AFI, along with MasterCard, co-hosted the African Mobile Phone Financial Services Policy Initiative (AMPI) Regulatory Capacity Building Workshop 2-3 February 2016 in Dakar, Senegal.

The workshop convened more than 70 participants from the public and private sector, and provided attendees with an overview of the latest innovations and progress in advancing financial inclusion through digital financial services. It also sought to strengthen capacities in building adequate supervisory framework to mitigate emerging risks in digital financial services, as well as provide insights on implementing interoperable schemes and regulatory frameworks that enhance efficient distribution channels for digital financial services.

“This type of workshop, building capacity to advance financial inclusion through digital financial services in Africa, is representative the idea behind the creation of the AFI Public-Private Dialogue Platform,” said Norbert Mumba, Deputy Executive Director at AFI. “With our private sector partners, including MasterCard, today we once again confirmed the importance of the AFI approach of bringing the knowledge and experience of financial inclusion leaders together for the benefit of all.”

In the workshop’s first session, Daniel Monehin, Divisional President of Sub-Saharan Africa at MasterCard, presented his company’s perspective on recent developments in digital financial services in Africa. He discussed the emergence of new technologies and business models, and highlighted new solutions in the field of digital and mobile financial services implemented by MasterCard and its partners, while stressing the main challenges that need to be addressed.

Mr. Monehin noted it is important to have the proper mindset to do financial inclusion, saying: “An appropriate, and powerful, method needs to be taken into consideration to make financial inclusion work, and there needs to be a model to make it sustainable. The model needs to be long term in nature. One cannot look for returns in six months—if there are returns in five years then you are lucky.”

Building on this session, MasterCard’s Raadhika Sihin moderated a panel discussion on regulatory innovations as a response to innovative digital financial services that featured the Bank of Ghana’s Clarissa Kudowor and GSMA’s Brian Muthiora. The session helped financial regulators obtain a more robust understanding of possible policy solutions to adopt regulations and policies that consider opportunities arising from the latest digital finance innovations, and emphasized the importance of public-private dialogue.

“Regulators should be agents of change and need to create an enabling environment for people in the market, however, reaching people can require dancing to a different beat at times,” said Ms. Sihin.

An outline on supervisory and regulatory frameworks that support the process of managing the risks assumed by practitioners in the provision of DFS and digital payments was given in a session featuring the Central Bank of Egypt’s Ahmad Fargallah, Central Bank of Nigeria’s Olubukola Akinwunmi and Central Bank of Kenya’s Stephen Mwaura. Discussions concentrated on the importance of proportionate risk-based approaches to be included in the regulations, bearing in mind that both the prudential and the financial inclusion approaches are expected to be met.

There was general consensus that regulators need to be more pliable to assist financial inclusion by financial regulation, with Mr. Mwaura, stating: “There has been a move in a direction with very risk-adverse regulators. The issue was raised on how we can level in on technology to improve financial inclusion, and it was identified that the biggest problem about capacity is regulators that kill good innovations.”

The workshop’s first day concluded with a lively debate around practical cases on the supervision and oversight of e-money schemes. It was noted e-money and mobile payments schemes are rapidly taking off in Sub-Saharan Africa, which provide quick and secure payment solutions, and reduce delivery costs and expand reach into poorly served geographic areas at costs below traditional branch-based banking. To this extent, supervision and oversight practices are becoming increasingly as important since they will safeguard the stability of the digital financial services ecosystem.

Dialogue centered around the most successful practices that have been implemented by financial supervisors in Africa, as well as in regard to how these practices should be customized for different African countries with various levels of digital financial inclusion maturity.

The workshop’s final day put a spotlight on the role regulators can play in developing supervisory and regulatory frameworks that mitigate risks and ensure safety and security for end users of remittance services as the number of mobile-enabled cross-border payments and remittances services increase in Africa.

Mr. Mwaura and George Sije, from the Bank of Tanzania, along with GSMA’s Brian Muthiora, concentrated on what has been experienced with these services to date and some of the risk mitigation measures that should be in place to ensure integrity of the systems.

Policy implications for building effective DFS ecosystems and, leveraging on digital financial services to foster MFIs and, consequently, SME finance, were also examined before the event concluded.

The workshop was held ahead of the 4th Annual Leaders’ Roundtable of AMPI, which will take place 4-5 in Dakar, convening many of Africa’s high-level financial inclusion policymakers and regulators, along with other public and private stakeholders.