The growth of mobile money in Africa is rapidly accelerating, driven by improved access to technology, challenges in accessing traditional financial services, and an increase in contactless payments spurred by the COVID-19 pandemic.
Mobile money services, supported by telecommunication companies and a network of licensed agents, allow registered users to deposit cash into a virtual wallet and utilise the funds for various payments and purchases, including peer-to-peer transactions.
Mobile money serves as a pivotal tool for financial inclusion, particularly for individuals who are unbanked, providing them with a means to actively participate in the economy. Africa’s designation as one of the most underbanked regions globally has led to a substantial surge in the adoption of mobile money.
Throughout history, sub-Saharan African countries have encountered challenges in their socioeconomic progress due to the limited prevalence of financial inclusion. According to World Bank data, as of 2021, 45 percent of individuals aged 15 and above in sub-Saharan Africa remained unbanked.
A lucrative opportunity has emerged for telecommunication providers in Africa through the rise of mobile money, with approximately 144 mobile money providers active in Sub-Saharan Africa. Key players like M-Pesa, Airtel, Orange Money, Eco Cash control a significant portion of the market.
Thanks to enhanced internet connectivity and the accessibility of low-cost smartphones, a greater number of unbanked people are now able to conduct mobile money transactions online, being a key factor in the 29 percent boost in e-commerce value growth in sub-Saharan Africa in 2022. Beyond simply enabling transactions, mobile money is paving the way for a deeper insight into how people consume.
Six billion registered mobile money accounts worldwide, with a 13 percent year-over-year growth in 2022, and 781 million of these accounts are based in Africa. Between 2021 and 2022, there was a 22 percent growth in total transaction values, amounting to US$1.26 trillion. As it grows, it provides an enormous chance to reach the 1.4 billion people who do not currently have access to financial services.
The market’s size can be more effectively perceived through the examination of additional statistical data.
- Exceeding 60 million individuals since 2021 exclusively.
- A total of 110 million accounts were opened in West Africa over the course of 4 years (2018-2022).
- West Africa is experiencing the most significant growth in agent networks on a global scale.
- The main drivers of active accounts globally are located in West Africa, with Nigeria, Ghana, and Senegal leading the way.
- The majority of new registered mobile money accounts in 2023, 36 percent, originated from West Africa.
- Thanks to mobile money, financial inclusion experienced a boost from 56 percent to 71 percent.
Southern Africa exemplifies how underbanking drives the use of mobile money, thanks to the accessibility of banking services in the region. The penetration of mobile money in that region has been minimal, indicating that unless an alternative solution to financial exclusion in parts of Africa is identified, the utilisation of mobile money is likely to increase in the long term.
Mobile money is commonly known for being more cost-effective and convenient than traditional banking options. Access to bank branches is limited in many African countries, requiring individuals to undertake extensive travel to reach them.
Contrary to other options, mobile money empowers users to make transactions from the ease of their homes or workplaces. Overall, the success of mobile money in Africa can be attributed to its alignment with local needs and preferences. Additionally, mobile money is generally considered to be a more cost-effective and convenient alternative to traditional banking services.
Enabling individuals to manage their finances and make investments for the future can contribute to economic growth and poverty reduction. Moreover, mobile money’s success highlights the importance of cooperation between telecom companies and financial institutions. In summary, mobile money has emphasised the critical role of trust in the achievement of digital financial services.
The 3 Most Popular Mobile Money Apps in Africa :
M-Pesa :
The dominant mobile money app in Africa, M-Pesa, has garnered a user base of over 40 million. The service first debuted in Kenya in 2007 and has since extended its reach to various African countries like Tanzania, Ghana, and Egypt. Using this app, individuals can conduct activities such as making deposits, withdrawing money, shopping, and more.
Airtel Money :
With more than 19 million users throughout Africa, Airtel Money stands as a popular choice for mobile money services in the region. The app encompasses all the essential features needed for mobile banking, like making deposits and paying expenses. Kenya, Uganda, and Tanzania are among the African countries where this app is commonly used.
Eco Cash:
Launched in Zimbabwe in 2011, EcoCash has emerged as one of the top mobile money apps in Africa, garnering a user base of over 10 million. By collaborating with several banks, EcoCash enables users to easily link their mobile money accounts with their bank accounts, a notable feature of the service. Apart from that, EcoCash ensures the safety of users’ funds by providing security features such as PINs and fingerprint authentication.
The Potential of Mobile Money in Africa
There are multiple chances for the growth of mobile money in Africa in the future. There is a notable opportunity in expanding mobile money services to include complex financial offerings like loans and insurance, going beyond basic transactions. This will aid in promoting financial inclusion in Africa by granting access to a more extensive array of financial resources. Africa’s economic progress is significantly influenced by SMEs, which struggle with limited access to credit and financial services. The use of mobile money could assist in narrowing this gap by providing SMEs with access to loans and various financial instruments.