Chidi Okpala is the director and Africa head of Airtel Money at Airtel Africa.
As the story of the mobile phone and its contribution to bridging the digital divide in sub-Saharan Africa unfolds, the device’s revolutionary role in facilitating transactions and wealth distribution in the region is shaping up in an unprecedented way. The spread of mobile telephony in the face of the exclusion of many people from the formal financial system because of socio-economic challenges has given impetus to the mobile money wave.
For, although only about 10 per cent of people with primary or no education have bank accounts, compared with 55 per cent of those with tertiary education, the number of people using mobile phones in Africa is the highest in world, according to a recent study on financial habits by the Gates Foundation, the World Bank and Gallup World Poll.
But the mobile money wave is not accidental. Telcos are investing millions of dollars in infrastructure, consumer education and awareness to broaden mobile money propositions and drive financial inclusion. Generally, mobile money is a substitute both for brick-and-mortar banks and the transfer of cash through, say, bus drivers, as has been the case in many parts of Africa.
And because it empowers people who cannot get to a bank branch or an automated teller machine (ATM) to seek financial services, its availability helps remove the bias of the banking system towards the educated. This brings good news to millions of Africans, say farmers whose educated children are working abroad, as they will now enjoy a portion of the $40 billion that experts predict will be transferred into Africa by 2016. The opportunities are huge, not just for telcos but also for the service providers in the mobile money transfer cycle.
The industry body GSMA (GroupeSpeciale Mobile Association) says that as at June 2012, there were about 57 million registered mobile money users in sub-Saharan Africa, representing nearly 70 per cent of the world’s mobile money user base. Yet close to 500 million people remain unbanked in the region. So getting the unbanked into the system though mobile money is not impossible.
Key trends will continue to drive the expansion of mobile money in sub-Saharan Africa. First, making mobile money available to customers means they shift cash transactions into a digital system relatively cheaply, securely and reliably. For instance, in a majority of the 17 countries where Airtel operates in Africa, Airtel Money is being used to pay civil servants and pensioners. Many more are using the wide range of services, from making merchant payments to settling water and electricity bills. They are able to conveniently send money to loved ones for food, clothing, medicine and books.
Second, as GSMA notes, many policymakers and operators have recognized the strategic importance of mobile money as both an opportunity to increase financial inclusion and a revenue generator. Apart from data, Airtel has identified mobile commerce as an increasing source of revenue growth and diversification while driving cost efficiencies through airtime and data purchases by customers via Airtel Money.
There is a lot to make out of the disparities in accessing telecommunication services, too. Because telcos are deploying smarter mobile networks, there are multiple opportunities in addressing the latent demand in mobile money. Market segments such as rural areas will be key: Sub-Saharan Africa lags behind the global average (about 44 per cent) in the proportion of people with bank accounts. Women, 88 per cent of whom do not have a formal bank account, will increasingly be critical to mobile operators.
Third, mobile technology is capable of extending the reach of financial services through products like insurance, credit and savings. There is, more than ever before, a need for effective relationships with banks and other financial institutions to meet a broader range of customers’ financial needs, thereby deepening financial inclusion. Airtel is partnering with the region’s foremost financial service providers who are offering unsecured credit and insurance products in various countries. For customers, the mobile money revolution is bound to bring unbridled joy.