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The Growth of Mobile Money in Africa

The Growth of Mobile Money in Africa
Millions of Africans utilize their cell phones to manage their finances. Mobile money in Africa is currently in use in 36 of the 47 countries in Sub-Saharan Africa and is used prominently throughout East Africa.

Mobile financial services (MFS) have become increasingly popular across the continent for many reasons. Many economists cite safety, efficiency, transparency, and ease of the services as reasons for the increased usage.

MFS include more than just cash transfers but have also expanded to utility bills, shopping, investment, taxes, and more. The services have also allowed easier cash flow across borders and between family members in times of crisis, which economists have cited as major motivators in service usage in the region, according to a report in All Africa.

One of the most prominent mobile money services in the region, M-PESA, was developed in Kenya. Since 2007, Safaricom and Vodafone’s M-PESA application has allowed users in Kenya and beyond to store funds on their mobile devices in order to transfer funds to other users, pay bills, and make other purchases.

The country now tops the global charts, with 58 percent of its adults having mobile money accounts. Former Safaricom CEO Michael Joseph noted that mobile technology has been transformative for the informal business sector, which comprises about 70 percent of jobs in Kenya. This increase has been instrumental in helping surge GDP rates throughout the developing world.

The latest mobile money statistics indicate that users in East Africa have largely continued to shift GDP to be transferred via various mobile money platforms. According to All Africa, mobile transactions amounted to $45.75 billion for East Africa, comprising 32 percent of the region’s combined GDP.

This is a significant increase from the $4.86 billion transacted via mobile services in 2009, which only comprised 3.4 percent of the region’s GDP. In Zimbabwe, 45 percent of the country’s GDP is transacted via MFS.

In its 2014 State of the Industry Report, the Groupe Speciale Mobile Association (GSMA) stated that MFS are ingrained in the majority of developing markets, with over 250 mobile money services available across 89 countries.

In 2014, almost 300 million users were registered for mobile money accounts. 2014 marked 16 markets with more mobile money accounts than regular bank accounts, “indicating that mobile money remains a key enabler of financial inclusion.” Furthermore, as smartphone access increases, the GSMA expects MFS usage to continue to increase rapidly.

Because of the prevalence of MFS through non-bank providers throughout the region, government regulators are passing guidelines for mobile money service provision in order to allow better financial inclusion for all members of society.

While competition has grown steadily between bank and non-bank mobile money service providers, regulations like these aim to maximize the reach of the services to the widest audience possible. The GSMA report marks that 47 of the 89 markets with mobile banking have regulations to allow both banks and non-banking services to sustainably provide for their markets.

The GSMA outlined in its report that there are still obstacles in helping mobile money services achieve their full potential in the region. The report states, “Regulatory barriers, low levels of investment and lack of industry collaboration limit the ability for mobile money to reach scale.”

Despite these obstacles, economists widely expect mobile money to continue to grow in order to meet eager markets across the continent.

– Arin Kerstein

Sources: Africa Focus, All Africa, CommsMEA, GSMA, IT News Africa
Photo: Flickr

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South Africa and Mobile Money

South Africa and Mobile Money
The matter of mobile money becoming popular in South Africa was not a question of if, but when. This claim is supported by South African payment experts who believe that the current local market factors support mobile wallet adoption.

Some believe that mobile money does not have a place in the developing world. Countries that have a smoothly running banking system like card payments and ATMs. There is no room for the digital use of money.

However, mobile phone usage in South Africa has soared. The country’s high rate of mobile phone users suggests that user education is not a barrier.

Consumers have become comfortable making payments online as well as on mobile devices. This fact supports the mobile wallet service as a viable option for many individuals.

The First National Bank’s mobile wallet is an example of how banks are looking to have access to low-cost channels to serve under- and un-banked customers. In South Africa, a key focus is on the seven million people who earn salaries but do not have their own bank accounts.

“The World Bank 2014 Global Financial Development Report estimates that about 2.5 billion people in the world do not have access to banking services.” Mobile money could change this.

In the United States, T-Mobile has introduced similar services to serve the needs of unbanked individuals. Romania faces the same challenge. There is a huge population of unbanked individuals that mobile money could help.

But it does not stop with mobile money: other services are likely to be incorporated within the banking infrastructure. In China, a mobile banking service lets brands reach consumers via mobile banner ads.

“A diversified offering will unlock value in a South African market that is socially savvy and has an appetite for integrated services,” says Mustapha Zaoiunu, the CEO of PayU, a mobile banking company. “It is an inevitable progression for large third-party players like Apple or PayPal to offer a suite of services through their wallets.”

