The Contribution of Mobile Money Technology on the Performance of MTN Cameroon
Department: Management
No of Page: 65
Project Code: MGT9
References: Yes
Cost: 5,000XAF Cameroonian
: $15 for International students
CHAPTER ONE
INTRODUCTION
Background to the Study
The
evolution Mobile money technology can be traced some few years backed, mobile
money technology started in Kenya in 2007 through M-PESA (“M” for “mobile”,
“pesa” for “money” in Swahili), a popular mobile money service offered by a
local mobile network operator, Safaricom. Since then, the mobile money industry
has rapidly expanded, particularly in developing economies in Africa and South
Asia such as India, Bangladesh, and Pakistan.
Mobile
money was initally made popular by Safaricom and Vodafone’s M-Pesa. The M-Pesa
application is installed on the SIM cards of customers and works on all handset
brands. It is free to register and the user does not need to have a bank
account.
Safaricom
receives fees for withdrawals and transfers, but keeps deposits into the mobile
wallets free. The transfer service was quickly picked up for use as an informal
savings account system and electronic payment mechanism for bills, goods and
services. With M-Pesa, Kenya is at the forefront of the mobile money revoluton:
the number of agents across the country increased by 40 percent in 2013.
It
is now estmated that 24.8 million subscribers use mobile money services, like
M-Pesa, in Kenya (Communicaton Commission of Kenya, 2013). Mobile money
technology has spread rapidly in many developing countries.
However,
only a handful of these initiatives have reached a sustainable scale, in
particular GCASH and Smart Money in the Philippines; Wizzit, MTN Mobile Money
and FNB in South Africa; MTN Mobile Money in Uganda; Vodacom M-PESA and Airtel
in Tanzania; Celpay Holdings in Zambia and MTN Mobile Money, Orange Money in
Côte d’Ivoire.
The
Philippines was one of the earliest adopters of mobile money services when
SMART Communications launched SMART Money in 2001. The service, which uses SIM
Tool-Kits, enables customers to buy airtime, send and receive money
domestically and internationally via mobile, and pay for goods using a card. In
2004, Globe Telecom launched GCASH.
This
service provides a cashless method for facilitating money remittances, settle
loans, disburse salaries or commissions and pay bills, products and services
via text message.In South Africa, MTN Mobile Money was launched in 2005 as a
joint venture between the country’s second largest network operator MTN and a
large commercial bank, Standard Bank.
In
Uganda, MTN was the first operator to launch mobile money services in 2009 and
remains, by far, the market leader (Intermedia, 2012). By law, each mobile
money provider has to partner with a bank. However, users do not need a bank
account to use mobile money services.
In
Tanzania, Airtel was the first mobile network operator to introduce a
phone-to-phone airtime credit transfer service, “Me2U,” in 2005 (Intermedia,
2013).
Airtel
partners with Citgroup and Standard Chartered Bank to provide m-money services,
including bill payments, payments for goods and services, phone-to-phone and
phone-to-bank money transfers, and mobile wallets. In 2008, Vodacom Tanzania launched the second
East African implementation of the Vodafone m-money transfer platform, M-Pesa.
Finally,
in Côte d’Ivoire two mobile operators, Orange and MTN, are competing head to
head in the mobile money market (CGAP, 2012). Orange Money was launched in 2008
by Orange in partnership with BICICI (BNP Paribas), and MTN Mobile Money was
launched in 2009 by MTN in partnership with SGBCI (Société Générale) (GSMA,
2014).
Mobile
money technology was first launched in Cameroon in 2011. The Cameroonian
subsidiaries of telecommunication leaders MTN and Orange pioneered the concept
and officially launched it in 2012. The circumstances which prompted its
launching were similar to those of most developing countries, particularly
concerning the small numbers of members of the population who held bank
accounts.
Although
the services which mobile money provides in Cameroon do not include financing now,
its introduction had significantly increased the financial inclusion rate (29%)
by 2017, from 9% Sustainability 2020, 12, 183 6 of 17 in 2012.
