REGULATION OF INTERNATIONAL REMITTANCES AND CENTRAL BANKS’ CO-OPERATION ON CROSS BORDER MOBILE PAYMENTS: FOCUS ON THE WEST AFRICAN MONETARY ZONE (WAMZ)) E. N EGBUNA (PhD) DIRECTOR, FINANCIAL INTEGRATION WEST AFRICAN MONETARY INSTITUTE (WAMI) Being the text presented in the Panel discussion on Regulation of international Remittances and Central Banks’ co-operation on Cross Border Mobile Payments BY

AGENDA Introduction What is Cross Border Mobile Payments and its Significance to WAMZ and WAMI Mandate? Overview of the situation and Current status of Mobile Payments development in the WAMZ region. Associated Challenges The way Forward

1. INTRODUCTION- THE WAMZ PROGRAMME The West African Monetary Zone consists of six countries: - The Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone. The primary objective of the programme is the establishment of an economic and monetary union of the member countries. The expected date for the launch of the Union is January 2015

1. INTRODUCTION - THE WAMZ PROGRAMME The West African Monetary Institute (WAMI) is the Administrative Organ of the WAMZ Programme. - Undertakes multi-lateral surveillance exercises to ensure the attainment of set primary and secondary macro-economic convergence criteria; - ensures the attainment of structural and institutional benchmarks; - performing activities that will lead to the establishment of the: West African Central Bank (WACB); West African Financial Supervisory Authority; and West African Monetary Zone Secretariat

1. INTRODUCTION CONTD. About 300 million mobile phone subscribers in Africa- the WAMZ accounts for about half this number New technologies offer improvements to remittance services and reduction in transactions costs: mobile phones should hold the greatest promise for Africa Remittances – Important source of income to developing countries like the WAMZ: Poverty alleviation Stimulation of development

1. INTRODUCTION CONTD. Most of the funds are sent through informal channels with attendant risks Most of the remittances fall outside the regulatory monitoring scope Money laundering Exchange control monitoring

2.CROSS BORDER MOBILE PAYMENTS – WAMZ & WAMI MANDATE. As a working definition, cross border mobile payment is a real time mobile payment, which is crucial for both remittances(person to person), and for formal/informal cross border trade (business to business) transfers/settlements

2.CROSS BORDER MOBILE PAYMENTS – WAMZ & WAMI MANDATE Strong regional financial markets and institutions play an important role in supporting economic development The formalization and efficiency of cross border remittance and trade flows is an important development goal WAMZ/WAMI – confronted with the promotion of cross border mobile transfer, but not at the expense of financial stability

3. CURRENT STATUS OF MOBILE PAYMENTS DEVELOPMENT IN THEWAMZ Slow rate of evolution of mobile payments resulting from the following: Shallowness of the financial system Absence of a common regulatory framework within the region Formal barriers to the provision of payment and transaction services by non banks Formal and informal trade barriers

4. SOME CURRENT ACTIVITIES OF WAMI TOWARDS PROMOTING THE WAMZ INTEGRATION AGENDA ADB financed payments system development project The Gambia: Already live Guinea: End December 2012 Liberia; End December 2012 Sierra Leone: End December 2012

4. SOME CURRENT ACTIVITIES OF WAMI TOWARDS PROMOTING THE WAMZ INTEGRATION AGENDA Cross border banking regulation Establishment of the College of Supervisors (CSWAMZ), leading to: Capacity building Information sharing Corporate governance Harmonization of banking supervision processes

4. SOME CURRENT ACTIVITIES OF WAMI TOWARDS PROMOTING THE WAMZ INTEGRATION AGENDA Capital Market Integration Progressing towards a common regional capital market Lower cost of capital Increase access to capital Stimulation of growth

4. SOME CURRENT ACTIVITIES OF WAMI TOWARDS PROMOTING THE WAMZ INTEGRATION AGENDA Harmonization of supervisory and reporting standards Risk Based Supervision (RBS) Implementation of eFASS technology

4. SOME CURRENT ACTIVITIES OF WAMI TOWARDS PROMOTING THE WAMZ INTEGRATION AGENDA Trade Integration ECOWAS-WAMI joint task force on trade integration ADB assisted national trade policies formulation for The Gambia, Sierra Leone and Liberia

5. ASSOCIATED CHALLENGES Development of non proprietary mobile banking solutions Removal of entry barriers to potential new entrants with the attendant risk of disrupting lucrative business models of banks and mobile operators Ensuring high levels of security and trust Bank led/non bank led model?

5. ASSOCIATED CHALLENGES Are Consumers adequately protected? Fraud Loss of privacy Service failure How does it impact stability in the banking system and national/regional payments system? Are payments and deposits adequately distinguished? Are there laws backing e-money issuance?

5. ASSOCIATED CHALLENGES Are there legally backed agencies for cash deposits and withdrawals? How do we manage AML/CFT risks?

6. THE WAY FORWARD Completion of the ADB funded payments system development project in the WAMZ with the possibility of the following adds-on National Switch Mobile money banking facilities eg, POS Other e-banking channels Installation of eFASS technology eFASS is operational in Nigeria. It is being installed in Ghana. Liberia has an offer in principle for funding from one of the development institutions.

6. THE WAY FORWARD Capacity building WAMI Cross border payments and integration issues: Choice of model for the WAMZ II. CSWAMZ Supervisory roles for cross border mobile payments III. Member states’ Central banks and Telecommunications operators Design of regulatory and legal framework Passage of the Guidelines on electronic banking law by all member countries.

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