The Regulation of Mobile Money: Law and Practice in Sub-Saharan Africa

436 Pages·2019·6.768 MB·English

by  Sunduzwayo Madise

PALGRAVE MACMILLAN STUDIES IN
BANKING AND FINANCIAL INSTITUTIONS
SERIES EDITOR: PHILIP MOLYNEUX
The Regulation
of Mobile Money
Law and Practice in Sub-Saharan Africa
Sunduzwayo Madise
Palgrave Macmillan Studies in Banking
and Financial Institutions
Series Editor
Philip Molyneux
University of Sharjah
Sharjah, United Arab Emirates
The Palgrave Macmillan Studies in Banking and Financial Institutions
series is international in orientation and includes studies of banking sys-
tems in particular countries or regions as well as contemporary themes
such as Islamic Banking, Financial Exclusion, Mergers and Acquisitions,
Risk Management, and IT in Banking. The books focus on research and
practice and include up to date and innovative studies that cover issues
which impact banking systems globally.
More information about this series at
http://www.palgrave.com/series/14678
Sunduzwayo Madise
The Regulation
of Mobile Money
Law and Practice in Sub-Saharan Africa
Sunduzwayo Madise
University of Malawi
Zomba, Malawi
ISSN 2523-336X ISSN 2523-3378 (electronic)
Palgrave Macmillan Studies in Banking and Financial Institutions
ISBN 978-3-030-13830-1 ISBN 978-3-030-13831-8 (eBook)
https://doi.org/10.1007/978-3-030-13831-8
Library of Congress Control Number: 2019932925
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Dedicated to my wife, Rhosalyn
F
oreword
Mobile payments seem to be the future of finance. Banks and other
financial and quasi-financial service providers are partnering with tech-
nology companies to allow consumers to transact using electronic
gadgets within the confines of their homes or in conditions of their
choice. Among the many technological advancements that abound,
mobile money is more likely to have a huge impact on the economies of
sub-Saharan Africa.
This book looks at the legal aspects of regulating mobile money. A
law-in-context approach is undertaken, with insights drawn both from
practice and scholarly perspectives. Unlike most works that have written
on the subject, the book takes a rather different approach, examining
issues that are interdisciplinary and multidisciplinary on law, technol-
ogy and finance. The book provides a critical analysis of novel chal-
lenges regarding the regulation of “new forms of money” such as mobile
money.
A central thesis of the book is that the current financial service regu-
latory architecture in many sub-Saharan African countries is ill-equipped
to regulate emerging financial services such as mobile money. Although
the author, Dr. Madise, refers mainly to developments in his home coun-
try, Malaŵi, as a case study, the issues raised in the book are pertinent to
many parts of sub-Saharan Africa and other emerging markets. A com-
parative analysis, for example, between Malawi and other jurisdictions
within the region, including Kenya’s standard setting M-Pesa, enriches
the book.
vii
viii FoREwoRD
The writing of this book has benefitted greatly from the author’s
unique background in matters of financial services regulation. I first
met Dr. Madise when he was reading for his Master of Laws (LL.M.)
degree programme at the University of western Cape in South Africa,
where I continue to serve periodically as Visiting Professor of Law. His
chosen research area of specialisation was financial services regulation. I,
together with Professor Rieke wandrag, supervised Dr. Madise’s LL.M.
dissertation. And Dr. Madise’s enthusiasm to explore linkages between
his other area of expertise, namely engineering, and financial services
regulation stems from his early years at the University of western Cape.
Dr. Madise obtained his LL.M. (with distinction) at the University of
western Cape before pursuing his Ph.D. studies in the UK. I was priv-
ileged to act as Dr. Madise’s referee when he applied for admission to
carry out doctoral research studies in financial services regulation at the
University of warwick, where I taught in the 1990s.
And so, I am pleased and honoured to provide this Foreword. Dr.
Madise has written an exceptional book, and I would recommend it,
without hesitation, to all scholars, practitioners and researchers in law,
technology and finance.
Kenneth Kaoma Mwenda Ph.D., LL.D., D.Sc. (Econ.)
Rhodes Scholar
South Africa Extraordinary Professor of Law, University of Pretoria
USA Adjunct Professor of Law, American
University washington College of Law
washington, DC, USA Program Manager, The world Bank
P
reFace
This book is a result of research done from 2013 to 2017 for my doctoral
studies. The book covers regulation of mobile money and uses case stud-
ies from Malaŵi. Although Malaŵi is used as a case study, the issues raised
in this book would apply to most cases where disruptive and transforma-
tive technology like mobile money are being introduced. Before enrolling
as a law student, I worked as an Electronics Engineer for almost a decade.
My passion therefore lies in the intersection between law and technology.
The book is therefore a convergence of law, technology and finance. The
book is recommended for all scholars, researchers and practitioners in the
fields of law, economics, finance, engineering and development.
I am immensely grateful to Professor Dalvinder Singh and Professor
Abdul Paliwala under whose supervision and mentorship my doctoral
thesis was prepared. I sincerely hope I have repaid, in some small way,
the faith that they put in me by accepting to be my supervisors. This pro-
ject would not have been possible without the financial assistance pro-
vided by the Commonwealth Scholarship Commission who funded my
doctoral studies at the University of warwick, in the UK. I should also
acknowledge Dr. Chikosa Silungwe, a fellow warwickan, who encour-
aged me in many ways and was always available to advise me on my jour-
ney. Finally, I must thank my sister Professor Nyovani Madise for her
inspiration and support and my son Hlekwayo, who was my companion
on my Ph.D. journey and bore most of the blunt of my bad days.
Zomba, Malawi Sunduzwayo Madise
ix
c
ontents
1 Introduction 1
1.1 Chapter Outline 10
References 12
2 Introduction to Money 15
2.1 Introduction 15
2.2 Origins and Nature of Money 17
2.3 Money the Oil That Drives the Financial System 37
2.4 The Nature of Payment Systems 41
2.5 The Malaŵi Payment System 46
2.6 Emerging Forms of Money 49
2.7 Conclusion 55
References 56
3 Developments in Mobile Technology and the Emergence
of Mobile Money 63
3.1 Introduction 63
3.2 Development of the Telephone 65
3.3 Development of the Mobile Phone 69
3.4 A New Service Is Born: Mobile Money 71
3.5 Mobile Money in Operation 91
3.6 Mobile Money and the National Payment System 95
3.7 Conclusion 104
References 105
xi