Industry Thought Leadership

Globally, 2.5 billion people out of a population of 7.4 billion are excluded from financial services, while 4 billion people out of 7.4 billion own mobile phones (1). Meanwhile in Sudan, this access to financial services ratio is far below world averages with 35 million Sudanese out of 39 million are excluded. This while mobile penetration is at a high of 27.8 million Sudanese who currently own mobile phones (2).

Historically, the Government of Sudan exerted enormous efforts. In the 1900s banks were established. In 1990s electronic payment systems were launched with centralized and nationwide platforms. These included SWIFT for international remittances, ATM networks for cash withdrawal, and a system for check clearance. The year 2007 witnessed the introduction of electronic payment channels, such as POS, SMS and ATM, where individuals could purchase electricity, top up their mobile phones, pay their mobile phone bills. In recent times, the Government introduced nation-wide system (through Sudatel as the pioneer Telco to introduce MFS) to pay electronically for any government service. Yet with all of this effort the mobile financial penetration remained low.

On the way in 2013 there were more flexible payment tools and channels. E-purse (reloadable prepaid card) was introduced in both virtual and physical forms. Finally, high mobile phone penetration segued virtual channels into mobile money services.

Building on this history, Sudan opted for a Collaborative and Centralized MFS Model. The base platform is owned by the Central Bank of Sudan who delegated its management to Electronic Banking Services Company (EBS - a company mandated to operate national payment systems). This model allowed equal opportunity and operations for all telecom operators as well as all banks in Sudan. There are no imbalances between powerful telcos and the diverse number of banks.

However, this model has more complexity because of the myriad stakeholders involved, as illustrated here:

Starting at the regulatory level we have the Central Bank of Sudan (CBOS) and the National Telecommunications Corporation (NTC) regulating and standardizing a mix of banking and telecom services.

On a provisioning level we have two types of providers:

• Financial Services Providers (FSP): any institution that owns a financial license from the Central Bank.
  
• Customer Services Providers (CSP): any brand that owns a customer base and capabilities to build and maintain a brand, a distribution network, and/or customer interfaces to provide such financial services to customers.
  
• On a distribution level (Merchant Distribution Network – MEDIN), there are Points of Sales (POS) where the cash physically moves in and out.
  
• Billers and Utility (Bn) provider level are the business owners who accept payment through mobile money for their services and products.

Finally on the system operation level is the operator (EBS).

Such a model encompassing such divers’ stakeholders, each with their own interests, sparks heated debates around even its basic viability. Conflicts abound from a multi-stakeholder platform where each has limited control over the system. If not well managed, the debates may affect time to market and limit its functionality. However this model lays the foundation for smooth interoperability between customers and allows for choice of the different brands. It provides uniform standards for ancillary payment systems such as ATM’s to convert their E-money to cash, and transfer money between their E-wallet and bank accounts. At the same time it removes platform operational overhead from the providers. This leaves each to differentiate and compete on customer service. Our findings even suggest that the model encourages collaboration with banks rather than competing with them.

Sudatel Group has introduced mobile money via its Sudan subsidiary, Sudani, back in 2014 in cooperation with Faisal Islamic Bank using the brand name ‘Gorooshi’ (My Money in Sudanese slang). At first it was very limited in terms of services and access points. Cash In/Out services were limited to 7 Sudani customer service shops and 14 Faisal Bank branches. Despite this, the service was very well accepted by our customers, both banked and unbanked alike. The need for mobile money was made so evident. Such unmet needs led to a migration to a more advanced platform in end of Q3 2016. The service was then widely and commercially launched.

Service Challenges:
As any mobile money service the main challenge was offering convenience, which meant building a wide network of agents. This was paralleled with the challenge of mass education and building broad awareness. In the case of Sudan, there was a particularly unique challenge of competing with Airtime Transfer. Due to the absence of any tangible convenient money transfer options, people used a surrogate of air time credit transfer provided by all mobile operators to send money to relatives, friends and even pay for goods. Simply put, a user would transfer air time to his distant beneficiary who then sold the airtime at a discount to any nearby airtime dealer for cash. Over time this evolved to a massive and ingrained informal distribution network for airtime transfer. Dealers would earn from 5% to 10% per transaction, which became their real daily ‘bread and butter’. Fearing cannibalization, dealer resistance to switch to a standardized and centralized mobile money system was enormous.

To overcome these challenges, Sudani created a hybrid distribution network. It is a combination of Sudani-owned customer shops dotted around Sudan ringed with independent Sudani telecom dealers, and blended with a third-party non-telecom retail network (Rittal Technology Co). The service was then proliferated with a 360 degree communications campaign combined with field teams on the ground to demonstrate, educate, acquire and activate the services directly with customers. In addition, Sudani took the lead with the national regulator, NTC, to regulate airtime transfers to gradually migrate people towards quality and secure mobile money services. Prior to this campaign, the number of MFS subscribers peaked at 136,449. Only Gorooshi word-of-mouth attracted users at the time. Post campaign efforts resulted in a customer growth of 52% within only one month of launch and keeps growing aggressively to this day.

Sudani’s vision is to develop full MFS solutions equally to both the banked and the unbanked alike with finance services cards and mobile money. This will not be done alone. Sudani is partnering with all manner of goods and services companies to distinguish Gorooshi from its peers while making it more convenient and useful in terms of the variety of services on offer. In the end, Gorooshi will be instrumental to achieve a parity of MFS users to mobile holders. The aim is to have banking in the palm of each and every Sudanese.

On a Group level, Sudatel will spearhead MFS with a Gorooshi-like model adapted to each of its subsidiaries in West Africa.