The Bank of the Republic of Burundi (BRB) participated in a structured study tour organized by the Mobile Money for the Poor (MM4P) from 10-13 November 2014 in Dar es Salaam, Tanzania. This tour was funded by UNCDF, Sida, AusAID and the Bill & Melinda Gates Foundation. BRB welcomed this opportunity as a step forward for thorough knowledge about the supply, regulation and oversight of mobile and branchless financial services.
BRB was represented by the Governor Jean Ciza along with Diane Jocelyn Bizimana, Deputy Head of Microfinance and Non-Bank Financial Institutions Supervision and Financial Inclusion Department. Two main activities were on the agenda: two days for training sessions and an additional pair of days dedicated to field visits.
The training sessions were led by experts in digital financial services (DFS) who shared their successful experiences with participants. During the visits to providers of branchless and mobile financial services, managers of these services made presentations on DFS strategies and business cases. Participants had the opportunity to discuss the technical aspects of providing the service. They also visited a few agents of providers and business people that accept mobile money as payment, which allowed them to see an active digital financial market.
Lessons learned by the Bank of the Republic of Burundi
- DFS regulation is necessary. It needs to be proportional to take into account the tiers of the customers and to differentiate the ceiling accordingly in a more flexible way.
- Developing a low-risk approach just refers to knowing what clients do rather than who they are.
- DFS operations become low-risk operations once the regulator has put in place laws to make them low-risk bearing. They are not low-risk financial services by nature.
- The regulator should regularly organize talks with all industry providers, to better understand the technical aspects throughout their development and the risks involved in the supply of DFS. Indeed, he should make sure these services are provided fairly in a win-win environment for both providers and consumers.
- The regulator cannot solve alone all the problems regarding availability, accessibility, reliability, affordability, appropriateness, etc. The provider of the service must also make his own contribution.
Toward the setting up of DFS regulation in Burundi
The participation of the Bank of the Republic of Burundi in the study tour organized by the Mobile Money for the Poor in Dar es Salaam was proved beneficial in more than one respect.
In fact, the BRB achieved the expected outcome through the participation in this tour, namely the thorough knowledge about the supply, regulation and oversight of mobile and branchless financial services:
- The delegation acquired a deeper understanding of the technical aspects of DFS and was convinced they are not such high risk bearing operations.
- The delegation managed to understand which issues the regulation should address, such as deposit-taking institutions, agent regulation, KYC, interoperability, consumer protection and financial literacy.
- The Governor left Dar es Salaam with the commitment to set up, as soon as possible, a DFS regulation in Burundi, which could be improved as the services develop and new insights are realized. A relating draft regulatory framework was scheduled to be presented to the BRB General Council this year.
Also worth noting is DFS providers continue increasing in number in Burundi, in the absence of any regulation so far. However, to mitigate the risks, they are all bank-led models.
ABOUT THE AUTHOR
Diane Jocelyn Bizimana is the Deputy Head of Microfinance and Non-Bank Financial Institutions Supervision and Financial Inclusion Department at the Bank of the Republic of Burundi.
Categories: Digital Financial Services