It is a popular fact that remittance via mobile has picked up a rapid pace in Africa. The most prominent example that can be cited is that of Kenya where people have been using mobile money for over seven years. M-Pesa is Kenya’s dominant mobile-money provider. Such mobile money services allow people to make P2P payments by simply texting. As per recent figures, mobile-money accounts now outnumber bank accounts in 9 countries – Cameroon, the Democratic Republic of Congo, Gabon, Kenya, Madagascar, Tanzania, Uganda, Zambia and Zimbabwe.
As per GSMA, a trade association of mobile carriers, there are 242 mobile money service providers operating in 89 countries holding a total of 203 million mobile money accounts. Although Kenyans have been using such service for more number of years as compared to others, but they are not the leader anymore. In Tanzania, in 2013, 44% of adults used some form of mobile money as compared to 38% of Kenyans. Tanzanians conducted 99.9 million mobile money transactions worth $1.8 billion. Tanzania is witnessing mobile phone becoming a platform for a whole range of financial services.
The ease of usability of mobile money services makes it a popular method among Africans. It can be attributed to the use of Unstructured Supplementary Service data (USSD), a simple text based data transfer protocol enabled by mobile networks. USSD is finding use in day to day transactions right from insurance to tax payments, savings, etc. Mobile carriers restrict mobile money service to within their network, not enabling one to pay someone on a different network.
To handle such issues, services like Kopo Kopo are coming up with methods to accept mobile money anywhere along with online tracking. Such services are also enabling businesses to leverage mobile money as payment method. Kopo Kopo is especially gaining popularity in Tanzania and Kenya. In 2013, the Tanzania Revenue Authority started allowing citizens to pay vehicle licensing fees via mobile money.
Countries in Africa are also witnessing linking of banks with mobile money service providers. Tanzanian regulators are in the process of allowing banks to pay interest to mobile operators which shall then be distributed to users. In Kenya, the Commercial Bank of Africa teamed up with M-Pesa to allow transfer of mobile money to bank accounts for loan applications.
Other trends being observed around mobile money services include microinsurance. A company called Bima operates in Tanzania providing such services. Instead of directly selling to consumers, Bima sells it to mobile operators who then provide insurance policies to subscribers for free. This also gives an opportunity to operators to retain customers effectively.
Africa is also witnessing cross-border and cross-operator remittances. Three Tanzanian operators had allowed mobile money transfers between their networks. A company named Tigo started cross border remittance between Tanzania and Rwanda. The Central Bank of West African States helped Bharti Airtel and MTN Group develop cross-border mobile transfer system between Ivory Coast and Burkina Faso. With interoperability coming up bringing more new services, Africa could become the foundation of a whole new financial-services industry.