West Africans are seeing an explosion of advertisement for m-banking and m-payment services that allow them to transfer money over the phone, according to WATH, but these transfers often stop at the border and the Hub, therefore, is helping set the stage for these services to go regional.

A 2006 USAID study conducted by CARANA Corp., which manages the Trade Hub, found that over US$10 billion in informal cash transfers flow annually through Ghana, Mali, Nigeria and Senegal.

The study also found that doing business in cash adds approximately 20 per cent to the transaction, given travel, traffic, long lines, missed appointments, and risk of theft, destruction and corruption – particularly along major trade corridors.

The Trade Hub now sees mobile phones as one solution, given that in 2007 five per cent of West Africans had bank accounts, while 26 per cent of the population in Ghana, Nigeria and Senegal owned mobile phones and telecommunications researchers are estimating that some 70 per cent of West Africans will own mobile phones by 2015.

WATH is conducting its research within the present legal and regulatory framework in West Africa, and once stakeholders know what is legally possible, the Hub will organise a pilot to ‘m-send’ money, in which someone will send cedis via mobile from Ghana that will instantly be received as naira in Nigeria and FCFA in Senegal.

The legal analysis and the pilot, together, should expose major road blocks and differences in the legal frameworks between countries and suggest solutions for effective harmonization through the Economic Community of West African States (ECOWAS).

The Hub claims to have discovered a little-known provision that may allow banks in the West African Monetary Zone, comprising Gambia, Ghana, Guinea, Nigeria, and Sierra Leone, to convert currencies between them.

This would allow, for example, the Bank of Ghana and the Central Bank of Nigeria to offer cross-border services to back customers with ATM, debit or credit cards.

With West Africa’s current foreign exchange system, currency is processed through banks in London, New York or Paris.

The Hub is, therefore, seeking out modalities by which inefficiencies and gaps that currently prevent cross-border, multi-currency transactions can be removed by, for instance, connecting domestic switches internationally and making m-banking more efficient.

In this regard, the WATH in February, met 130 m-banking players in Ghana, Nigeria, and Senegal, including banks, mobile network operators (MNOs), switching companies who connect banks to each other, lawyers, domestic policy makers, regulators, regional bodies, international organisations, and donors.

WATH officials say the possibilities are tantalising: banks and MNOs are not the only ones who stand to gain from regional m-banking services.

Individuals and SMEs will save on the cost of their transactions and develop a credit history, increasing their access to business loans and financial settlements services.

Governments will also have a robust settlement system and decrease opportunities for corruption, while providing a favourable environment for business expansion and increased investment.