What Will Be the Hottest Mobile Money Market in the World by 2020?

The Consultative Group to Assist the Poor (CGAP) have released a report on mobile money momentum in African countries, emphasizing Ghana, Kenya and Tanzania as the most successful mobile money markets in the world.

According to the report, 17% of Ghana's 27.3 million citizens have a mobile money account, which has doubled from 2014. Ghana demonstrated a rapid growth of mobile money and a potential to become the world’s most successful mobile money market moving previous leaders.

Moreover, 92% of adults in Ghana have the required ID necessary to open an account and 91% of Ghanaians own a mobile phone. As stated by The World Bank, Ghana has an even greater potential for mobile money than Kenya and Tanzania, which are considered two of the most successful markets in the world.

Great opportunities for FinTech companies in the following four countries are predicted by the fact that in three of them less than half of the population is financially included.

Kenya has the highest rate of financially included population of 65% while the lowest is held by Rwanda (37%). The vast majority of Ghanaians and Rwandans are not served by traditional financial industry players, which provides an opportunity for FinTech entrants which is hard to overestimate.

As financial inclusion in the four countries clearly has room for improvement, the mobile money market also represents an outstanding opportunity in all given countries, especially in Rwanda and Ghana, where only 17% of population have active mobile money accounts even though the vast majority meets the requirements.

Mobile money can deliver financial inclusion benefits only if a range of certain services is offered by providers and used by customers. According to CGAO, across Kenya, Tanzania, Rwanda and Ghana, people list domestic remittances as their top reason for starting to use mobile money (45%).

For rural population living on less than $2.5 per day, mobile money is emerging as a common source of financial inclusion. In Ghana, rural access has doubled since 2010, and in Rwanda, people living below the poverty line are more likely to be active mobile money users than those with higher income, as stated by CGAP.

Interestingly, Ghana has the highest percentage of population ready to be banked and use mobile money. With the second highest rate of basic numeracy, Tanzania, on the contrary, has the lowest rate of adults with required IDs to open an account. The story with Rwanda is also quite interesting. While 87% meet ID requirements and basic numeracy is at the same high rate, less than half of the adults actually own a mobile phone, which creates a significant barrier to serve the population. Overall, Ghana and Kenya are the most promising mobile money markets.

Mobile money is used for various reasons across countries. For example, mobile money users in Rwanda are most likely to pay bills via their mobile devices, with 25% of active mobile money users taking advantage of this feature. While Ghanaians are financially active, 86% of active mobile money account holders save. However, they generally do not use their mobile money accounts for other purposes.

Digitizing existing payment streams that are currently occurring in cash is a significant opportunity for mobile money growth in Rwanda and Ghana. In both countries, these payment streams exist but have not shifted to digital formats yet with only 0.1% using mobile money for that purpose.

As CGAP concludes, Ghana has excellent conditions for mobile money, including literacy, numeracy, phone ownership and phone usage. Moreover, new regulations passed in July 2015 have made it easier for mobile money service providers to operate. The challenges that remain are customers’ persistent reliance on cash, especially for paying bills.

While phone ownership is at a relatively low rate in Rwanda, customers are already in the habit of paying bills with mobile money. With an improved mobile network, digitizing additional payment streams is a significant opportunity.

Mobile money is a promising financial inclusion solution for many people in African countries, as evidenced by progress in Kenya and Tanzania. Rwanda and Ghana are well-poised for mobile money to take off in the coming years, as CGAP suggests.