By Mohit Bhargava

In the past decade, mobile money has transformed the financial landscape in many developing countries in Africa, Asia and Latin America helping many to rise above crippling poverty and live better lives.  It has brought millions of people who transacted through informal channels like bus drivers and stacked money at home into formal financial mainstream creating financial inclusion.

During the formative years of mobile money, it was largely used for transactional services like person to person transfers and bill payments; however, it is now increasingly used for advanced activities like business payments, savings, accessing loans, insurance payments, and purchasing bonds and shares. Thus mobile money is slowly evolving from a financial inclusion and transactional tool to financial enrichment tool that allows customer to save, borrow, invest and grow money. In this article we will discuss how mobile money services are helping people to invest in capital market by enabling them to purchase bonds and shares easily.

 M-Akiba, Kenya

Mobile Money forayed into bond purchase, when Kenya launched M-Akiba, a mobile-only government bond in 2017. Kenya being the most widely penetrated mobile money market with 45 million accounts was the perfect place to introduce this service.

In order to subscribe to M-Akiba, the customer had to follow a two-step process – in the first step, the consumer registers their mobile money account with the service, and next, in the second step, the customer purchased the bond.  Safaricom M-Pesa and Airtel Money integrated their USSD channel and payment functionality to the M-Akiba platform to enable customers to purchase bonds and receive interest.

M-Akiba allowed a minimum purchase amount of KShs 3,000 (about US$30), far less than KShs 50,000 (about US$500) previously required for purchasing a bond, which allowed people with humble means to access the capital market.  The bond earned 10 percent annual interest, which was paid into the customer’s mobile money account every six months. By issuing bond via mobile money and lowering the minimum purchase amount, the government aimed to lower the cost of raising money, while at the same time increasing access to capital market for ordinary citizens.

The results of M-Akiba were a mixed bag. A total of 303,534 people registered for M-Akiba, but only 4 percent (11,697) of the people who registered actually purchased the bond. However, the picture looks better if we look at historical data. Prior to M-Akiba there were only 10,000 retail investors in government bonds. M-Akiba alone was purchased by 11,697 people thus bringing in many new retail investors.

The government raised KShs 247 million (about US$2.47 million) against the target of KSh 1billion (about US$10 million) – a success rate of 24.7 percent. While the money raised did not meet the government’s expectation, a study by FSD Africa showed that M-Akiba was successful in broad-basing the reach of capital market to ordinary citizens. 85 percent of M-Akiba buyers had never bought a bond before with the buyers distributed across all of Kenya’s 47 counties. 78 percent of M-Akiba buyers invested less than KShs 6,000 (about US$ 60), indicating that by lowering of the minimum purchase amount the government had encouraged low and mid income Kenyans to invest in capital market. The majority of M-Akiba buyers liked the product. 84 percent of buyers would recommend it to others and 80 percent would invest again, if the bonds were issued once more.

In addition to above data, the FSD Africa survey provides key information on the factors that restricted M-Akiba’s uptake. The survey highlighted that while registration process was simple, the purchase process was confusing to many. Many registered users did not realize that their purchase process was not complete thus hindering conversion from registration to purchase. Moreover, agents associated with the service focused on the registration process neglecting to drive investments after registration. Also, the service was not backed up by adequate and timely communications on offers and updates which was one of the factors affecting service uptake. More than 60 percent individuals surveyed did not receive any reminder message after registering (lack of prompt to purchase). Many people were unaware of interest rate, tenor, closing date and other details about the product. The customer care line was a landline number, which was difficult to access. Thus, for improving the uptake of mobile money bond services in the future, it will be critical to simplify the purchase process, improve product awareness and understanding, communicating frequently with the users and delivering robust customer care support.

 U-Gain, Zimbabwe

Untu Capital, a micro-finance company in Zimbabwe launched U-Gain, Zimbabwe’s first mobile based retail bonds in December 2017. Untu aimed to raise US$ 1 million in debt financing for start-ups and small businesses. Customers were able to purchase U-Gain bonds over a 30 day period using mobile money services like EcoCash and Telecash. Customers could invest a minimum of US$50 for 1 year period. The annual interest rate was 9 percent payable every six months.

