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Mobile money creates new opportunities


The rapid expansion of mobile money systems is creating new opportunities for micro and small enterprises (MSE) – particularly in low income countries such as Zimbabwe to access financial services, United Nations Conference on Trade and Development (Unctad) economic affairs officer Remi Lang has said.

Lang, who was speaking during the launch of 2011 Information Economy Report in Addis Ababa, Ethiopia, said to extract the full development benefit, Africa needs to pioneer new legislation and regulations.

According to the report, the international community should actively support development of sound regulatory frameworks and relevant institutions, as well as facilitate the exchange of practice and expertise.

Mobile money is providing increased access to finance for MSEs, which traditionally have been poorly served by existing lending institutions.

Banking through mobile phones allows for real-time transfer and the receipt of small amounts of funds at low cost.

Lang said these could reduce the costs of processing and administering small loans, thereby alleviating a significant disincentive for lenders to extend credit to MSEs.

The launch of the report comes at a time the country’s leading mobile phone operator, Econet launched Ecocash, while some financial institutions have introduced mobile banking services.

“Mobile money services promise widespread benefits for private sector development. With appropriate regulation, these services have the potential to contribute to much-improved financial inclusion,” said Lang.

The report stresses existing mobile money systems can become even better adapted to meeting the needs of small business.

“Most mobile money deployments were set up with people-to-people transfers in mind. Basic money transfer or payment functions can have a major impact on the way small enterprises operate.

“They can enable them to better manage their cash flow and expedite the delivery of supplies and goods,” the report added.

The Unctad report urged countries to explore ways to absorb small enterprises into the mainstream by means of mobile-based commercial and financial transactions.

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