Presentation on theme: "REGULATION OF INTERNATIONAL REMITTANCES AND CENTRAL BANKS’ CO-OPERATION ON CROSS BORDER MOBILE PAYMENTS: FOCUS ON THE WEST AFRICAN MONETARY ZONE (WAMZ))"— Presentation transcript:
1 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 INTEGRATIONWEST 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 PaymentsBY
2 AGENDAIntroductionWhat 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 ChallengesThe way Forward
3 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
4 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; andWest African Monetary Zone Secretariat
5 1. INTRODUCTION CONTD.About 300 million mobile phone subscribers in Africa- the WAMZ accounts for about half this numberNew technologies offer improvements to remittance services and reduction in transactions costs: mobile phones should hold the greatest promise for AfricaRemittances – Important source of income to developing countries like the WAMZ:Poverty alleviationStimulation of development
6 1. INTRODUCTION CONTD.Most of the funds are sent through informal channels with attendant risksMost of the remittances fall outside the regulatory monitoring scopeMoney launderingExchange control monitoring
7 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
8 2.CROSS BORDER MOBILE PAYMENTS – WAMZ & WAMI MANDATE Strong regional financial markets and institutions play an important role in supporting economic developmentThe formalization and efficiency of cross border remittance and trade flows is an important development goalWAMZ/WAMI – confronted with the promotion of cross border mobile transfer, but not at the expense of financial stability
9 3. CURRENT STATUS OF MOBILE PAYMENTS DEVELOPMENT IN THEWAMZ Slow rate of evolution of mobile payments resulting from the following:Shallowness of the financial systemAbsence of a common regulatory framework within the regionFormal barriers to the provision of payment and transaction services by non banksFormal and informal trade barriers
10 4. SOME CURRENT ACTIVITIES OF WAMI TOWARDS PROMOTING THE WAMZ INTEGRATION AGENDA ADB financed payments system development projectThe Gambia: Already liveGuinea: End December 2012Liberia; End December 2012Sierra Leone: End December 2012
11 4. SOME CURRENT ACTIVITIES OF WAMI TOWARDS PROMOTING THE WAMZ INTEGRATION AGENDA Cross border banking regulationEstablishment of the College of Supervisors (CSWAMZ), leading to:Capacity buildingInformation sharingCorporate governanceHarmonization of banking supervision processes
12 4. SOME CURRENT ACTIVITIES OF WAMI TOWARDS PROMOTING THE WAMZ INTEGRATION AGENDA Capital Market IntegrationProgressing towards a common regional capital marketLower cost of capitalIncrease access to capitalStimulation of growth
13 4. SOME CURRENT ACTIVITIES OF WAMI TOWARDS PROMOTING THE WAMZ INTEGRATION AGENDA Harmonization of supervisory and reporting standardsRisk Based Supervision (RBS)Implementation of eFASS technology
14 4. SOME CURRENT ACTIVITIES OF WAMI TOWARDS PROMOTING THE WAMZ INTEGRATION AGENDA Trade IntegrationECOWAS-WAMI joint task force on trade integrationADB assisted national trade policies formulation for The Gambia, Sierra Leone and Liberia
15 5. ASSOCIATED CHALLENGES Development of non proprietary mobile banking solutionsRemoval of entry barriers to potential new entrants with the attendant risk of disrupting lucrative business models of banks and mobile operatorsEnsuring high levels of security and trustBank led/non bank led model?
16 5. ASSOCIATED CHALLENGES Are Consumers adequately protected?FraudLoss of privacyService failureHow 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?
17 5. ASSOCIATED CHALLENGES Are there legally backed agencies for cash deposits and withdrawals?How do we manage AML/CFT risks?
18 6. THE WAY FORWARDCompletion of the ADB funded payments system development project in the WAMZ with the possibility of the following adds-onNational SwitchMobile money banking facilities eg, POSOther e-banking channelsInstallation of eFASS technologyeFASS is operational in Nigeria. It is being installed in Ghana. Liberia has an offer in principle for funding from one of the development institutions.
19 6. THE WAY FORWARD Capacity building WAMI Cross border payments and integration issues:Choice of model for the WAMZII. CSWAMZSupervisory roles for cross border mobile paymentsIII. Member states’ Central banks and Telecommunications operatorsDesign of regulatory and legal frameworkPassage of the Guidelines on electronic banking law by all member countries.
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