As
a direct consequence, many citizens have been able to ply trades and launch
startup enterprises, which have resulted in indirect employment for of the
order of 5000 people. The mobile money transactions which have accompanied this
surge amount to in the region of FCFA 3500 billion in 2017, a figure which
represents 17.5% of the GDP of Cameroon.
This
represents an increase of more than 1000% from the FCFA 300 billion recorded in
2016. The introduction of mobile money has enabled Cameroonian households to
incur reduced costs by saving and reduce the risk of loss and theft which had
accompanied saving in the past].
As
the mobile telephone penetration rate was 71% in 2014, and that of holding bank
accounts had been one of the lowest in the world at 12%, it is abundantly
evident that mobile money could not have arrived in Cameroon at a more
promising time.
The
mobile money service in Cameroon is provided through a partnership between
commercial bank and mobile network operators (MTN Cameroon, Orange Cameroon,
CAMTEL, and Nexttel) because only commercial banks are allowed to issue
electronic money, and the mobile network operators own the telecommunication
infrastructures and technologies to deploy the platform.
The
number of mobile users also continues to rise rapidly in both rural and urban
areas of Cameroon, partly due to the poor condition of the fixed-line network.
There were roughly 7.4 million mobile phone subscribers in the country in 2009.
Therefore,
the competing firms in the telecommunication industry need to provide the
appropriate services that meet customers’ expectations to gain a larger share
of the market. This explains why MTN, a major mobile telecommunication company
in Cameroon; has as vision to “lead the delivery of a bold digital new world”
that “make customers life a whole lot brighter” (Cameroon Web, 2017).
Consequently,
the twin launch of 3G & 4G network in 2015 by MTN which nearly contributed
14.2% of its total income; positioned itself as a reliable world-class network
provider and strategic partner of Cameroon’s socioeconomic development. MTN is
perhaps the most important telecommunications network in Cameroon and the
Central African sub-region.
It
had nearly 9.9 million subscribers on 31 December 2016 out of Cameroons’
population of 21 million with a national coverage of close to 93 per cent; its
client services were certified ISO 9001:2008 by SGS in 2014 in recognition of
its continuous efforts to provide the best quality of service possible to its
customer.
In
2015, MTN upgraded to 3G and 4G LTE which definitely has had an impact on their
clients. All mobile money transaction carried out in Buea are automatically
transfer or recorded in the MTN Cameroon main server in douala and letter on
reconcile in the MTN head office in South Africa.
1.2 Problem Statement
Mobile
Money technology appears to be the solution to the multiple problems, namely,
liquidity, means of payments, debt collection, working capital and financing.
Its adoption and usage in ther day-to-day activities have had a positive impact
on their performance, (source).
However,
with today's rapidly changing technological evolution there is a great need for
telecommunication companies in Cameroon to open up to technological innovations
Numerous studies have been undertaken in countries like South African, Nigeria,
and Ghana on the effect of technology on the performance of MTN (Sogbodjor, 2015).
However,
no sufficient work has been done in Cameroon with regard to technology and
performance issues. Technology is essential for high performance of any
business establishment nowadays, however technology comes with it benefits and
challenges. MTN Cameroon adopted the 3G technology in 2015 and few months
later, the 4G network was introduced.
It
is worth noting that this innovation came up fifteen years after MTN has been
operating on 2G. Technology has been a stepping stone while to others it has been
a stumbling block. The appearance of technology years back to the world has
provoked the innovative and competitive nature of countries.
Technological
awareness has gone a long way to make telecommunication what it is now.
Although mobile money does not provide an all solution for all of the financial
problems with which businesses are faced, the benefits far exceed the
disadvantages which are associated with adopting the system.
Irrespective
of whether the system is used in isolation or conjunction with a bank account,
it stands to increase the sales of businesses if properly used and reduce their
operating costs, with both factors making positive contributions to improving
their financial performance.
- The main objective of this study is to assess the influence of mobile money technology on the performance of MTN Buea
Specific objectives
- To assess how 3G and 4G internet has affected MTN performance in Buea
- Sought out the impact of cost of mobile money technology on performance of MTN Buea
- To examine the challenges of mobile money technology on the performance of MTN Buea.
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