| E-Money Digital Payments Sweep Africa, Head for Europe and India Posted: 30 Mar 2014 06:44 PM PDT An interesting, but inaccurate headline appeared on the Financial Times today: Africa's digital money heads to Europe. A close look reveals this has little to do with "digital money" per se, but rather with monetary payments made by phone. Nonetheless, the wave is about to spread. The mobile payment system that has revolutionised business and banking in sub-Saharan Africa is to come to Europe as Vodafone seeks to spread the popular digital currency outside emerging markets.
Vodafone has acquired an e-money licence to operate financial services in Europe, with plans to launch M-Pesa (which means mobile money in Swahili) in Romania as a first step to potential expansion in the region.
M-Pesa has become so popular in parts of Africa that it is now a virtual currency, offering a secure means of payment for people who do not have easy access to banking services. A mobile phone text message is all that is needed to pay for everything from bills and schools fees to flights and fish, and means that the mobile phone can double as an office for the continent's smaller entrepreneurs.
Vodafone now hopes to win over an estimated 7m Romanians who mainly use cash.
Michael Joseph, Vodafone director of mobile money, said that the European e-money license would allow Vodafone to operate M-Pesa in other markets, although he indicated that the focus would be on central and eastern Europe.
"There are one or two [countries] we are looking at but [these are] unlikely to be in western Europe in the next year or so," he said, adding that countries with a large migrant population such as Italy were potential markets.
In Kenya, where M-Pesa launched in 2007, the platform is so widely used that a third of the country's $44bn economy washes through the system, sold by 79,000 agents nationwide. It has since been extended to Tanzania, Egypt, Lesotho and Mozambique.
More recently, M-Pesa has been introduced in India, where Vodafone is seeing rapid growth given the large numbers of people without bank accounts. More than 1m people have registered in India, although Vodafone expects that will accelerate if revised regulations being considered by the Reserve Bank of India ease restrictions on such money platforms.
Romanian M-Pesa customers will be able to transfer as little as one new Romanian leu (0.22 euro cents) up to 30,000 lei (€6,715) per day.
"The majority of people in Romania have at least one mobile device, but more than one-third of the population do not have access to conventional banking," Mr Joseph said.
M-Pesa had about 16.8m active customers at the end of last year, generating about €900m in transactions per month. While M-Pesa was originally conceived as a means to retain customers in Kenya's mobile phone market, it is now profitable in its own right with $143m in revenues from the 18.2m M-Pesa customers in Kenya alone, or about 18 per cent of overall country sales. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| China Accelerates Bad Debt Writeoffs; Reflections on "Policies to Counter Economic Volatility" Posted: 30 Mar 2014 11:23 AM PDT Financial stress related to Ponzi financing and other bad debts in China is readily visible in numerous places. One result is China's Big Banks Double Bad-Loan Write-Offs. China's biggest banks more than doubled the level of bad loans they wrote off last year, in a sign that financial strains are mounting as growth in the world's second-largest economy slows.
The five biggest Chinese banks, which account for more than half of all loans in the country, removed Rmb59bn ($9.5bn) from their books in debts that could not be collected, according to their 2013 results. That was up 127 per cent from 2012, and the highest since the banks were rescued from insolvency, recapitalised and publicly listed over the past decade.
The sharp acceleration in write-offs is the latest indication of the turbulence now buffeting China's financial system. The bond market suffered its first true default in March, two high-profile shadow bank investment products were spared from collapse by last-minute bailouts earlier this year, and a small rural lender suffered a brief bank run last week.
Data also point to a deeper economic downturn in the first quarter than expected, putting China on track this year for its slowest growth since 1990.
The deterioration has fueled expectations that Beijing will act soon to shore up the economy. "Increasing downward pressure on the economy should not be neglected," Li Keqiang, China's premier, said last week. "We have policies in store to counter economic volatility." Anecdotes from ChinaThere was an interesting post on the Motley Fool titled Random China Observation, by "GoCanucks" who was in China for a month on family business. He talks about the property bubbles and the readily apparent stress. He concluded ... The bubble is so obvious (admittedly it felt that way 3 years ago), but when I asked my friends "what if", the common answer is "the government won't allow it to happen". And every time I hear that phrase, I can't help thinking of the following quote from Michael Lewis's essay on Irish RE bubble: "Real-estate bubbles never end with soft landings." Policies to Counter Economic VolatilityYes indeed, central banks have "policies in store to counter economic volatility", and they use them. It was those policies in the wake of the dotcom bust that led to an even bigger debt bubble and subsequent housing crash. The Bernanke Fed created the biggest equity and corporate bond bubble in history in the wake of the housing crash. China has acted at every turn to counter the slightest unwanted slowdown, while maintaining ridiculously high growth targets. Those growth targets led to Ponzi financing of cities that are vacant, the world's largest mall (yet devoid of customers), airports and trains that go unused. These kinds of malinvestments are the direct result of "policies to counter economic volatility", yet China's premier, the Fed, the Bank of Japan, the People's Bank of China, the ECB, the Bank of England, the Bank of Canada, the Reserve Bank of Australia, etc, all arrogantly believe they can "counter economic volatility" without consequences. Logic alone suggests the notion that anything can be centrally planned without huge damaging consequences is as ridiculous as it is arrogant. History proves it. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
No comments:
Post a Comment