The Standard: Why Central Bank Position on Mobile Banking Attracts Wrath, June 2

Business Daily Africa: Banking the Poor (Special Report on Mobile Banking)

Saturday Nation: Is This the End of the Banking Hall?, June 13

Saturday Nation: Kenya’s Central Bank to Push for New Banking Rules, May 4

Daily Nation: New Law to Make Banking Easier, May 25

Reuters: Kenya to Enact Laws Regulating Mobile Banking, May 25

But what if mobile banking might actually reduce AML and terrorism funding. How m-banking can reduce money laundering (Business Daily, May 27), by Matt Herbert of The Fletcher School, suggests that might be possible:

* an anti-money laundering (AML) provision
* an anti-Ponzi scheme provision
* a provision to allow banks to engage in “branchless banking”

The branchless banking provision was a bone of contention for the banks, which claimed that Safaricom’s M-PESA had an unfair advantage in being allowed to set up agents far and wide without government approval, while banks needed to jump through a number of regulatory hoops to open even a bricks-and-mortar branch. The anti money laundering and anti-Ponzi provisions were in response to cries for enhanced consumer protection in what is fast becoming a Wild West new banking frontier.

If the bills become law, it will be interesting to see if the banks take advantage of their new freedom, and whether they can move fast enough to keep up with a dynamic technology company such as Safaricom, whose CEO Michael Joseph is best-known and most admired CEO in the land.

From hotel porters to members of Parliament, everyone is using M-PESA, to send money home to villages, pay bills and tuition–and store money in their phone.  Even in Kibera, the largest slum in Africa with 1 million people living without electicity or sewage, M-PESA is being used by local savings groups to mobilize money.  Some groups have used their meager savings to invest on the stock market–in M-PESA.

Organized largely by students at The Fletcher School (Center for Emerging Markets Enterprises) and co-sponsored by the Kenya School of Monetary Studies, with lead support from Kenya’s Equity Bank, the conference provided a forum for the Central Bank of Kenya to address simmering tensions between the banking community and Safaricom, whose M PESA mobile-money transfer system is spreading like wildfire. With more than 6 million M-PESA accounts, more people in Kenya are transferring money by mobile phone than have bank accounts.

High-level Kenyan dignitaries included the Governnor of the National Bank, the Vice President of Kenya, and the Ministers of Finance and Communications. Attendees included the Central Banks of Uganda, Tanzania, and Rwanda, numerous commerical banks, Safaricom,  and interested parties primarily from Africa and Europe, butalso including World Bank’s CGAP and Bankable Frontiers from the U.S. The presentations and debate were high-level and high-spirited.

The week of the conference,  Business Daily Africa ran a 12-page spread representing numerous points of view; during and after the conference, local TV and print media ran multiple stories.

More updates to follow…I’m going to predict, there’s something happening here.

Quadir, as you might expect, comes out in favor of cell phones, as a technology that is spreading fast on its own because of its immediate perceived and real economic value–which will allow adults to provide better education for their children.

Negroponte, as you might expect, favors laptops, for their value in offering children a “window” on the world and a medium that encourages learning and creativity–which will make them more productive adults.

It’s hard to argue with either side, but it’s pretty clear which side is winning the debate in the marketplace. It’s not exactly Ali-Frazier, but it’s a good debate with both sides accomodating their opponent’s perspective.

Maybe the next such debate will be Smartphones v. Netbooks.

Analysts were initally quite critical of the deal, as Unitech has no network to speak of, and Telenor’s stock dipped on the announcement.  However, Unitech Wireless holds licenses for all 22 mobile regions of India–the world’s 2nd biggest market after China–which would appear to be a valuable asset even in a very competitive market. Consider that a few years ago, Telenor spent $1.9 billion to buy a license in Serbia! Coupled with Telenor’s experience and success in South and Southeast Asia, an Indian play of this magnitude makes long-term strategic sense.

Telenor says the deal is contingent on sharing infrastructure, perhaps eyeing the 30,000-50,000 cell towers of its entrenched competitors. While unstated, Telenor is likely looking to the new company Indus Towers, started by Bharti, Vodafone Essar, and Idea Cellular,  to share network assets.

Since the announcement, Telenor has indicated it will not pay shareholder dividends in 2008 or 2009, and will take out a three-year loan to pay for its investment. Telenor’s share price, which lost 64% of its value in 2008, has recovered somewhat in early 2009 trading.

M-PESA, launched by Safaricom in 2007 in conjunction with Vodafone, has gotten the attention of bankers because of its quick growth. M-PESA now has 5 million users and 5,000 outlets–compared to 3 million with bank accounts at 750 banks.

Because M-PESA is primarily aimed at the “unbanked” population, the limit on a single transfer is under $500.

Safaricom overall counts 12 million users.

VNL, a Swedish-based company operating in India, has been perfecting low-cost WorldGSM technology for several years, and will begin pilots and rollouts in 2009, in both India and Africa (Malawi). The idea is to implement low-cost equipment that makes it profitable for telecoms to serve low ARPU (”average revenue per user”) users in difficult-to-serve regions.

WorldGSM is GSM compliant, but is low-power and low-cost, self-deploying (no need for skilled technicians, or air conditioning), and low maintenance. WorldGSM is a re-engineering of GSM technology for the next billion rural, unserved low-income users.

The founder and CEO of VNL is Anil Raj, founder of Hutchinson India, now the country’s number two operator. He also served as Chief Strategic Officer at Sony Ericcsion.

Like GrameenPhone in Bangladesh, which has created a huge interlocking chain of entrepreneurs who sell and maintain service, VNL relies on village enterpreneurs to deploy base stations along roadway or atop village houses. One key part of the kit: a compass to make sure the towers face South to collect the sun.

The IPO, although very small by Western standards, is a significant step forward for Bangladesh’s capital markets, which have been strengthening over the part five years. “It will be a breakthrough for the country’s capital market history,” said Abu Ahmed, professor of the Department of Economics of Dhaka University. The IPO is planned for the end of September.

The fact that GrameenPhone, which is owned by Telenor, a publicly traded company in Norway, is offering shares in Bangladesh is significant because it gives Bangladeshis a chance to buy into one of the country’s strongest corporate performers. This has long been a bone of contention between Muhammad Yunus, the Nobel laureate and founder of Grameen Bank, which owns 38% of GrameenPhone, and Telenor, which owns 62%. At his Nobel acceptance in Oslo, Yunus made several “in your face” comments about Telenor. Yunus now asserts that the owners of Grameen Bank are entitled to buy 20% of the shares being offered and that they have the capital to do so.

This silly jousting aside, the IPO may well propel other telecoms to list in Bangladesh, including Egypt’s hyper-successful Orascom, which operates Banglalink.