ItemAJIC Issue 17, 2016 - Full Issue - print-on-demand version(LINK Centre, University of the Witwatersrand (Wits), Johannesburg, 2016-12-15) ItemThematic Overview: Economic Regulation and the Development of Telecoms, Mobile Money and Banking(LINK Centre, University of the Witwatersrand (Wits), Johannesburg, 2016-12-15) Roberts, SimonThis thematic overview for AJIC Issue 17 discusses the lessons emerging from studies of electronic communications access, innovation and regulation in a selection of African countries including Kenya, Nigeria, South Africa, Uganda, Tanzania and Zimbabwe, with particular emphasis on digital financial services. ItemMobile Payments Markets in Kenya, Tanzania and Zimbabwe: A Comparative Study of Competitive Dynamics and Outcomes(LINK Centre, University of the Witwatersrand (Wits), Johannesburg, 2016-12-15) Robb, Genna; Vilakazi, ThandoThis article aims to contribute to a better understanding of the competitive dynamics in mobile payments markets and the implications for consumers. We do this by conducting a comparative review of market structure, competition dynamics and pricing in mobile payments markets in three African countries. The results show that, where there is a dominant incumbent, tariffs for mobile payments tend to be higher and reflect a wider gap between those for registered and unregistered customers. This is consistent with the predictions of economic theory in network industries and the incentives of incumbent operators to capture or tip the market in their favour, which also contributes to reducing switching by existing customers in the market for mobile services. ItemCompetition in Mobile Financial Services: Lessons from Kenya and Tanzania(LINK Centre, University of the Witwatersrand (Wits), Johannesburg, 2016-12-15) Mazer, Rafe; Rowan, PhilipMobile financial services (MFS) are the main drivers of financial inclusion in many developing countries, where they provide low-income consumers with access to transfers, payments, and increasingly more complex products including credit, savings, and insurance. MFS channels can provide the advantages of convenient, secure, and cost-efficient product offerings to consumers. In several markets, MFS have helped to significantly increase the portion of the population with access to formal financial services. To promote both quality and diversity in MFS products, and in turn financial inclusion, it is important to ensure a competitive ecosystem that facilitates entry into the market, the development of innovative MFS products, and high-quality, value-for-money services. This article aims to provide insights into the role that effective competition and competition policy play in developing MFS, and in promoting financial inclusion, using Kenya and Tanzania as case countries. ItemMobile Credit in Kenya and Tanzania: Emerging Regulatory Challenges in Consumer Protection, Credit Reporting and use of Customer Transactional Data(LINK Centre, University of the Witwatersrand (Wits), Johannesburg, 2016-12-15) Blechman, Jason G.The recent proliferation of mobile financial services in developing countries has increased access to financial services among underserved rural and low-income populations. Mobile credit is one emerging mobile financial service that allows consumers to quickly apply for and receive loans over mobile devices. Mobile credit services have achieved early success in Kenya and Tanzania, two mature markets for mobile financial services. While these new services have the potential to further promote financial inclusion, they also raise novel regulatory issues and do not fit neatly into pre-existing regulatory categories. This is due to the nature of mobile credit and the variety of entities and regulatory frameworks implicated in the business models found in these two markets. Policymakers and regulators will need to make choices about how to regulate mobile credit with respect to consumer protection, credit reporting and the use of mobile and mobile money services transactional data, a key input for credit evaluation decisions. These choices will need to take into account promotion of financial inclusion and protection of consumers while limiting disincentives for innovation and investment. ItemThe “Evolution” of Regulation in Uganda’s Mobile Money Sector(LINK Centre, University of the Witwatersrand (Wits), Johannesburg, 2016-11-15) Macmillan, Rory; Paelo, Anthea; Paremoer, TamaraUganda’s mobile money sector has grown rapidly since its introduction in 2009. As at the last quarter of 2015, there were 21.1 million registered mobile money users in the country, representing a penetration of about 54%. As well as providing a convenient, cheap and safe means of money transfer, mobile money has spurred increased financial inclusion, which grew from 28% in 2009 to 54% in 2013. The rapid growth has happened under conditions of “light touch” regulation of the sector, which allows the first mover to reap the rewards of investments made, but raises potential