 I'm delighted to be in the studio this morning with Mr. Francis Wangusi, he's the Director-General of the Communications Authority of Kenya, and he's here at ITU to take part in the focus group on digital financial services. Thank you very much, Mr. Wangusi, for finding some time to talk to us. Thank you for inviting me too. Kenya is actually probably the star player in this field, isn't it? An amazing track record in promoting digital financial services, leveraging new technologies, you pioneered the M-PASA system, which is famous now around the world. What do you think was the secret of the success? Why did Kenya have such an outstanding success when other countries haven't actually achieved as much as you so far? Well, first of all, when the concept of mobile money services was done on our players and the government, I think there was a little more bravery from both the government and the players to at least start it, despite not knowing the risks that are going to be involved and whether or not it's going to succeed. But we did, by agreeing to give it a pilot of one year and also limit the amount of money that was going to be carried through the financial platform in order to find out whether there is viability at the end of the tunnel. That limit, they maybe made people feel a little bit more reassured that nothing really... Nothing major really happens and just in case, of course, the whole pilot project bangles. But I think after one year, we had amazing results that really we were just only forced to start developing financial regulations, financial and, of course, ICT regulations around the platform in order to encourage it to move further. I think that's very interesting. You know, I actually asked the Minister from Somalia if he thought the lack of regulation was a hindrance or actually helped, and it sounds like you might argue that it helped by not having a very strong framework to start with. You were able to introduce the service. I think, yes, when the service matures, the need for regulations and policy direction becomes very important. But I think at the start, had we put that in place, it could have been a big hindrance towards the rapid growth of the service. We saw that when there was that lackuna of regulation, the mobile operator who was responsible for this pilot leveraged a load in order to see that the services succeeded and also to avoid a number of risks that could have made the government probably think otherwise in terms of allowing the service to continue. But as I said, one of the safeguards that we put in place was to limit the amount of money that was to be transacted by an individual on that platform. So that helped us. We found that quite a number of people, you know, there was quite a number of transfers of revenue from person to person, growing up very much, especially from towns to the rural areas, because most of the people who work in towns are relatives in the rural areas. And before then it used to be very difficult to send money to people in the rural areas when they needed help. Sometimes it will take as long as a week, but you see with the speed of this kind of transaction, which could just take a matter of seconds. Many people who are sorting out their problems with their rural communities took just an easy time to be able to do that. And that inspired the rabbit growth of this service. Did you have to actively promote the service when you first introduced it or was it really word of mouth? Well, ideally I wouldn't want to say that the service was promoted so much. At least there was sensitization, and particularly with the service provider. But immediately people picked it up and saw the convenience. I think the promotion of the service was done by the people themselves. We talked a little bit already about the regulatory framework. Now the telecom sector and the financial sector are both highly regulated sectors. Financial services would normally be under the auspices of perhaps the central bank or something like that. How are you working out a regulatory framework that balances both the telecoms regulation side and the financial side? One thing we realized that for the success of this service, both the ICT regulator and the financial regulator must work together. And that where they were overlaps in responsibilities, then we needed to come together and see how we can be able to collaborate in order to be able to make the service a success. As a result of this, there has been no much friction in terms of the decisions the ICT regulator makes in promoting the services or at least making the services secure in one way or the other and what the central bank of Kenya in this particular respect does. In fact, the reason, a case in point, is that there was a petition that was given by one of the mobile operators, not for us to allow the use of the Thinsim technology in the mobile money transfer market. And of course, this was as a result of one of the operators having introduced that particular service. There was really a lot of heat around the determination of that particular request and both the ICT regulator and the financial regulator worked together. We sought for various technical advice with regard to the operations of the Thinsim. They also sought to see what implications it might have on the financial security particularly in terms of money laundering and also in terms of operators just maybe undercutting themselves using the same technology. But at the end of it I think we were satisfied that the Thinsim has the technology similar to any other SIM card and therefore the risks are just inherent in Thinsim like they are in any other SIM card. So instead we moved forward to look for a way of how we can be able to mitigate those risks