EcoCash, Zimbabwe’s largest mobile money service launched U-Gain under its EcoCash I-nvesta bouquet of services. EcoCash customers could register for the service by simply agreeing to term and conditions by entering EcoCash PIN. The purchase process was also easy, where customers had to enter the number of units to purchase and Central Securities Depository number. EcoCash also provided option to trade the U-Gain bonds on the Financial Securities Exchange and dispose of the bonds before the expiry of the 12 months.

U-Gain bonds were highly successful. They were oversubscribed by 73 percent as they raised US$1.75 million against a target of US$1million. In cash-strapped economy of Zimbabwe, Untu Capital was able to include many more Zimbabwe in the retail bond purchase by eliminating the need to pay in cash or have a bank account and making the minimum investment as low as $50.

The success of U-Gain bonds, encouraged EcoCash to extend EcoCash I-nvesta to share trading. Today, EcoCash I-nvesta allows existing and new investors to open a C-Trade account and buy and sell shares using mobile money. C-trade is a digital platform that enables the buying and selling of shares listed on Zimbabwe Stock Exchange online via a computer or mobile device. All consumers registered on C-Trade get the Central Securities Depository number (CSD). To buy shares using   EcoCash I-nvesta, the consumers have to enter the CSD number, the company code of the company whose shares they want to buy and the number of units they want to buy. Consumers also have to choose between either primary orders (buying shares directly from the company) or secondary orders (buying share from another investor). The process is simple and can be performed through a smartphone or a feature phone. Through this simple, easy-to-use and device-agnostic process, EcoCash aims to bring new small-value investors into capital market.

MTN Ghana IPO, Ghana

MTN, Ghana’s largest mobile operator launched its Initial Public Offer (IPO) on 29th May 2018. It aimed to raise GH¢3.47 billion (US$ 711 million) by selling 4.63 billion shares at per unit price of GH¢ 0.75 (US$ 0.15), representing 35 percent of MTN Ghana’s total shares. The minimum number of shares to be sold for IPO to be successful was 463 million representing 10 percent of the total shares on offer.

The IPO was historic because it was the largest undertaken in Ghana and for the first time public was able to buy the shares using mobile money (MTN MoMo Wallet). Customers were allowed to buy shares in multiples of 10 and a minimum of 10 shares.

MTN Ghana was able to successfully close its IPO on 31st July 2018. It raised US$ 1.14 billion (US$ 234 billion) by selling 1.53 billion shares, representing 32.97 percent of the total offer. A total number of 128,152 applicants purchased the share out of which 99.7 percent were Ghanaians. MTN Ghana has largest number of Ghanaian shareholders on the Ghana Stock Exchange. Interestingly, 108,434 applicants that is 84.6 percent of all applicants purchased share through MTN MoMo Wallet. Use of MTN Mobile Money platform, strong awareness creation and use of several media platforms through the 10 regions contributed to success of IPO and bringing in many first time users in capital market.

The IPO was officially listed on the Ghana Stock Exchange in September 2018. After listing customers were also allowed to trade MTN shares using MTN MoMo Wallet.

The above examples illustrate that mobile money is a powerful tool to encourage and enable ordinary low and mid income people to invest in capital market. However, to make this use-case successful, service providers have to offer a simple user journey (for registration, purchase and trading) and invest in consumer education and promotion.

In future mobile money wallets will become a key instrument for buying bonds/shares and trade them, especially in Africa. Indications of this have already started coming. The government of Ghana has announced a plan to introduce an electronic platform in 2019 that will enable investors to use mobile money to buy shares and trade on the secondary market.

The use of mobile money for trading will further leads to its evolution. Mobile money app can evolve to provide real-time share prices. Machine learning and artificial intelligence can be employed to offer automated advice to consumer on right time and price to buy bonds and shares.  The possibilities are endless!

References: FSD Africa, TechZim, BusinessGhana,

 About the author: Mohit Bhargava has ten years of work experience in product marketing and research in the telecom and digital payment domains. At Mahindra Comviva, he is serving as Manager in product marketing for the mobile financial solutions portfolio. His areas of function primarily include evangelizing Mahindra Comviva’s mobile financial products and their impact on transforming the financial landscape globally.

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