As the story of the mobile phone and its contribution in bridging the digital divide in Sub-Saharan Africa unravels, the device’s revolutionary role in facilitating transactions and wealth distribution in the region is shaping up in an unprecedented way.
The speedy penetration of mobile telephony and the exclusion of most people from the formal financial system because of the existing socio-economic challenges seem to be the largest contributors to the mobile money wave. For, although only about 10 percent of people with primary or no education have bank accounts, compared with 55 percent of those with tertiary education, the share number of people using mobile in Africa is the highest in world, according to a recent study on financial habits by the Gates Foundation, the World Bank and Gallup World Poll.
But the mobile-money wave is not purely accidental. For their part, mobile telecom players, such as Airtel Africa, are investing millions of dollars in infrastructure, consumer education and awareness to broaden mobile-money propositions and drive financial inclusion.
Generally, mobile money is a substitute both for brick-and-mortar banks and sending cash through, say, bus drivers, as has been the case in most of Africa. And because it empowers people who cannot get to a bank branch or an automatic teller machine (ATM) to access financial services, its availability helps offset the bias of the banking system towards the educated. This brings good news to millions of Africans, say farmers whose educated children are working abroad, as they will now enjoy a portion of the US$40 billion that experts predict will be transferred into Africa by 2016.
The opportunities are huge not just for telecoms but also for the ecosystem of service providers in the mobile money transaction cycle. GSMA, an industry body, reckons that as at June 2012, there were about 57 million registered mobile money users in Sub- Saharan Africa representing nearly 70 percent of the world’s mobile money user base. Yet, close to 500 million people remain unbanked in the region despite their being a slightly larger number of active SIM connections. So getting the pool of those unbanked into the system – though mobile money – is not impossible.
Key trends will continue to drive the expansion of mobile money in sub-Saharan Africa. Firstly, availing mobile money to customers means they shift cash transactions into a digital ecosystem relatively cheaply, securely, and reliably. For instance, in a majority of the 17 countries where we operate in Africa, Airtel Money is helping customers make payments and transfer money in unprecedented ways. Across all our operations, Airtel Money is now being used to pay civil servants including the military, the police force, and pensioners through their mobile phones. Many more are utilising the wide range of services – from making merchant payments to settling water and electricity bills. They are able to conveniently send money to loved ones for food, clothing, medicine and books.
Secondly, as GSMA notes, many policymakers and operators have recognised the strategic importance of mobile money as both an opportunity to increase financial inclusion and a revenue generator. Apart from data, powered by increasing 3G and 4G penetration across our pan-African markets, Airtel has identified mobile commerce as an increasing source of revenue growth and diversification while driving cost efficiencies through airtime and data purchases by customer via Airtel Money.
There’s a lot to make out of the disparities in access to telecoms services, too. Because, telecoms are deploying smarter mobile networks, there are multiple opportunities in addressing latent demand in mobile money. Market segments such as rural areas will be key: sub-Saharan Africa lags the global average (about 44 percent) in the proportion of people with bank accounts. And women in the region, 88% of whom did not have a formal bank account, will increasingly be critical to mobile operators.
Thirdly, as well as enabling payments, mobile technology is capable of extending the reach of financial services through products like insurance, credit and savings. There is, more than ever before, a need for effective relationships with banks and other financial institutions to meet a broader range of customers’ financial needs, thereby deepening financial inclusion. Airtel is partnering with the region’s foremost financial-services providers who are now offering unsecured credit and insurance products in various countries respectively.
Last but not the least, operators will be proactively developing the mobile money ecosystem through additional products and services. At Airtel, cross-border mobile-money capability will be unleashed leveraged our unique footprint and extending maximum convenience to Africans for remittances and small trades.
As Africa’s technology drum beats assiduously and rumbles louder, the gap in financial service provision between telecoms and financial-service organisations will surely continue to narrow. And for customers, the revolution is bound to bring unbridled joy in just what a mobile phone can do.
Chidi Okpala is the Director and Africa Head, Airtel Money at Airtel Africa