Personal empowerment for African consumers The African continent has
M-Pesa, over the next decade and a
To be sure, access to financial
witnessed progressive increases
half, this telco-led financial service
services remains a challenge in
in financial inclusion, largely
model has boomed and continues
several communities in Africa due
driven by mobile money and other
to serve hundreds of millions of
to several factors, including low or
technological advances, against
Africans today. Fintech firms have
irregular income, attitudes toward
a backdrop of limited banking
also joined the fray, disrupting
banking, proximity to a financial
infrastructure and ubiquitous
the telco-led mobile money model
services provider, and more.
mobile devices. It is estimated
in select markets. Generally,
Distribution costs in the banking
that adult ownership of financial
non-bank financial services
industry, including building
services accounts in Africa has
have significantly boosted adult
branches, connecting them to a
increased from 38% to 74%
ownership of financial services
data network, and paying staff
in the last decade, and mobile
accounts in many African countries.
salaries, are prohibitively high. It is
money has played a key role in this advancement, with Africa accounting for two-thirds of all the value of mobile money transactions globally in 2022. Without a doubt, the digitisation of financial services and distribution via mobile and agency banking channels has made them more accessible, but what impact has this had on the lives of Africans?
The effect of widespread access to digital financial services has been significant on the lives of Africans. Sending money to a family member elsewhere in the country can now be achieved without leaving home. Consumers no longer need to make a journey to the office of a utility company or service provider (e.g., cable TV) to make a bill payment. They also do not
therefore not feasible to establish a bank branch in every community; however, agency banking, created by mobile money operators who already had a massive telco distribution network of agents selling airtime, makes it possible to have physical locations for financial services in the communities where customers live and work. This, along with the ubiquity of mobile devices, has contributed to the huge
Traditionally, banking and other
need to travel to a bank to check
formal financial services were
their account balance or to access
reserved for only big businesses
their funds. The savings in time and
Mobile money is only the entry
and well-heeled individuals
improvements in productivity for
point to accessing financial services
in African countries. The unit
African consumers have been quite
and is largely limited to a store of
economics of establishing and
significant.
value wallet, which allows for funds
running a branch network along with the requirements for opening and operating an account ensured that banking services only reached a minority of the population. As the 20th century came to an end, Africa witnessed a mobile phone revolution. GSM licences were granted by several nations, and within a decade, having access to a phone line was no longer a luxury on the continent. The decision by telcos to include mobile money wallets in their offering could not have come at a better time. Popularised by Kenyan Safaricom’s
For individuals seeking to transact across borders, the possibilities have also expanded. Remittances into African countries are a major source of foreign currency earnings. In the past, a student in Dakar, Senegal, receiving money from his older brother based in Paris, France, would need to wait a couple of days for the funds to arrive, and he had to go to a bank branch or remittance agent to cash out. Today, he can receive the funds instantly into his account or digital
success of mobile money in Africa.
transfers within the operator’s mobile network. Partnerships with other ecosystem players can radically improve the offering, adding credit, insurance, and other valuable services to the bouquet. For example, in 2019, Ecobank partnered with MTN Mobile Money in Ghana to include its microlending product, XpressLoan, on the mobile money menu, and within the first 6 months, loans worth $150 million were issued to over 1 million unique users.
wallet and pay for books or food directly from there. 21
