19/09/2024
How Bank of South Sudan can promote electronic payment services in South Sudan.
Today, one no longer needs a strong case to argue that digital payments system/services is critical for economic development, it simply a way of life. In the region it is part and parcel of people’s lives. In Kenya there is no where you would go and not find Mpesa services nearby, the same can be said about MTN Momo in Uganda and Tigo in Tanzania and several other digital platforms on the African continent, it simply a way of life.
On the 17th of September 2024 the Bank of South Sudan the monetary and fiscal regulator of the Republic of South Sudan announced several policies to curb an ailing economy and one of the directives was on the promotion of electronic payment services, it stated “The public is encouraged to embrace electronic payment platforms, including mobile money, credit cards, which incur low charges on transactions, while offering convenience, and establishing individual credit history.” On the same date the Ministry of Finance and Economic Planning also added their voice on the same. This is a good step coming from the two institutions. My call to the two institutions is to go beyond just releasing a one-page communique but to further institutionalize the development of electronic payment services into a long term (10 years) strategy for the banking sector.
The success and robustness of electronic payment services requires coordination, alignment of many moving parts of the financial sector, organizing stakeholders, investment in infrastructure, enacting legal frameworks, trust building, etc. The paper draws a few lessons from countries that have walked the journey of digital transformation, more so in electronic payments systems, lessons we can draw, tweak, customize, improve and adapt.
Below I outline some of the factors that can hasten the development and uptake of electronic payments services for a long-term plan.
1. Investment in energy and Connectivity: The growth of electronic payment services is directly related to the grow and development of mobile pe*******on and availability of electricity. For a country that has 7.5% electricity pe*******on, and 35% mobile phone pe*******on requires a lot of investment in the two sectors. The Ministry of Finance and economic planning should produce policy frameworks and investment instruments that can create an enabling environment for potential investors in the sector in the energy and telecommunication sector.
2. Building trust in the banking sector: The bank of South Sudan and the Ministry of Financial and economic Planning needs to embark on a plan of rebuilding trust in the banking sector, a sector that has a tarnished image hanging over their heads. Inter-banking transactions only exists for local currencies but not to other currencies i.e USD, Euro, GBP etc. There was a situation in the recent past where commercial bank deposit guarantees with the Bank of South Sudan had been used and the bank of South Sudan was unable to pay it back on time, this has caused a mistrust between commercial banks and the Bank of South Sudan. Correcting this will be a starting point for building trust, with commercial banks and subsequently with customers.
3. Streamlining and Fast-tracking Agency Banking: Agent banking is one of the easiest means to get closer to customers in areas where banking services might not exist. Bank of South Sudan can come up with frameworks in collaboration with commercial banks that can enable the growth and development of agency banking services, hence reaching the last mile.
4. Technology infrastructure: key to the development of digital payment systems and services is the availability of infrastructure, in the case of South Sudan infrastructure meaning availability of last mile solutions, bank branches, ATM machines, banking agents, mobile money outlets, point of sale machines in hotels, restaurants, shops. Tax reduction or zero-rated taxes on financial payment devices, e.g POS devices, ATM machines, ATM cards can promote the development of the sector.
5. Subsidizing payments through banks: enact policies that will make it attractive to do a transaction through the bank than through cash transactions.
6. Streamline License Provision: Make rules and regulations that are clear on the process of setting up Fintech companies in the country, what it requires, incentives available, what fees are involved and all the variables readily available, this can be made available on the website of the bank of South Sudan for potential global investors to access.
7. Regulatory Framework to guide the sector: South Sudan requires several laws and regulations that can help guide the digital banking and mobile payments ecosystem. The following are required, Consumer Protections Act, Data Protection Act, Cybercrime and Computer Misuse Act, National Communication Authority Act, Bank of South Sudan Act. The two entities should also enact policies and frameworks that would discourage monopoly and bottlenecks that hinder the growth of SMEs, through the enactment of Antimonoploy Act.
8. Political will for accountability: The political will to ensure accountability by making sure all government collections and payments are made through electronic payment services. This will be a game changer for the sector, not only will it bolster the banking sector, but it will also create an atmosphere of trust in the sector as the government will be exemplary for the sector.
9. Ecosystem collaboration: This involves building and maintaining harmonious relationships with key stakeholders in sector, such as customers, merchants, banks, telecoms, Fintechs, or NGOs. It also involves creating and joining networks, platforms, or alliances that facilitate cooperation, integration, or innovation among the ecosystem players, such as mobile money associations, payment switches, or sandbox programs. Creating a desk at the Banking of South Sudan that is responsible for coordinating and engaging stakeholders on issues pertaining the electronic payment systems.
In summary they are so many moving parts to make a successful electronic payment service more so to hasten its growth, the Ministry of Finance and Economic Planning and Bank of South Sudan needs to bring together stakeholders, listen to their experiences, challenges and ambitions and develop a 10-year strategy for the sector than just producing a one-page communique.
Written by
Joseph A. GAMA
Technology, Social and Economic Enthusiast.
[email protected]
