.net/info/index.php?option=com_content&view=article&id=1

Picture Above sourced from Flickr by ICT4D.at