THE majority of the two billion people in the world who remain unbanked and locked out of access to safe, secure and affordable financial services are in developing economies, the majority in Africa.
This is why the quick roll-out and uptake of mobile money on the continent has been hailed— at least 40 African countries have at least one form of mobile money service, giving more people options to transform their personal circumstances, and pushing economic growth.
In 2011, some 24% of African adults had a mobile money account; in 2014 this share jumped to 34%, cementing the region’s status as the global mobile money epicentre—while just 2% of adults worldwide have a mobile money account, 12% in Sub-Saharan Africa has one at the end of that year, according to the World Bank. Significantly, just half of these Africans had an account at a formal financial institution.
33 million daily transactions
The scale of use is such that in December 2015, some one billion transactions were processed globally through mobile money, or an average of 33 million transactions daily, according to a new report by the mobile phone industry lobby GSMA, which counts nearly 800 operators as members, and more than 200 other firms in its ecosystem.
The study finds that the next frontier for mobile money seems to be more investment in services to give customers more options, save on operator costs and open new revenue streams, while allowing them to compete against online platforms such as PayPal.
The 2015 State of the Industry Report on Mobile Money casts light on the global trends in mobile financial services, from which we gleaned some highlights about the use of the services on the continent.
1: There are currently some 411 million accounts in existence globally in 93 countries and across 271 services, a 31% growth. Some 222.8 million of these accounts were in sub-Saharan Africa, with 84 million being active. South Asia has the next highest, with 102 million listed accounts.
2: Because it was the pioneer region, mobile money in sub-Saharan Africa seems to be maturing—while the region has 52% of active services, the launch of most new services last year took place outside it, with new growth coming in Latin America, Europe, Asia and North Africa. A third of all registered mobile money accounts were opened in South Asia in 2015. But 2013 was the bumper year, when 58 new mobile money services were launched globally, in 2014 this fell to 30, and just 13 last year, with four of these in sub-Saharan Africa.
3: Nigeria has the most mobile money services for the unbanked, with 19, highlighting the booming growth in markets outside more mature East Africa, which at 55% is the African region with the highest level of mobile money penetration. Some 63% of all accounts opened in Sub-Saharan Africa in 2015 were in Middle, West, and Southern Africa.
4: Western Africa had the largest growth in mobile money, as Burkina Faso, Mali, Guinea and Ivory Coast anchored an explosion. In 2015, year on year growth in the number of active agents—the cornerstone of mobile money—was 60.1%, twice the rate of any other region.
5: Just three African countries have mobile money products that “understand each other”— what in the industry is called interoperability; Madagascar, Rwanda and Tanzania, despite two-thirds of markets where mobile money is available having two or more live services (60 of 93 countries). This ability is seen as key to solving the financial inclusion conundrum, but must overcome the challenges of regulation, infrastructure and commercial viability.
6: You wouldn’t think it, but gender is a major player in the equation in a rather unexpected way: a lack of trust. Earlier GSMA research found that “the social norms around how women and men make financial decisions in a household, the ‘appropriateness’ of men and women interacting with sales agents of the opposite sex, and community perceptions of male and female roles, all influence mobile phone ownership and usage.” Just about one in four agents are women. It is estimated that reducing the gender gap in usage and ownership could add up to $170 billion to the industry by 2020.
7: Understanding the African rural market, which tends to operate differently than in urban areas, is key to an operator’s success there. In Chad and Mali for example, the most successful agents tend to be older and with more established businesses, which offer a broader variety of services. Due to their unique profiles, they are increasingly seen as arguably the best testing grounds for collaboration and new services between providers.
8: Trade in services is seen as the best way of breaking down the stubborn barriers to intra-African trade, and there are now 29 live cross-border mobile money initiatives globally across 19 countries. All but three are in sub-Saharan Africa. It is possible to track the region’s migration corridors using them as they tend to be remittance channels, in addition to cross-border trade. It is estimated a 5% cut in remittance costs would add $4 billion to Africans, who pay the highest fees on the $60 billion they send back home every year.
9: Some 19 markets in the world—all but two in Africa— have more mobile money accounts than bank accounts: Burundi, Cameroon, Chad, Democratic Republic of the Congo, Gabon, Ghana, Guinea, Kenya, Liberia, Lesotho, Madagascar, Rwanda, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. In addition, 37 markets have at least ten times more registered mobile money agents than they do bank branches, up from 25 in 2014.
10: Regulation is gradually catching up with the vibrant industry: 51 0f 93 countries offering mobile money services now have a regulatory framework—the phenomenal growth of early pioneers such as Kenya’s M-Pesa was linked to their ability to stay ahead of lagging regulators who were still grappling with how to make rules for what was a new phenomenon.
11: Mobile network operators make up nearly 60% of mobile money service providers, and the returns for them can be substantial: a fifth of M-Pesa provider Safaricom’s revenues come from the service—with revenues at $320 million currently, a 22.8% growth; a story replicated by other providers active on the continent such as the transnational Millicom, for whom sub-Saharan Africa mobile financial services contributed nearly 10% of revenue in the third quarter of last year.
