Barriers To Mobile Money In Africa
Last week, I spent three days at the Mobile Money Africa (MMA) conference in Johannesburg, South Africa, with around 200 delegates from across Africa and abroad. We were there to discuss the state of the mobile money industry in the continent.
While some markets are further ahead than others, in terms of the uptake of mobile financial services, and everyone talks about the big mobile money boom, there’s still a lot of work to be done to establish this as a mass-market industry in Africa. After listening into the different speakers, and based on the discussions I had there, it is clear to me that there’s a consensus over some key areas that need to be solved quickly:
Mobile Money Boom in Africa?
GSMA announced that mobile money services are now available in 34 of the 47 countries in the region, with multiple deployments in some countries. Does this mean that mobile money is booming in Africa? Well, yes and no. A lot of people at MMA argued that mass-market adoption has only really happened in East Africa. Countries like Kenya, Tanzania, and Uganda have become poster children for mobile money, yet even here the most commonly used service is P2P transfer.
What about the other markets in Africa? Some argue that one size does not fit all. An example is the success of M-Pesa in Kenya, which was partly down to the need for P2P transfers, but in a market like Ghana there are different migratory patterns and less need to send money from a city to a village via a mobile phone. In Ghana, the uptake of mobile money would need to be driven by other services that offer “speed” and “convenience” - like mobile bill payments. In Mozambique, automating pre-paid electricity purchases using a mobile wallet would be another good example, as today there are about a million transactions every month where people queue in line to buy prepaid electricty.
The Importance of Education
The need to educate consumers was another important point raised at the conference. I spoke to representatives from Safaricom and Orange Money and they were vocal about the fact that, “large bill board advertisements” were not enough to drive people to use mobile money. There is need for direct interaction with the consumers to explain the benefits of the service and - more importantly - build trust. This supports the findings we at Ericsson have seen from our research. We found that 44% of non-users in Sub-Saharan Africa don’t use mobile money because they think it is not secure. Read more on page 10 of our report.
Two important issues that came up often and need to be urgently addressed were interoperability and the role of regulators. I talked about the importance of these in my own presentation. Read more about these points in my next blog post.
Growing Mobile Money Ecosystem
Overall, this year’s MMA was a very stimulating event with lot of valid discussions. I saw that the MNOs were keen to showcase best practices and capitalize on their success by acting as thought leaders within this new emerging new business segment. . Traditional banks were trying to showcase innovation in areas like mobile banking and agent networks as a way of proving their relevance in addressing this slight disruption caused by the mobile channel. As someone said during one of the panels, “banks cannot be everything to everyone”. I feel many banks are still trying to find their strategy to enter the mobile money value chain - especially with regards to launching offerings towards the underserved.
On my way out from the conference I stopped by a supermarket. On seeing my event badge, the cashier immediately invited me to pay using mobile money, and began to explain the various services available now at Pick n Pay including domestic money transfer. This was a real first-hand experience that brought a neat close to another successful Mobile Money Africa!
What do you think about mobile money in Africa? Share your thoughts below.
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Written by: Rajiv Bhatia
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