In 2020, users in sub-Saharan Africa accounted for around two thirds of worldwide mobile money transactions. These transactions represented a combined value of $490 billion USD. In the same year, the region recorded approximately 548 million registered mobile money accounts, of which 159 were identified as being active.
In low resource environments where people have traditionally had little access to financial services, mobile money could be revolutionary, allowing even those without bank accounts to transfer money quickly at low cost using just a mobile phone.
The Definition of Mobile Money
Mobile money makes possible the transfer of money between cell phone devices via a digital payment platform. Users don’t need to be connected to a formal banking system to send, withdraw, and receive money. The technology that enables mobile money is installed on the device’s SIM card and can be used in both regular and smartphone devices.
Mobile money is different to mobile banking. The latter is a means for an individual to manage the funds in their bank account via an internet-enabled mobile device.
The Benefits of Mobile Money in Sub-Saharan Africa
Experts in financial services, such as David Mouko Elizaphan Omaanya, the director of Savannah Technologies Ltd, know that as well as promoting financial inclusivity, mobile money delivers many other benefits. Elizaphan Mouko is also a director at Uzapoint, which offers mobile and web Point of Sale software for SMEs throughout Africa.
In Kenya, mobile money has boosted consumption and raised around 2% of households out of poverty while driving up labor market outcomes and levels of savings, according to an assessment by Suri & Jack. This has been most impactful with regard to female-headed households.
Mobile money also has the potential to create more stable financial systems. For example, the collapse in 2013 of the Somali Central Bank resulted in the breakdown of the country’s financial system. However, the introduction of technology turned the situation around, as the nature of mobile money meant that businesses could still transfer funds between each other and marketplaces could continue to flourish.
Mobile money can promote financial resilience too, notably in cases where individuals or families find themselves in difficult circumstances, such as in the event of a sudden health issue or a natural disaster. A recent study found that Kenyan households with access to mobile money didn’t need to reduce their spending in response to an unexpected negative event, as they were able to swiftly receive money transfers from friends and family members.
For more information about the benefits of mobile money, take a look at the embedded PDF.
