VZCZCXRO0900
RR RUEHDE
DE RUEHBUL #3077/01 2761335
ZNR UUUUU ZZH
R 031335Z OCT 09
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC 1808
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC 0894
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHNR/AMEMBASSY NAIROBI 0074
RUEHIL/AMEMBASSY ISLAMABAD 7961
RUEHAD/AMEMBASSY ABU DHABI 1996
RUEHDE/AMCONSUL DUBAI 7064
RUEHDO/AMEMBASSY DOHA 0507

UNCLAS SECTION 01 OF 02 KABUL 003077 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR SRAP, SCA/FO, SCA/RA, SCA/A, and EEB/IFD/ODF 
DEPT PASS AID/ASIA BUREAU 
CENTCOM FOR CSTC-A, USFOR-A 
TREASURY FOR MHIRSON, ABAUKOL, AWELLER, AND MNUGENT 
 
E.O.12958: N/A 
TAGS: EFIN EINV PGOV EAID ETRD AF
SUBJECT:  Expanding Mobile Money Services in Afghanistan 
 
¶1. (SBU) SUMMARY: Mobile commerce (mCommerce), also known as 
mobile money (mMoney), offers an opportunity to increase 
rapidly access to financial services in Afghanistan, 
particularly in rural areas.  Moreover, mobile money, with 
proper regulatory safeguards, advances anti-corruption 
efforts, for example by establishing a secure system for 
police, civil servants, and military personnel to receive 
their salaries.  It can also help combat illicit financing. 
In February 2008, AfghanistanQs leading telecommunications 
operator Roshan launched M-Paisa, a mobile payment system 
modeled on a highly successful money transfer service in 
Kenya.  M-Paisa has registered over 80,000 subscribers in 
Afghanistan (10,000 of which are active) and is expected to 
grow in the coming months.  We are encouraging the expansion 
of mobile money service in Afghanistan, including piloting an 
initiative to link M-Paisa technology with two microfinance 
institutions (MFIs).  End Summary. 
 
Status of Mobile Money Development in Afghanistan 
 
¶2. (SBU) In February 2008, AfghanistanQs leading 
telecommunications operator Roshan launched M-Paisa, a money 
transfer service, to provide registered customers a safe, 
effective and affordable means to transfer money using their 
mobile phones.  The platform, developed in partnership with 
Vodafone, is modelled on VodafoneQs highly successful M-Pesa 
mobile money transfer service in Kenya.  M-Paisa is an 
innovative solution for Afghans who do not have bank accounts 
or a means to transfer money.  The service has over 80,000 
subscribers supported by about 600 agents across the country. 
¶3. (SBU) Roshan also plans to apply M-Paisa in other ways to 
spur financial sector growth.  In addition to piloting 
initiatives to facilitate disbursement/repayment of 
microfinance loans, Roshan is conducting a trial to facilitate 
money transfers for the payment of 47 police salaries in 
Wardak province.  Roshan plans to expand this program over 
time to include the entire Afghanistan National Police (ANP) 
and the Afghanistan National Army (ANA).  By providing the 
Afghan National Security Forces (ANSF) a formal, transparent 
mechanism to deliver salaries to their families, mMoney and 
services like it that may develop will help mitigate soldier 
absences after they are paid and reduce opportunities for 
corruption (e.g., salary skimming). 
¶4. (SBU) The Da Afghanistan Bank (DAB, Central Bank) recently 
drafted and distributed a comprehensive regulation that covers 
the mCommerce sector to protect against systemic risk, ensure 
consumer protection, and implement anti-money laundering 
measures.  The regulation would limit the number of mobile 
banking agents, as well as the daily ($600) and monthly 
($3,000) remittance amounts per customer.  These limits are 
not dissimilar to those set in other parts of the world, 
including Kenya and the Philippines.  Roshan aims to have the 
remittance values raised, however, something which will 
require further discussion with the DAB Supervision 
Department. 
Untapped Opportunity for Mobile Commerce in Afghanistan 
 
 
¶5. (SBU) Mobile network technology is an innovative solution 
for reaching the unbanked in Afghanistan.  The rapid growth of 
mobile payment technologies in recent years in countries such 
as Kenya and the Philippines demonstrates that there is demand 
and means among low-income users to adopt mobile technology. 
Benefits include improved security, reduced travel costs, and 
less queuing time.  Telecom companies, banks, and microfinance 
institutions realize extending financial services to the poor 
through mobile technology can be profitable due to 
significantly lower service delivery costs. 
 
¶6. (SBU) Afghanistan's financial sector needs innovative 
methodologies to broaden access to the formal financial 
sector.  While a formal banking infrastructure is emerging 
with 17 registered commercial banks and 16 MFIs, it remains 
largely inaccessible to Afghans living in remote areas, 
particularly in insecure provinces in the south and east. 
Moreover, the microfinance sector reaches less than 15 percent 
of the 3.5 million potential clients in Afghanistan.  Outreach 
to the small and medium enterprise (SME) sector is even lower, 
with market penetration of less than 1 percent.  Furthermore, 
almost 70 percent of the microfinance sectorQs clients are 
 
KABUL 00003077  002 OF 002 
 
 
urban, with over 40 percent located in the region in and 
around Kabul. 
 
¶7. (SBU) Commercial banks and MFIs recognize Afghan migrant 
workers, who typically send money back to their families, need 
quick and efficient money transfer services.  These 
institutions also find it cost prohibitive to build brick-and- 
mortar branches in sparsely populated areas of the country, a 
problem compounded by insecurity.  Road and transportation 
networks in AfghanistanQs rural provinces are still being 
rehabilitated, remain poor, making it hard for loan officers 
to reach out regularly to rural clients and deters travel to 
the nearest provincial centers to repay loans.  All of these 
factors make Afghanistan a good testing ground for mCommerce. 
 
EIKENBERRY