Box VIII.2: DFIs’ Support to Mobile Banking and Payment Systems in Africa

Box VIII.2: DFIs’ Support to Mobile Banking and Payment Systems in Africa

Mobile banking in Africa has been pioneered by M-Pesa, a system that allows depositing, sending, and withdrawing funds using mobile phones. The mobile operator Safaricom launched the scheme in Kenya in March 2007 and since then it has reached more than 40% of the adult population in the country, doubling the number of Kenyans considered financially not-excluded. This success prompted DFIs to invest in the mobile banking sector and grasp the huge opportunity to improve financial inclusion throughout the continent:

In 2010, Proparco jointly with the IFC provided a credit line of FCFA 8 billion to Millicom Chad, with the aim to support the extension of its network and provide access to a larger customer base. This initiative will contribute to increase the potential for mobile banking and improve financial inclusion in Chad.

In 2007, the IFC partnered with WIZZIT to bring mobile lending to millions of people in South Africa. The project deals mainly with low-cost, transactional bank accounts that use any mobile phone on any network for making and receiving payments, as well as borrowing loans. Furthermore, the service comes with a MasterCard-branded debit card that works on traditional ATMs. So far, over 400,000 people in South Africa have opened an account and WIZZIT has disbursed more than 350 loans (between 2,000 and 10,000 Rand equivalent to USD 285 -USD 1,425) to businesses.

In 2010, the AfDB, the West African Monetary Institute (WAMI), and the Central Bank of Liberia (CBL) launched the West African Monetary Zone (WAMZ) Payments System Development Project in Liberia with a grant of USD 7.6 million. This program aims at enhancing payment systems other than cash in order to improve banking and financial transactions.

Source: Proparco (2010), IFC (2007), Mass and Radcliffe (2010).

payment systems over the last 5 years which reflects the important potential for such services to improve financial inclusion on the continent (see Box VIII.2).

Interestingly despite the large number of projects supporting microfinance among the ones included in the database, available evidence suggests that DFIs do not direct a significant share of their financial resources towards the African microfinance sector. Indeed, most of DFIs’ investments in microfinance, have been so far concentrated in 2 regions: Latin America and the Caribbean and Eastern Europe and Central Asia, which together accounted for about 70%