1. Monday, August 10, 2015

2. A bank is a number one player in any sort of financing The out of 45million people, 27.9% leave in urban, 72.1% are in rural. The current banked community in the country, (13.9) %: 17.9% male, 10.1 % female (2013);  Only 6.8% rural community use banking services as compared to 27.6% urban  78.6% of formally employed people use banks, 4.9% subsistence farmers use banks  Sources of Income: Salary 7.2%, Own business 22.4%, Agriculture 36.4%, dependents = 22.9% Monday, August 10, 2015

3.  29.6%=Insufficient money (perception, fact: 28%, 84 % (rural) live below poverty line)  Minimum balance =21.0% (monthly fees: psychology of the poor keep, protect)  Banks are too far = 12.8%  Does not know how to open a bank account = 6.3% (illiteracy = (20-30)%)  Does not understand benefits =4.2% Monday, August 10, 2015

4.  Worry of failure to pay back = 37.5%  => Business models: when does a farmer default? Community banks know better!  No need to borrow money = 35.2%  (You borrow to grow – no growth in subsistence farming)  Don’t believe in borrowing = 8.0% Monday, August 10, 2015

5.  Scale down: the only way to get closer! But…business case?  Use Technology: Use of payment channels like ATMs, mobile and Agency banking is key….business case?  Share: Economies of scale & synergies….YES  Financial Education: Increase financial literacy levels  Community based financial institutions are very key to rural financing: Community Banks, MFIs, Village Community Banks (VICOBA), SACCOS Monday, August 10, 2015

6.  More than 70% of all payments are made through non bank instruments ◦ The right agent banking model must address the following challenges ◦ Increase the banked community ◦ Address agent liquidity challenges ◦ Keep the bank-customer relationship positive ◦ Help to raise both deposit and loan portfolios ◦ Increase bank footprint ◦ Have business proposition: both the bank and the agent Monday, August 10, 2015

7.  Infrastructure (road network, communication)  Illiteracy  Business challenges: ◦ Population Dispersion These make rural business propositions challenging Solution: Provide simple, shared solutions to create economies of scale. Monday, August 10, 2015

8.  The trend is towards convergence and sharing  Sharing infrastructure, reduces cost  Enriches product provision  Facilitate cross-institution payments  Creates numbers needed for rural business viability Monday, August 10, 2015

10.  To address all these challenges, in year 2006, six banks started a Consortium of banks in order to establish a shared infrastructure for provision of ATMs and related electronic payment services (POS, Mobile, etc)  The name Umoja, in this context stands for Unity, Togetherness  Ownership: Owned by member banks  Due to increase in number of members, The Consortium transformed its governance structure from Consortium to a Company, limited by shares. Monday, August 10, 2015

11.  Membership: 27 member banks (Community and commercial banks)  ATMs: Around 200 ATMs  Coverage: Country coverage across the mainland and Zanzibar (Unguja and Pemba)  Transaction channels Currently:ATMs, Mobile, Agency banking To be introduced: Internet All services (to be) introduced in a shared environment Monday, August 10, 2015

12. PHASE I Cash withdrawal Balance enquiry PIN change Mini statements Same card holder accounts transfers PHASE II  Inter-bank/Inter-card Transfer  Card-less withdraws  Shared Mobile banking  Shared Point of sales  Shared Agency banking  Cross -bank beneficiary payments  Online Airtime Recharge  Utility Payments  Subscription Services  Internet Banking  Regional and International Integrations Monday, August 10, 2015

13.  UmojaSwitch is owned by banks but it is not a bank  Banks within UmojaSwitch Compete while Cooperating  New banks have equal chances of becoming owners  Banks participate as shareholders or non shareholders Monday, August 10, 2015

14. UmojaSwitch has gone miles

15. Monday, August 10, 2015 UmojaSwitch is now an East African Network

16. Monday, August 10, 2015