Some of the integrated services could include price comparisons, relevant product information, the ability to make reservations, split billing and digital tickets for movies or concerts.

The world is starting to notice the role mobile money pays, including its efficiency, speed, access, reach and revenues. Mobile money is becoming the new way to be part of the banking network.

Because smartphone usage has soared in the developing world, mobile money will surely become a popular banking option. With its easy access and acceptance, it is predicted to become favored with the unbanked and banked individuals of the developing world.

– Kerri Szulak

Sources: IT News Africa 1, IT News Africa 2
Photo: Meme Burns

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How Mobile Banking Can Help the Developing World

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Mobile banking and money transfers are growing in popularity. Kenya has more active accounts than it does people. But how exactly can mobile banking make a positive impact on the developing world?

The total value of worldwide transactions made on mobile phones in 2013 was $24 billion. The top five countries with the highest number of active bank accounts are all in the developing world: Kenya, Tanzania, Botswana, Zimbabwe and Cameroon.

Such is the potential of mobile banking that Bill and Melinda Gates have made it their next target, believing that “mobile banking will help the poor transform their lives.”

Instead of storing wealth physically, with things like livestock, jewelry or even stuffing money in mattresses, mobile banking enables people a safer and more “mobile” way to manage their money. There is less potential for depreciation or loss of wealth when money is stored in a bank – a bank cannot get sick and die, unlike a cow.

Furthermore, if only a small amount of money is needed for a minor home repair or a few groceries, it makes sense to use a small amount and pay through a phone connected to your bank instead of taking a cow or piece of jewelry however far is necessary to sell for more money than might be needed in the immediate future. Mobile banking also makes the opposite more possible – again, livestock can die which makes saving money for the long term more difficult, but access to a mobile bank makes it simpler to save for children’s education, a payment for a car or just a rainy day.

Another positive impact of mobile banking is that it reduces the amount of time spent and distance traveled to go to a physical bank, sell livestock or make a payment. Transfers, deposits and payments can be completed in an instant instead of walking to the nearest bank or market.

In the same way, mobile banking also benefits farmers. Without mobile banking, farmers bring crops to town and leave them with a seller who has a vegetable stand before returning home. The farmer then has to return to town, hope that he can find the seller and collect his money. This whole scenario has the potential for loss of money and long journeys. Plus, what if the farmer needs money before he can come to town to collect it?

Mobile banking can eliminate all these potential issues if brought into play. Instead of the farmer making a second trip to collect his money, the seller can transfer it to the farmer as soon as his produce sells, from phone to phone in an instant.

A perfect example of the positive impact mobile banking is capable of having on the developing world is M-Pesa, which was one of the first systems to start enabling payments by mobile phone. Based in Kenya, the company “developed a system for transferring micro-credits via cell phones supported by a network of agents. This system was initially intended to drive local development and its objective was to reduce funding costs, but it found its real niche for its use with the payment options it offers.”

This way of making payments moved around the obstacle of cash access in Kenya, which is relatively difficult due to the technology and infrastructure needed to set up an ATM system. Instead, making a payment via an SMS text saves time and is easier for individuals – the way forward for banking and improving lives in the developing world.

– Greg Baker

Sources: Huffington Post, New York Times, BBVS Innovation Center, CNN, The Economist
Photo: AVG Now

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Mobile Money Africa Set To Return In 2013

Mobile Money Africa Set To Return In 2013
The fifth annual Mobile Money Africa Conference is projected to gather over 400 mobile banking industry leaders in Johannesburg, South Africa to discuss ways to move the market forward.

Mobile Money is a mobile banking concept that has taken root in African communities in rural areas where the nearest bank is often several miles away. Mobile bankers use their cell phones to transfer money from one person to another with only the use of a SIM card.

While Mobile banking continues to spread slowly, primarily throughout the developing world, its biggest markets are in Africa. 15 of the top 20 Mobile Money-using countries are located on the African continent. Generally about 10% of people in these countries use Mobile Money, but in Kenya the number of users reaches 68% of people.

Mobile banking continues to spread through developing nations because the fees for banking are too high and the locations are too sparse. Mobile Money Africa works to help alleviate these problems and develop a stronger market, possibly in alliance with traditional banking methods.

This year, Mobile Money Africa will be hosting the Mobile Money Awards – a contest in which Mobile Money innovators are recognized and rewarded by the industry. The conference is slated for the 28th and 29th of May.

– Pete Grapentien

Source: BizCommunity
Photo: IT News Africa