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RegTech promises to disrupt the regulatory landscape by providing technologically advanced solutions to the ever-increasing demands of compliance within the financial industry.
Deloitte, one of the world’s leading professional services and risk consulting firms, advising 80% of the Fortune Global 500 companies, recently published its 2020 edition of RegTech Universe. The firm believes that “RegTech promises to disrupt the regulatory landscape by providing technologically advanced solutions to the ever-increasing demands of compliance within the financial industry.” While the analysis focuses on the role of Regulation Technology (RegTech) in monitoring transaction compliance globally, it is crucial that we also look at RegTech from an African context.
In Africa, Mobile Network Operators (MNOs) are market-makers, their dominance and contribution to economic growth in the countries they operate are substantial, making the telecom sector an important one that governments in Africa must nurture and grow. To do this, regulatory oversight and compliance are critical. The sector should be viewed in much the same way as the banking sector: encouraged to operate innovatively but within a well-defined and enforced framework of regulatory compliance.
According to Deloitte, the telecom sector is a significant contributor to the economies and national treasuries of governments in emerging markets. Notably in Africa, given the propensity for the community, and therefore communications within and across communities, as families and friends have become more geographically distributed, the need to communicate electronically has become all the more important.
GSMA who represents the interests of mobile network operators worldwide, in its 2019 Mobile Economy Sub-Saharan Africa analysis, reported a GDP contribution for 2018 of 8.6% from the telecom sector and forecasted this to grow to 9.1% by 2023. MNO’s saw their revenues grow from US $35 billion in 2013 to US $45 billion in 2019 (2017 and 2019 GSMA Mobile Economy Sub-Saharan Africa reports). These companies are the financial beneficiaries of our human need to stay in contact, whether for business or socially. While MNOs have introduced infrastructure to enable higher-quality communications, one must question whether the profits generated by these international companies adequately benefit the countries, and ultimately the citizens, in which they operate.
In an age of rapidly advancing technologies, another question arises about whether governments are sufficiently armed with best-practice regulatory monitoring systems to enforce compliance within the telecom sector. In many instances, governments rely on a self-declaratory system to oversee the sector. This means it has limited oversight and is at the mercy of MNOs, hoping that they will provide accurate, fair, and complete declarations regarding the revenues and profits generated.
The only way to introduce fairness, accuracy, and completeness into the MNO ecosystem, is by empowering governments with technologies that can remain current in a dynamic sector. In addition to employing expert auditors from the likes of Deloitte, KPMG, and EY, governments also need independent telecom sector experts that have the capabilities to monitor the business and technology practices of MNOs objectively. The RegTech analysis by Deloitte offers insights into the companies providing such compliance solutions, such as Arkk Solutions, KROLL, Jumio, and BNYMellon-Pershing.
Notably on Deloitte’s list for its contribution to regulatory compliance and transaction monitoring in Africa is Global Voice Group (GVG). In compiling its analysis, Deloitte acknowledged GVG for its open and transparent cooperation, as it provided more business and operational information than many of the other companies in the RegTech space. Since 1998, GVG has provided independent telco monitoring technologies to countries such as Ghana, Senegal, Tanzania, Rwanda, Uganda, Congo, Gabon, Liberia, Guinea, Guinea-Bissau, and the Central African Republic. The company’s RegTech systems have not only generated billions of dollars in additional revenues for these governments but have also prevented significant revenue losses through the control of telecoms fraud.
Africa’s telecom sector plays a critical role in fostering improved communication services as well as being a significant economic contributor. It is incumbent upon governments to maintain a symbiotic relationship with the sector while balancing this relationship with a need for regulatory compliance and revenue assurance.
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