There has been an exponential boom over the past year in the use of mobile money across the continent, due to the increased digitalization and sophistication of the digital transaction ecosystem.
Kenya, one of the global leaders in mobile money adoption, hit an all-time high between January and November 2021 with users transacting around $55.1 billion ($6.2 trillion). shillings), according to data from the Central Bank of Kenya (CBK).
This exceeds the $45.9 billion (5.2 trillion shillings) mark reached in all of 2020, as well as being the highest value recorded since the introduction of mobile money wallets in the world. country.
It is also important to note that this increase came despite the withdrawal of subsidies put in place by the government in 2020 to ease the burden on operators and encourage the adoption of cashless payments due to the coronavirus pandemic.
This boom is also happening across the continent.
World Bank data has recognized Ghana as the fastest growing mobile money market in Africa over the past five years.
According to a study, Five Strategies for Mobile-Payment Banking in Africa, mobile phone and wallet transactions accounted for 82% of Ghana’s gross domestic product (GDP), compared to 87% in Kenya, despite having lower smartphone penetration rates than of China – the only geography whose overall market penetration of mobile financial services is greater than Africa.
The widespread success of mobile money in Africa owes much to its exclusivity of bank accounts, meaning it brings people into the formal financial ecosystem who might face barriers to opening a traditional bank account. .
Other countries outside of Africa have sought to develop their own mobile payment platforms, citing apps like Venmo, but many of these are tied to existing bank accounts, limiting their reach to those in the formal financial ecosystem.
Data from the Wall Street Journal points out that nearly half of the world’s 1.04 billion registered mobile money accounts are in sub-Saharan Africa.
However, there is room to further scale the success of mobile money in sub-Saharan Africa through improved interoperability and adoption of technology in industry oversight.
Ghana implemented its first mobile money interoperability system in 2018. This decision was advised by the need to remove the barriers and complexities associated with transfers across different mobile money networks.
Between 2018 and 2021, the number of people aged 15 and over with a mobile money account increased from 13% to 38.9% according to data from Statista.
Kenya also embraced mobile money interoperability in 2018 when the number of mobile money subscribers, according to CBK data, stood at 37.8 million. That number has grown today to 67.15 million mobile money subscribers in November 2021.
James Claude, CEO of regulatory technology developer and big data analytics company Global Voice Group (GVG), believes that mobile money interoperability can be very beneficial for Africa and enable it to replicate the boom experienced in 2021.
“The mobile money ecosystem has undergone an undeniable revolution in recent years. Just a year ago, 562 million Africans were using mobile money services, representing a 12% increase from the previous year,” he says.
“This revolution has fostered financial inclusion across the continent, but there is still a long way to go to reduce the unbanked population in the region. In this regard, mobile money interoperability plays a crucial role in reducing the costs of sending and receiving money on the African continent, which in turn improves access to these digital transactions.”
In its early years in Kenya, mobile money was primarily used for peer to peer (P2P) transactions, but it has now become a major payment channel for businesses as well.
Many businesses today are able to receive payments from customers via mobile money, while others also make payments through the same channel. The growing reach of the industry calls for more agile and effective oversight of the sector.
This mandate covers several sectors, with mobile network operators (MNOs) and the financial services sector falling under separate files. Mobile money monitoring should therefore take this into account and facilitate the collection of relevant information, as well as its use and interpretation by the parties concerned.
Pricewaterhouse Coopers (PwC) Kenya experts’ analysis calls for adoption of technology for surveillance.
Experts say that “predictive analytics will go a long way in filling the gaps as it will enable real-time data collection, analysis and reporting.”
The overall impact that technology will have on strengthening oversight is immense, especially considering the fact that the digitization of payments has grown rapidly over the past couple of years.
Overall, the growth of mobile money will continue due to its relevance to the situation on the continent. Increased smartphone adoption and increased internet penetration will also play a key role in this regard.
Claude supports this point of view by pointing out that “the rate of this growth will depend heavily on the rate at which Internet access reaches the unbanked and on the speed with which the problems related to interoperability are solved, in addition to the problems security associated with mobile money transactions”.
“With the implementation of technologies that adapt to the needs of the payments ecosystem, as well as those of recipients, the digital economy, and more specifically mobile money, will surely continue to grow at high rates. “.