(Business in Cameroon) - MTN Cameroon is currently finalizing MoMoKash, its platform aimed at providing savings and microcredit services via mobile phones. This was confirmed by a source within the company on condition of anonymity since the project is not yet officially announced.  "We should have announced it but, there still are minor adjustments to make," the source said.

Mechanism

The platform was created by Credixcam, a Cameroonian startup specialized in the sector, and users can just subscribe to the services via a shortcode. The services will be managed by Mobile Money Corporation, MTN Cameroon’s subsidiary in charge of the management of the operator’s mobile money services (issuance of electronic money, deposits, and withdrawals), that recently increased its capital to comply with COBAC regulations

Via the platform, MTN Cameroon would not grant the microcredits itself. Rather, it will serve as the intermediary connecting users with financial institutions as is the case in Ghana with MTN Ghana and Kenya with M-Shwari. In that regard, it signed agreements with many microfinance institutions in Cameroon.

With this service, the operator seems to have taken the lead in the mobile microcredit sector in Cameroon. In short, apart from being able to withdraw or deposit money via their mobile phone, MTN mobile money users can now request small loans or receive interests on the amount they save in their mobile money accounts.

MTN Cameroon was already the precursor of Mobile money services and is also the first mobile operator to enable its users to send funds directly to other people’s mobile money accounts in the framework of the GIMAC group’s platform (even though other actors were ready).

Interest rate

The microfinance sector thus offers new opportunities in Cameroon. With its airtime credit services, MTN Cameroon already has a scoring experience. But, many other actors may soon enter the market. Indeed, some Indian and American firms are already present to offer mobile savings and loan management platforms. Also, Orange recently established its subsidiary Orange Bank. The next stage would be to launch mobile savings and loan services.

The big question here remains the interest rate that would be applied to saved or borrowed funds. In Kenya, the rate applied to borrowed funds were so high that the central bank decided to step in and find ways to regulate the rates. For instance, the aggregated annual interest rate on borrowed funds was about 350% of the principal. Let’s note however that for airtime credits, MTN deducts 10% of the amount borrowed.

The second big question is how the involved actors (microfinance institutions and MTN Cameroon) would share the fees of the services. Nevertheless, this is an organic growth opportunity for microfinance institutions since without opening additional branches, they can easily reach millions of potential clients. MTN will then collect deposits on their behalf.

 Idriss Linge