and right now we have hired a consultant who is going to be able to help us be able to provide a regulatory determination on the way forward in regulating the mobile financial services now that there are more players not just even the Thinsim alone. This would be looking at a sort of technology neutral approach rather than linked to any particular platform. Yes and then also help us to come up with medications in terms of risks, regulatory medications that would be able to minimize the risks because of what we are doing right now in encouraging in the operability of various platforms. I wanted to ask you actually in terms of risk your success has been so world famous that I imagine it must have attracted the attention of some potential cyber criminals and that's a worry I imagine for you. How do you make sure and mitigate those cyber security risks? One of the things that and you are very right that the cyber security risks have been prominent especially when the service grew. But one of the things that we did was first of all to limit the amounts of money that can be transacted by an individual. This of course brought the risk appetite to a low level so that it doesn't allow those who probably might want to be able to take advantage of the service and create maybe a big impact in terms of the risk so that it can discourage people from using it. But the existed risks, I think along the ecosystem of mobile financial services you know right from the banks to the operators of the mobile money transfer platforms and the agents who are the last people to be able to serve the customers we found that there were various risks along the chain. Now we have tried as much as possible to try and limit those risks but however some of the risks which were unforeseen like for example what we call the phishing and smishing which has been a very common risk for us back home there. We have come up with a method of trying to ensure a tight kind of regulations that would enable those who access the service to have been properly identified and registered so that whatever SIM card that is being used in the transaction of this service must be with somebody who has been properly identified who is within the government registration system. Of course those who come into Kenya from foreign countries and want to use the service within the country of course we use their passports and we identify them with their passports as one of the key component in the identification process. So this has helped to reduce but even after saying that the aspect of and the mandal lowering well is a very wide subject and I don't think we could easily be able to say we have eliminated it. Somehow within Kenya itself one of the experiences we had is that institutions like prisons particularly notorious for this were criminals who are using a number of SIM cards which of course they obtained unlawfully to be able to threaten people to send money to them under the guise that probably they are robbers who are at their doorstep so give me money or I break into your house and collect what I want. It's almost a kind of mobile protection racket. Exactly, exactly. I think that could be the best word I mean we can use there. This has been rampant but then slowly because we realize this was coming from institutions which are meant to be confining criminals and yet they are encouraging this kind of racket I think we looked for a way of how we can collaborate with the police and the prison warders to be able to arrest this and since we arrested it I think we don't see it anymore but it has not had such a significant impact in redidding the growth of mobile money transfer services. When you started M-Pesa it began as a fairly simple banking system now do you see it, do you have a vision for that developing are there different areas now that you are looking at? Yes, in fact several models of mobile financial services not even just the transfer services regarding person to person or person to business or business to business now there are various models that have come up and particularly after banks having realized that part of their customer base is being taken away by this new service they are partnering with the mobile network operators in order to be able to provide more brands of this service we have now mobile banking, microfinance institutions which are providing loans to small business people small enterprises are using this particular service we have now seen the growth of the insurance industry getting interested in trying to provide the insurance services through these platforms and many others we have seen like for example the transport sector getting so keen in trying to ensure that even the payment of their services is being done through M-Pesa and even the government itself now has created a platform through which people can pay for the government services on M-Pesa so this really is an accelerated growth in my opinion in the application of mobile financial services in the country A relatively simple system that sounds like a huge social and economic impact Exactly, and in fact many major technologies that are still being used are the ones that you know the system was founded on like the USSD technology although right now the WAP technology has been brought in by a few more companies that we have licensed particularly those who want to do mobile banking and I believe that it has worked well maybe basically because it is still confined within the country and the rules that we have within the country are good enough to help us be able to avoid and mitigate on a number of risks Well congratulations on developing such an excellent world-leading service Mr. Wanguzi, thank you very much for joining me today Thank you, thank you very much