Visa in Rwanda: The future for financial sector development?

Visa and the Government of Rwanda (GOR) recently announced an initiative to electrify the country’s payments system which, if successful, could potentially be a template for financial sector development involving private sector partnerships across the wider region. The aim is straightforward – to provide a payments infrastructure in Rwanda that is fit for purpose in the 21st century – i.e. one that is capable of processing electronic payments across many channels, including mobile.

Visa already participates in mobile payments in Rwanda via Fundamo, the mobile payments platform of choice for MTN that it purchased last year. However the announcement with GOR goes beyond the provision of mobile payments. This initiative will also integrate the economy electronically which will be a major step in its overall economic development. Creating an efficient and interoperable payments infrastructure will facilitate financial inclusion. At the same time, encouraging electronic government payments and disbursements will promote transparency, efficiency and general good governance. And beyond payments, the provision of government services over an upgraded electronic and mobile infrastructure has positive implications for the delivery of health, education and agricultural services.

This could potentially be a win-win for both partners. For the government it is a major step in delivering its Vision 2020 plan, a blueprint to become a middle-income nation within the next decade which includes developing a ‘cash-lite’ society. The initiative could also assist the country in meeting some of its Millennium Development Goals by 2015. For Visa it will help achieve its stated aim of generating 50% of its revenues from markets outside of the US by 2015, a sensible diversification goal given the economic woes in most developed nations.

The initiative has three main pillars – creating an infrastructure to facilitate electronic payments; promoting electronic payments (mostly through mobile); and capacity building (training and education). The agreement could also be seen as a model for corporate and social responsibility (CSR) for private sector companies operating in developing countries, focusing as it does on a consultative and partnership approach (with GOR), encouraging and enabling transparency and accountability (especially around government payments) whilst retaining a stated aim of generating a return for the private sector partner*. This last point is crucial – if responsible private sector companies are to be encouraged to invest directly in developing countries there needs to be an economic incentive and not just a philanthropic one.

But potential public-private partnerships like this are not abundant. On the public side of the partnership, it requires a visionary and open government and a favourable regulatory environment that encourages foreign direct investment. On the private side, it requires an innovative partner who has strong CSR values and also a longer term vision that can appreciate the greater opportunity in facilitating a country’s overall economic development rather than just concentrating on its own core business.

The Visa-GOR partnership would seem to have these attributes and the odds of success are stacked in its favour. It is certainly an ambitious and exciting development and if successful we should expect to see it being used as a template in other developing countries.

*For an interesting proposal on how CSR might be measured and reported within a developing country context see here

Killian Clifford
Director Mobile Money Consulting