by Srinivas Nidugond

When examining the global uptake of mobile money, Sub-Saharan Africa readily springs to mind as a noteworthy case. Here’s why-the region has (and will continue to) witness significant uptake of the service. To illustrate, as per the World Bank’s Global Findex Database, in 2014, 12 per cent of adults in the region had a mobile money account, as against the global level of 2 per cent. Unsurprisingly, a sea change has been witnessed since, with 21 per cent of adults in the region holding a mobile money account. Amongst the mobile money account holders, approximately half reported to have only mobile money account, while the other half have both mobile money and financial institution account. Country-wise, 73 per cent of adults in Kenya hold mobile money accounts, followed by Uganda and Zimbabwe, at 50 per cent.

Mobile money has boosted account ownership in parts of Sub-Saharan Africa
Adults with an account (%)

Source: Global Findex database.

Source: Global Findex database. Note: Data are displayed only for economies in Sub-Saharan Africa.

From East to West
Breaking it down further, in 2014, mobile money accounts were largely concentrated in East Africa. Currently, this includes countries in West Arica and beyond. Interestingly, the region houses 10 global economies where more adults have a mobile money account than one at a financial institution. This category includes Burkina Faso, Chad, Côte d’Ivoire, Gabon, Kenya, Mali, Senegal, Tanzania, Uganda, and Zimbabwe. In fact, in West Africa, the share of adults holding a mobile money account has increased to about 33 per cent in Burkina Faso, Côte d’Ivoire, and Senegal; 39 per cent in Ghana and nearly 45 per cent in both Gabon and Namibia.
By and large, the trend in this region is clearly inclined towards mobile money. To illustrate, the report states that the share of adults with an account at a financial institution has increased by a mere 4 percentage points since 2014. In comparison, the share of adults with a mobile money account has witnessed a twofold increase-9 percentage points. Of course, the level of uptake within the various economies themselves is chequered. To illustrate, in Côte d’Ivoire, the share of adults with only a mobile money account increased by 8 percentage points, while the share with both types of accounts or only a financial institution account stagnated. In Burkina Faso, Gabon, Ghana, and Senegal, there were significant increases in the share of adults with only mobile money accounts, as well as in the share with both account types. Meanwhile, in Kenya, Zambia, and Zimbabwe, notable growth was registered in the share with both types of accounts.

Mobile money accounts have spread more widely in Sub-Saharan Africa since 2014
Adults with a mobile money account (%)

Source: Global Findex database.
Note: Data are displayed only for economies in Sub-Saharan Africa.

Strained Ties: Gender and Account Ownership
This has remained largely unchanged since 2014. Economies that had no gender gap earlier are, by and large, continuing in the same vein, while the converse holds true as well. There are, of course, exceptions to this rule. For instance, no gender gap existed earlier in Burkina Faso and Ethiopia. So, while account ownership has grown by leaps and bounds in these two economies, this has also led to a double-digit gender gap in this context.

An interesting question thus is; is mobile money helping women obtain equal access to accounts? The early signs are certainly positive. Consider the eight economies where 20 per cent or more of adults have a mobile money account only: Burkina Faso, Côte d’Ivoire, Gabon, Kenya, Senegal, Tanzania, Uganda, and Zimbabwe. These economies all have a statistically significant gap between the sexes in the overall share with an account as well as in the share with both a financial institution account and a mobile money account.

However, Burkina Faso and Tanzania have a gender gap in the share owning a mobile money account only. This doesn’t hold true for the others. In Côte d’Ivoire, for example, men are twice as likely as women to have a financial institution account. Yet, women are just as likely as men to have a mobile money account only. In Kenya men are 18 percentage points more likely to have a financial institution account; they are also 18 percentage points more likely to have both types of accounts. But women are 11 percentage points more likely than men to have a mobile money account only.

Use Cases and Impact
In Africa, mobile money has become an integral part of people’s lives. It is being used for different kinds of payments, ranging from remittances to payment for work. Mobile money is slowly replacing cash and, of course, benefiting people. A few key use cases include:

Domestic Remittances
In Sub-Saharan Africa, domestic remittances are of vital significance. On an average, 45 per cent have reported sending or receiving such payments. Gabon, Ghana, Kenya, Namibia, and Uganda have the highest shares of adults using domestic remittances, about 60–70 per cent. In many Sub-Saharan African economies, the most common method of sending and receiving remittances is through the mobile handset. This, too, is executed mostly via mobile money accounts. In fact, amongst those sending or receiving at least one domestic remittance payment in Sub-Saharan Africa, most reportedly did it using a mobile phone— through either a mobile money account or an OTC service. Kenya leads the pack with 89 per cent adults sending or receiving domestic remittances in the past year using an account, in most cases a mobile money account. This is evident from the fact that most popular mobile money service across Africa like M-pesa, EcoCash, Airtel Money and Orange Money launched with domestic remittance as its primary use case. Mobile money-based remittances witnessed widespread adoption, as this medium is quick, affordable, secure and convenient, compared to cash.

Agricultural Payments
Many developing economies are agrarian societies. A significant part of population is typically dependent on producing and selling crops and livestock. According to the Global Findex, approximately 15 per cent of adults in developing economies receive payments for the sale of agricultural products. Most of these payments are in cash. However, in some African economies, digital payments have replaced cash payments, largely benefiting farmers. In Ghana, Kenya, and Zambia about 40 per cent and in Uganda 32 per cent of recipients reported receiving agricultural payments into an account, in most cases a mobile money account. Providing money directly into farmer’s account reduces time and costs associated with long distance travel to receive payments.

Farmers receive their money on time and are able to properly invest for their next produce, thereby increasing productivity. According to the Better than Cash Alliance, in Malawi, farmers who received digital direct deposits for cash crops invested 13 per cent more in their business, compared to those who received the proceeds from the sale of crops in cash.

Financial Aid Payments
Use of digital financial service for disbursing cash aid can benefit both the recipients and the donor (an NGO or the government). For recipients, digital payments services can lower the cost of receiving payments. For example, in Niger, receiving monthly social payments on the mobile handset saved the recipients 20 hours in overall travel and wait time. For governments, changing from cash to digital payments can improve efficiency and reduce corruption. In Niger, distribution of social transfers through mobile phones instead of cash reduced the variable cost of administering benefits by 20 per cent.

It wouldn’t be an understatement to say that mobile money has clearly carved a niche for itself in Sub-Saharan Africa. This is, of course, merely the beginning.

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