Mauritania’s journey towards increased financial inclusion
Mauritania is on track to improve its financial inclusion ratio — if it delivers on policy reforms that enable financial service providers to reach vulnerable populations.
"Market in Mauritania" by bobrayner is licensed under CC BY 2.0
Necessary regulatory reforms that could galvanize financial access in Mauritania include:
Allowing non-banks including telecommunication operators to become mobile money providers.
Lowering Know-Your-Customer (KYC) requirements for low-risk customers to open basic mobile money accounts.
Ensuring stability of the system and consumer safety through a solid consumer protection framework.
A promising outlook
Mauritania’s journey towards increased financial inclusion looks promising. According to the 2018 Global Findex, a little over 20 percent of the population beyond 15 years old had financial accounts, while mobile money accounts reached only four percent of adults.
Through our Africa Policy Accelerator project (APA), we're working with national policymakers and regulators to reach Mauritanians who have traditionally been under-served by the financial system. And despite challenges such as low connectivity coverage and the lack of a regulatory framework for e-money, we see some critical factors conducive to the development of digital finance in Mauritania:
Their commitment is clear. When UNCDF met the Central Bank of Mauritania (CBM) back in July 2019, they were already working with the Alliance for Financial Inclusion (AFI) to develop a solid financial inclusion strategy. The primary objective of their strategy being “to provide low cost access to basic financial services to people currently excluded from the banking system, whether they are in urban or rural areas”, it is clear that mobile money constitutes the main too to achieve that objective.
Mauritania has three licensed telecommunications service providers – Mattel, Mauritel and Chinguitel. When we met, they had already developed a mobile money product ready to launch, as soon as the regulations would allow them to.
The ID rates are some of the highest on the continent with over 85 percent of the population having an official valid photo ID, which can be used to open an account.
A payment infrastructure, GIMTEL, is already in place.
Significant P2G schemes and major billers can drive payments digitization and digital account penetration.
Unleashing digital financial services
In that context, our initial diagnostic concluded that the Central Bank could help unleash digital financial services by putting in place:
A level playing field between all providers through a proportionate regulatory framework that would allow non-banks (and in particular MNOs) to offer mobile money services. In fact, so far, similarly to other countries, banks and MFIs alone have not been able to cover the financial needs of the country, and other players such as MNOs will also have a role to play. Mauritania could potentially follow the path of other more mature mobile money markets such as Kenya, where today bank accounts outnumber mobile money accounts again (after mobile money accounts in Kenya eclipsed the total number of bank accounts, when M-PESA was introduced). We believe that Mauritania could be benefit from a richer financial and banking services offer where MNOs and Banks would co-exist and compete to build a market in tune with the needs of their population.
Tiered-KYC requirements for account opening: As of today, it is needed to show at the minimum a valid photo ID and a proof of professional and personal address. While in Mauritania the ID penetration rate is close to 90 percent, this measure is not necessarily the most urgent. However, implementing a various levels of documentation requirements (light for low-risk account and heavier requirements for more risky accounts), will be necessary to improve the financial inclusion ratio in the country, especially among vulnerable populations (including people living in refugee camps).
Consumer protection rules that would ensure system stability and safety of consumers. It is essential, in any market, that consumers moneys and data are protected. Today some regulations attempting to protect consumers are already in place. However, Mauritania will need to go further to fully protect their consumers, along the lines of the World Bank Consumer Protection Guidelines.
Benefits to women
All of these steps would also greatly benefit the financial inclusion of Mauritanian women. Today, there is a gender gap in financial access of five percentage points, which means that women are even less likely to be served than men, according to the Global Findex survey from 2018.
Consequently, along with other partners such as the World Bank and AFI, we are working with the Central Bank to support their effort drafting a new improved legislative and regulatory architecture that could potentially unleash mobile money and allow Mauritania improve financial inclusion. As part of the commitment made to the Central Bank earlier this year, UNCDF will continue providing the necessary support with technical assistance and capacity-building to the Central Bank through workshops on enabling regulations, review of draft regulations, sharing lessons from other countries and providing scholarships to trainings such as the Digital Frontiers Institute.
Authors
Olivia-Kelly Lonkeu
Alexis Ditkowsky