Mobile banking service providers decry new regulations susceptible of service fees increase

The new regulations require telephone operators to make their mobile banking services independent societies. Clients and providers of the services are worried about potential increase of prices.

An Ecocash agency in Kanyosha, Bujumbura

An Ecocash agency in Kanyosha, Bujumbura

Providers of mobile banking and money transfer services decry new regulations by the central bank of Burundi that might make the services more expensive.

The regulations require telephone operators (and other companies) to create new separate and independent societies to provide mobile banking and money transfer services. The services were currently an integral part of the telephone operators’ services.

Prosper Ngendanganya, Director of Financial Supervision and Stability at Burundi Central Bank, says the services had so far no regulatory framework. The central bank did not introduce regulations for the services from the start. He says the bank chose that option to “encourage good initiatives of different operators especially because that was in accordance with the national strategy of the development of the finance sector”.

The services “have potentialities to increase access to financial services especially for rural population with low income”, he says

Prosper Banyankiye, Advisor in the Commercial Bank of Burundi (Bancobu), says only 500 thousands of 4 millions of adults who could legally own bank accounts have them in banks or microfinances.

Mobile banking and money transfer services are innovative and very useful for people who don’t have the banking culture. The services allow people, especially workers employed far away from home, to send money to their families in the country.

Patrice Ndayishimiye is a user of Ecocash, a mobile banking and money transfer of Econet Leo telephone operator met in one Ecocash agency in Kanyosha, Bujumbura. He is from Kayanza western province. He says using Ecocash saves him time and travel fees. Moreover, it ensures him that the money he sends to his family back home reaches the recipient safely.

“In case of emergency, say a member of my family is ill, I send money via this service and it reaches my family directly to cover medical fees”, he says.

There are so far two telephone operators providing the services. These are Econet Leo and Lumitel that provide Ecocash and Lumicash services respectively. The operators “will be required to create autonomous entities that will provide those services”, says Ngendanganya, Director of Financial Supervision and Stability at Burundi Central Bank.

Jean Claude Ndayipfukamiye, Manager of Lumicash service of Lumitel, says it’s a good thing that the service will now have a regulatory framework.

He, however, takes issues with the fact that the regulations were decided upon without a prior consultation with the service providers. Furthermore, he fears the new regulations might require investments that will have the rise of the service prices as a consequence.

“The central bank made the regulations without including us. They did not even consider who the services benefited most”, he says.

“The new regulations might compel us to increase our service fees”, he says. “When the prices rise, our clients for whom we thought we were providing services at low cost will see prices rise. This is too bad especially in the current context where living conditions are very bad”, he says.

Ndayipfukamiye asks officials of the central bank to revise the regulations together with service providers. “In that way, we will, together, decide on appropriate regulations needed for our services”, he says.

An Ecocash agent who spoke on condition of anonymity shares the same worries as Ndayipfukamiye. “We fear the new regulations made without the intervention of stakeholders might come with new requirements that will make our operations difficult”.