Is a cash-free Malawi viable?

Along Chipembere Highway in Blantyre, there are bus stops that invite passersby to stop relying on coins and banknotes.

“Let’s make Malawi cash-free,” proclaim the establishments branded by National Bank of Malawi (NBM) to market its mobile banking technologies—the internet-based Banknet, phone-aided MO626Ice and card-and-swipe visa point of sale (POS).

To the brains behind the roadside advertising spree, the fact that the whirls of time pushed their forerunners to stop trading goods with goods in preference for money and other civilised mode of exchange, offers a compelling case that another revolution is possible.

But it only takes a stroll across the highway between the adverts and Chichiri Shopping Centre to realise the country’s long road towards electronic money transfers. Here many still have to fish into their wallets to pay their bills and buy airtime, something that can be done electronically in these times when more and more financial institutions are embracing an array of mobile solutions to reduce the risk of dealing in cash.

For many people at the country’s premier shopping mall, the cycle mirrors business as usual: On arrival, they queue to withdraw cash from the automated teller machines (ATM). Then they disperse into their preferred shops where they queue again to pay for their buys. Spot checks in Shoprite and Metro stores last week indicated that one in about 20 people in the queue use the point of sale to foot their bills.

“Most people prefer using cash because the POS machines are usually out of service,” affirmed one of the people manning tills at Shoprite.

To the customers, it can be embarrassing and inconveniencing to find the technology not responding after filling the trolley and enduring a wait in the long file. Some say they will wait until mobile money transfer schemes are popular, reliable and available at their doorstep before they can start investing in it.

“Why would one trust a new innovation that lets you down when it matters most? New technologies must demonstrate high levels of trustworthiness and relief to influence people to switch from what they are accustomed to,” said one of the customers.

In an interview, NBM marketing manager Wilkins Mijiga said inconveniences are part of the emergence of the mobile banking systems in a country where electricity supply and telecommunication networks are intermittent.

“Malawi is still at the adoption stage when it comes to mobile money. If telecommunications systems are consistent, people would have no problems switching to technologies that do away with laborious process of doing businesses and gives them the ease to make payments. However, power is always a problem and telecoms are also affected. So are banking services that depend on the two,” says Mijiga.

The marketer argues that with reliable power and connectivity, mobile technologies would not only eliminate the queues customers endure to access their income and pay bills as well as the duplication shopkeepers face to count money, pay change and recount daily income before sending it to the bank. He reckons it would also unyoke the banks from the burdensome costs of establishing brick-and-mortar branches across the country.

But further slowing down migration to the technologies that give people the ease to access and transfer money on the go is lack of interoperability for all banks to be seamlessly connected to each other.

In 2009, the Reserve Bank of Malawi (RBM) and Bankers Association of Malawi (BAM) adopted a national payment systems strategy with a vision to ensure the interoperability of ATMs and POS facilities by this year.

Failure to meet the deadline will endanger plans to introduce efficient branchless banking, including mobile banking.

While banks continue pursuing mobile transaction independent of each other, Minister of Information and Civic Education Moses Kunkuyu agrees that poor telecommunication and electricity supply are undermining efforts to use mobile technology to reach out to 81 percent of the country’s population which have no access to formal banking services, according to 2008 Finscoop study.

“The quality of telecommunication services have been a challenge for some time, but as a country we are making strides to ensure the unreached population has access to mobile phones, internet and other services that will help them realise what they can do with new technologies,” said Kunkuyu in an interview.

Among other things, the minister cited the establishment of telecentres in rural areas, distribution of cheap cellphones as some of the initiatives to bring technology closer to people. He says the interconnection agreement for the country to tap electricity from Cahorabasa in Mozambique and the ongoing establishment of an underground optic fibre cable connecting to Tanzania will improve the delivery of ICT services, including cashless financial transaction.

“The interconnection arrangement will transform the country from blackouts to constant electricity supply just as the optic fibre cable will make internet and other telecommunication services faster and more reliable. In fact, the cable will help us bring telecommunication solutions to areas that are connected to the country’s electricity grid,” he explained.

According to 2008 census, only 7 percent of the country’s population have access to electricity—and most of them are concentrated in towns where a majority of those who own mobile phones, bank accounts and internet facilities are based.

As the country strives for rural connectivity to bring ICT solutions to the unreached mile, National Bank envisages making POS services a nationwide financial inclusion facility where people can send or receive money through a network of certified agents like Airtel Money.

Two years ago, Airtel Malawi chief executive officer Saulos Chilima said at a mobile money conference that the success of such innovations require improved income levels, national identity cards, financial awareness and penetration of cellphones among the unbanked population.

Only when that happens will Malawi switch to mobile money like their ancestors switched from barter to paper money two centuries ago.