Zimbabwe's apex bank, the Reserve Bank of Zimbabwe (RBZ), is considering introducing a legal and regulatory framework for m-commerce activities, according to the governor, Gideon Gono. This development supports our view of the regulatory risks to m-commerce services across Africa, especially in markets running the operator-led model.
|Econet M-Commerce Subscribers ('000)|
The proposal for the regulation of m-commerce services was part of a monetary policy statement in January 2013. The regulatory framework will include a payment systems oversight guideline, an e-money and e-payments guideline, and an agency banking guideline. The new guidelines are all scheduled to be finalised and implemented in 2013. The ultimate aim of these guidelines is to restrict m-commerce services offered by mobile operators to mere payment systems or delivery channels, and prevent any overlap with traditional banking services such as deposit taking. RBZ is consulting with other stakeholders, notably the telecoms regulator POTRAZ, which it expects to finalise a memorandum of understanding with by the end of Q113.
BMI notes that the RBZ's move follows complaints by the Bankers Association of Zimbabwe (BAZ) about what they believed was unfair competition by mobile operators in the provision of mobile financial services in the country. Mobile market leader Econet, through its m-commerce platform EcoCash, is the dominant player in the m-commerce platform. It is safe to assume it is the primary target of complaints by BAZ considering its wide range of services, some of which delve into traditional banking territory, as well as its closed platform which does not give access to other mobile operators or financial institutions.
BMI will closely monitor the implementation of the regulatory framework and its impact on Zimbabwe's burgeoning m-commerce market. None of the mobile operators had responded to the RBZ's move at the time of writing, although we expect Econet to be most concerned among the service providers. The operator's rivals, Telecel and NetOne, also provide m-commerce services, but are likely to benefit from certain proposals such the implementation of interoperability. This would eliminate one of Econet's key competitive advantages in the m-commerce market.
That said, Econet appears to have taken sufficient steps to mitigate the impact of the proposed regulations. In February 2013, the operator increased its stake in local financial services provider TN Bank to 98% after minority shareholders in the bank accepted the proposal to exchange their shares for Econet shares and cash. Econet will now proceed to delist the bank from the Zimbabwe Stock Exchange integrate it as a subsidiary of the Econet Group. BMI views this as a strategic move by Econet to maintain a footprint in the financial services sector and use that as a platform to expand its m-commerce services portfolio and launch new mobile-based financial products.
Zimbabwe is not the only country with an operator-centric m-commerce model. Others include Kenya, Uganda, Tanzania and Rwanda. We retain our view that as the value and volume of m-commerce transactions increase, it is almost inevitable for financial services regulators to seek greater monitoring of the service to protect the system from abuse. However, we caution that such policies must aim to enhance growth and financial inclusivity to avoid reversing the gains of m-commerce services.