Andrea,
Great perspective. It needs a white paper or a theisis of some sort. That way we understand our environment better. May be we need to ask listers if we develop some collaboration to do a comprehensive research on the Banks change of policy toward small accounts.
On Registration of sim cards, we have not slept. We shall be back more stronger with the necessary legal framework. It is actually beneficial to all of us to register. The interest rates we pay are higher because we not easily traceable.
Regards
Ndemo.
Sent from my BlackBerry®
From: Andrea Bohnstedt <andrea.bohnstedt@ratio-magazine.com>
Date: Tue, 7 Dec 2010 14:53:34 +0300
To: <bitange@jambo.co.ke>
Cc: <kictanet-bounces+bitange=jambo.co.ke@lists.kictanet.or.ke>; KICTAnet ICT Policy Discussions<kictanet@lists.kictanet.or.ke>
Subject: Re: [kictanet] Update on Pasha Centres
Dr Ndemo, thanks for that - very useful. For Co-op Bank, this makes a lot of sense and if they work through the existing co-operative movement, they have a lot more control and closer integration anyway. Same with the other two banks that you cite: if they already have an extensive rural network, then it's easier to extend it further. Call it risk aversion - or just call it prudential growth: I have repeatedly heard in the past few months that the number of fraud cases in the banking system has risen quite significantly. I, for one, would like my bank to be very prudent about who and how they grant access to their core banking system so that my accounts are protected from unauthorised access.
This reversal of the roll-back of the branch system doesn't strike me as so incomprehensible, by the way. I think there are two factors at play: the transition from the Moi administration, and technology:
- in the last years of the Moi administration, the economy became ever more sclerotic, and I guess (although I'd have to look it up) that the state borrowed more (given that donors were moe reluctant to back a corrupt regime, and tax revenues were held back by a stagnant economy). For banks, it's easier and cheaper to lend to government than deal with small retail clients. Makes business sense. Since 2004, GDP growth has accelerated, and there has been some fiscal consolidation. Both a good incentive to reconsider the lower end of the retail market.
- Technology has made it a lot easier to administer smaller accounts, and mobile money has certainly played its role.
Lending through an agency network: I don't think it will necessarily be that easy because a bank may make the disbursement through an agent, or mobile money account, but still needs to do the whole credit evaluation - i.e check an individual's creditworthiness and/or have securities and/or require employment status and payslips and/or require guarantors etc. Again, this is to protect people who entrust the lending bank with thei money, and it's important not to confuse these principles of sound lending and banking with the technology through which the loan is paid out and paid back. Any bank that doesn't do this should have the CBK on its bank instantly, and rightfully so.
SIM card registration: I've bored everyone sufficiently with my opinion on this. The existing data base is not accurate, I am not sure what provisions have been taken to update subscriber figures regularly, and I have spoken to several people recently who have bought SIM cards and there was no mention of registration.
On 7 December 2010 13:10,
<bitange@jambo.co.ke> wrote:
Andrea,
Just talked to the Govenor on this issue. He says they have licensed 4,000 and are processing many more. Some banks of course are more risk averse than others. The Co-op Bank I know are working to develop their own DVs through their rural cooperative movement. They only need us to provide connectivity.
Two other banks with extensive rural network are also developing their rural model. Some 10 years Banksd ran away from rural Kenya citing cost in running "small" accounts. Today they are trooping back. I cannot figure out this but I suspect Prahalad's work on the bottom of the pyramid. I am aware some banks may leverage on mobile coverage to offer innovative products. Lending of less than 10,000 will common within the next few months.
From the recent UPU meet, it is made mandatory for each country to start working on the street addressing or GPS locationing systems. Once this is done the Banks can safely lend. This what Hernando de Soto's Mystry of Capital labours to explain. A nother book that should be a mandatory read for all Kenyans. And lastly you see why every mobile phone user needs to register.
Ndemo.
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