By Alkali Amana
The GSMA’s State of the Industry Report on Mobile Money 2021 reveals that ‘sub-Saharan Africa has been at the forefront of the mobile money industry for over a decade’. Globally, the continent accounted for most of the growth of the industry in 2020 with 43% of all new accounts and transactions amounting up to $495 billion in total. Invariably, it is safe to surmise that Africa is the mobile money capital of the world as the industry booms continuously and improves on its strength.
Further statistics from the GSMA reveal that globally there are 310 live mobile money services in 96 countries. 171 of these services are in Africa, with 157 in sub-Saharan Africa specifically. Today, an estimated 100 million mobile money accounts exist in Africa. When compared with South Asia, the customer adoption in Africa is way more than that of South Asia which is the second-largest region in terms of mobile money market share with around 40 million active mobile money accounts. In 2020, registered mobile money accounts in the continent grew 12% to 562 million in 2020, while monthly active accounts were 161 million, representing an 18% increase from its previous rating. An instance to show the rapid and constant growth of users for the mobile money market in Africa can be seen in recent reports which feature M-Pesa, one of the leading service providers, hit the mark of having 50 million active users monthly.
The numbers promise a lot. Being a global leader in the mobile money market shows a glimpse of the numerous opportunities that lie in Africa. When harnessed properly, these are potential deal-breakers. The import of what mobile money presents is its ability to provide a digital means of facilitating transactions for users to receive, withdraw, and send money without being connected to the formal banking system.
Mobile money provides various financial services to people who have limited access to traditional financial institutions especially to small and medium enterprises (SMEs), women, and the rural population. Providing insight into the opportunities within the mobile money market, the IMARC Group in its report ‘Africa Mobile Money Market: Industry Trends, Share, Size, Growth, Opportunity and Forecast 2021-2026’ noted that growing mobile money providers in emerging markets such as Africa help to boost the transactions in public and private sectors. Also, the high internet penetration rates will raise mobile money transactions as well. Moreover, the ease of accessibility, 24/7 availability, security, lower transaction costs and user-friendliness will accelerate the market growth in the forecast period in the region. Countries such as Kenya and Uganda have over half of the adult population using digital financial services. Apart from increasing access to financial services, the growing mobile money industry in the African region has offered a new career path and additional income opportunities to many small-scale entrepreneurs as mobile banking agents. Further, with the mobile device becoming a regularly used device, mobile money services have prominently transformed the user’s payment and money transfer experiences.
The appeal of engaging in financial activities and transacting with ease is fast becoming appreciated in place of traditional methods with institutions that consume time. The GSMA report disclosed that in 2020 mobile money customers were not only using their accounts more frequently, but they were using them for new and more advanced use cases. Calling the attention of interested parties and potential investors, this suggests that more and more people are moving away from the margins of financial systems and leading increasingly digital lives. In Africa’s most populous country, Nigeria, forecasts from the IMARC Group expect the mobile money market to thrive and exhibit strong growth in the coming years (2021 – 2026), despite the uncertainties that come with the aftermath of the Covid19 pandemic. Ordinarily, the pandemic and its effects seem to have accelerated the growth of mobile money with consumers rapidly switching to online purchases and digital checkout payments in retailers rather than using cash. Lockdown situations and restriction of movement to curb the effects of the pandemic have made the prospect of transacting at a distance with mobile money attractive. A 2020 World Economic Forum report revealed that governments even encourage the use of digital payments to reduce person to person contact and potentially curb the virus.
Essentially, mobile money serves a key purpose considering that it is proving to be a way for people excluded from the formal financial system, the unbanked – including women, youths and the rural poor, to access services such as savings and loans, start businesses and receive payments. Mobile money is a utility that cannot be ignored pressing into the future of Sub-Saharan Africa, especially where driving financial inclusion is concerned. It is time for businesses to integrate mobile money services to take on the chance of thriving. Governments must consider mobile money policies and integration into their systems too to sustain the growth of the economy digitally. A viable digital economy is a way forward for Africa as a global Fintech leader, and digitizing social payment processes such as welfare and pensions are areas governments can consider as starting points.