Addis Fortune (Addis Ababa)

Ethiopia: Central Bank Hiring Consultant for Mobile, Agent Banking

National Bank of Ethiopia (NBE) is looking to prepare a regulatory framework for the supervision of mobile and agent banking, yet to be introduced following the issuance of a directive in the coming few weeks.

NBE floated an international tender to hire a consultant for the development of the framework on July 10, 2012, which attracted only two offers from Ernst & Young (E&Y) and DTN Engineering Network.

Mobile banking, where bank clients use mobile telecommunications devices to access financial services, and agent banking, where nonfinancial institutions such as telecommunication agents and pharmacies provide financial services, are viewed as important ways to promote access to financial services, especially in unbanked areas.

To date, mobile banking is not sanctioned by NBE, but some banks, such as United and Zemen, offer various services, including book transfers, balance viewing, mini-statements, notifications, and alerts, which are not considered transactions by NBE, according to an official from the banking supervision directorate at the NBE.

NBE has been developing a directive for the implementation and regulation of mobile and agent banking.

A draft version was discussed with banks in mid-June. However, the directive, initially expected to be issued by the end of June, is still dragging on.

Among mobile technology providers available for business once the directive is implemented are Ireland-based M-Birr, which has signed a memorandum of understanding with ethio telecom through its local branch, and Dutch company Bell Cash, which has already provided its technology to Wegagen, Oromia Cooperative, Buna International, and Lion International banks.

"We understand that the technology can be helpful. However, this is a new thing in our country and we have to carefully consider security issues before allowing anything," an official at the Banking Supervision Directorate told Fortune.

It is with security and regulatory issues in mind that NBE is hiring a consultant for the development of regulatory and legal framework for mobile and agent banking.

"The directive was drafted in-house and is meant to provide direction to banks on the implementation of mobile banking, including identification of users and the amount of money to be transacted," according a source from the Microfinance Institutions Supervision Directorate said. "However, since mobile banking is new to our country, we are also looking to develop a document with the help of international consultants, which will focus on regulatory and legal aspects of mobile banking and will be used as a working document for the central bank itself."

The content of the yet-to-be-produced framework could lead to the revision of the directive.

Eight international companies had shown interest in the framework tender. NBE pushed the July 24 closing date to July 31, heeding the time-constraint complaint of these companies. Two additional companies bought the bid document in the extra one week, but only Ernst & Young and DTN made offers.

"Mobile and agent banking are new in Ethiopia, and this may have deterred some local consultants from participating in the tender," the NBE official told Fortune.

NBE is going ahead with the selection of the potential consultant, despite the required number of bidders being lower than the minimum three, saying that the hiring should take place urgently.

A committee of five people coming from different directorates within NBE that deal with financial institutions, will conduct the technical evaluation before the office of the procurement team evaluates the financial offers made and makes a decision.

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