Will Kina Soon Go Digital? BPNG Hosts Mobile Money Workshop

August 17, 2010

Representatives from the Bank of Papua New Guinea (BPNG), commercial banks, Post PNG and other organizations gathered for a workshop last week in Port Moresby to discuss the regulatory implications of branchless banking. Sixty workshop participants spent the day learning about different mobile money transfer systems in operation around the world, including a mobile money pilot recently introduced in PNG.

Mobile money is an innovative new way to store money electronically on a mobile phone. The largest provider in the world is Safaricom in Kenya, a subsidiary of the Vodafone Group. Safaricom’s M-Pesa system allows users to add value to their “mobile wallet” at a Safaricom store or participating M-Pesa agent (such as a top-up vendor or local village store) and they can use that electronic value to purchase goods, buy top-up, or transfer funds immediately to another Safaricom user anywhere across Kenya. M-Pesa’s ten million subscribers can also exchange the electronic money for cash at an M-Pesa agent or at a number of ATMs around Kenya. A similar service, known as M-PAiSA, was recently launched by Vodafone Fiji followed by the introduction of Digicel Mobile Money.

BPNG Governor Loi Bakani recognizes the potential for mobile money in PNG. During his opening remarks for the workshop, he explained, “There is an absence of basic financial services in PNG’s rural areas due to rugged terrain. Farmers and rural citizens are in desperate need of financial services, and often spend considerable amounts of time and money traveling to the city to access these services at a bank.”

Governor Bakani noted that mobile money could transform the status quo and expand financial inclusion in PNG. “The technologies currently available on the marketplace can greatly improve the lives of rural citizens by providing access to essential financial services,” he added.

Michael Tarazi, Senior Policy Specialist for the Consultative Group to Assist the Poor (CGAP) led the workshop. Mr. Tarazi highlighted the scale of mobile phone access around the globe, and the potential of mobile money to transform the lives of world’s poor. “While many poor people do not have bank accounts, there are currently about 4 billion mobile phone connections around the world. CGAP estimates that, by 2012, 1.7 billion people who do not have a bank account will have a mobile phone.”

Mobile money could provide those 1.7 billion people with convenient and affordable financial services.
Participants worked on case studies on the finer points of regulation, such as selecting mobile money agents (who would handle customers’ transactions) and combating money laundering.

Digicel and DataNets Ltd. joined the workshop in the afternoon to discuss their current mobile money partnership in PNG, known as “MPowa.”

DataNets showed the versatility of their MPowa platform through a skit, as actors bought and sold goods with mobile money, transferred funds, bought top-up, and withdrew cash using the live MPowa system. Sundar Ramamurthy, Managing Director of DataNets, said that PNG is ready for mobile money, and added that Papua New Guineans have been purchasing electricity through MPowa since February 2009. Demand for that particular service is brisk.

Those transactions for prepaid electricity – roughly 5,000 per day – are carried out on Digicel’s mobile network. John Mangos, Chief Executive Officer of Digicel in PNG mentioned this example as he spoke about the potential of Digicel’snetwork to host mobile money platforms and services. “We have the biggest network and the most coverage in the country. By keeping our network open to partnerships such as MPowa or BSP’s SMS banking, we expect to add many different applications, and have the banked and unbanked to come forward and let us know how they want to use our system.” He noted that Digicel had also been working with Bank of the South Pacific since their introduction of SMS banking in 2009.

Brendan Thompson, CFO of Post Papua New Guinea, enjoyed the workshop. “Post PNG is looking to diversify the financial services it provides. By drawing on examples from around the world, this workshop clarified the potential of mobile money in the Pacific.” Mr. Tarazi noted that post offices around the world are forming partnerships with mobile money providers. Currently Post PNG is the largest provider of domestic money transfer services in the country.

Pacific Financial Inclusion Advisor Tillman Bruett noted that the high turnout at the workshop was a clear indication of the interest in mobile money.

“Papua New Guinea has been on an amazingly fast road when it comes to mobile money. The level of commitment to this subject – to accomplishing this goal – has been incredible, and the pace of which even more so,” said Mr Bruett.

The workshop was hosted by the BPNG and the Pacific Financial Inclusion Programme (PFIP).