competition issues. The mobile money sector, much like the telecommunications sector, is characterised by network externalities, lock-in effects and high barriers to entry that can give rise to a concentrated sector with a single dominant player. This article considers the effect of light touch regulation on the competitive dynamics in the mobile money market in Uganda and contrasts this with the experience in Tanzania, where regulation evolved from a light touch style to a more comprehensive framework as the sector grew. ItemCompetition, Barriers to Entry and Inclusive Growth in Retail Banking: Capitec Case Study(LINK Centre, University of the Witwatersrand (Wits), Johannesburg, 2016-01-15) Makhaya, Trudi; Nhundu, NicholasThis case study examines barriers to entry in retail banking in South Africa, informed by Capitec’s experiences as an entrant in this concentrated and highly regulated sector. Capitec’s entry and growth in transactional banking sparked a competitive response from incumbents. Across all four incumbent banks, the fees for low-cost accounts have come down in nominal terms. It is unlikely that these effects would have occurred if the status quo had continued without a disruptive entrant, or if Capitec had been acquired by one of the incumbents early on. Capitec overcame barriers to entry including customers’ reluctance to switch, complex regulation, and the largely self-regulated payments system, in order to grow, in a sector populated by incumbents with some market power. The case study considers measures that could lower barriers for future entrants. ItemOpportunities for Universal Telecommunication Access in Rural Communities: A Case Study of 15 Rural Villages in Nigeria’s Kwara State(LINK Centre, University of the Witwatersrand (Wits), Johannesburg, 2016-01-01) Bello, Olayiwola Wasiu; Opadiji, Jayeola Femi; Faruk, Nasir; Adediran, Yinusa AdemolaThe goal of universal telecommunication access is to make telecommunication infrastructure available to everyone irrespective of their geographical location, income level, age, gender or other discriminatory parameters. Despite substantial efforts to close the digital divide, developing countries still encounter daunting challenges in making access truly universal. In this article, the authors report on an exploratory field survey of 15 rural communities in Nigeria’s Kwara State to document their perception of the effects of rural telecoms access on their livelihoods. Results revealed mostly positive effects in respect of economic growth, poverty alleviation, health education, primary healthcare delivery, and reporting of epidemic outbreaks such as the recent Ebola crisis. However, little impact on quality of government service was recorded, as awareness of participation in governance and socio-political issues was found to be very low. The article discusses some areas in which universal telecommunications access can be expected, going forward, to address the needs of communities in rural and remote communities. ItemChina and Africa: Alternative Telecommunication Policies and Practices(LINK Centre, University of the Witwatersrand (Wits), Johannesburg, 2016-08-15) Sutherland, EwanThe Beijing Consensus is said to be a win-win for China and Africa. China has become a major force in global telecommunications markets, as a manufacturer, a content provider and in delivering services to its citizens. While the relationship between China and Africa has been explored in many areas, telecommunications has been ignored, despite its strong domestic performance, as well as the presence of Chinese equipment in African networks and in the hands of consumers. China has not exported its domestic model of competing state-owned operators, nor have those operators followed the “going out” strategy. However, manufacturers have benefitted from the Washington Consensus model of oligopolistic markets. In countries with higher risks, they have been aided by Chinese development banks and intergovernmental agreements. In a new policy model, for the Comoros and Ethiopia, Chinese firms have taken on outsourcing of network functions for the state-owned operators. Additionally, manufacturers have found several channels to supply feature-phones and smartphones at low prices, helping to widen access. Absent from African markets are the providers of Internet content and apps. There is very little evidence of spillover effects, with little knowledge being transferred. China has won from hardware sales in Africa, while Africans have won wider access to telecommunications, including states rejecting the Washington Consensus model. ItemThe Impact of the Call Termination Rate Reduction on Consumer Surplus in South Africa(LINK Centre, University of the Witwatersrand (Wits), Johannesburg, 2016-12-15) Hawthorne, RyanThis thematic report presents some initial data on mobile call termination rates, and the welfare improvement due to call termination rate regulatory interventions, in South Africa for the period 2010 to 2015.