The announcement of Qatar’s telecom operator to launch a mobile money initiative throughout the Middle East, Africa and Southeast Asia (Gulf Times reported on May 6) is a big step forward for chronically “underbanked” Myanmar, where around 80% of presumably over 60mn people – currently a census is going on, the first since 1983 – don’t have access to any banking services nor have any bank accounts.
The financial services sector in Myanmar till of late was largely underdeveloped, to say it mildly. For the common people, it was nearly impossible to transfer money within the country through a normal banking system, let alone to and from abroad. Just two years ago, there were no ATMs and no credit cards in use, and economic transactions were totally cash based, or – in rural regions – based on barter trade.
This is going to radically change now, and mobile money services will play a big role. With a mobile phone penetration from currently 12% expected to rise to more than 50% in just a few years, it is highly likely that mobile money services will be adopted quickly as a convenient way to perform financial transactions, and even savings and investments. Many people will have access to such services for the first time in their life, and is can be anticipated that this will have a big effect on society as people will have new options, choices and opportunities they never had before.
Let’s take Kenya as an example. Before 2007, the country’s non-urban population suffered from similar problems to access banking services, but everything changed when the mobile money system M-Pesa was introduced in that year. The system became an overwhelming success, has around 17mn users today, equivalent to more than two-thirds of the adult population, and around 25% of the country’s GDP is now flowing through it.
The system not only offers cash transfers, it has since expanded with microfinance and other financial products and services. Salaries are paid per mobile, as are bills. It is said that paying a taxi ride in Nairobi per phone is easier than in New York.
Rural household income in Kenya rose by five to 30%, and the mobile money boom has sparked a large number of start-ups that built their business model around the system, thus triggering a totally new entrepreneurial culture.
A similar development can be expected in Myanmar, provided the currently four state banks and 16 private banks and the regulation authorities are not opposing it too much and the system is tailored to the regional customers’ needs. As the US-based Institute for Money, Technology, & Financial Inclusion, which is funding a study on changing financial landscape in Myanmar, said: Access to essential financial services can help people escape the vicious cycle of poverty.
Ooredoo’s system is highly anticipated in Myanmar, but will also face competition: Just recently, Myanmar Post and Telecommunications and military-owned virtual provider MECTel have introduced “Myanmar Mobile Money”, the first-ever such system in the country.
“The ability to pay and transfer money with their mobile phone transforms the everyday life of the less privileged, as they can conduct transactions anytime and anywhere and now have access to economic activities in which they formerly did not participate,” said Pankaj Gulati, executive of Oberthur Technologies, the French firm that provides the technology for “Myanmar Mobile Money.”
Source: Gulf Times