Africa has a population of approximately 1.1 billion people – of which a large portion of the population are those who do not have traditional bank accounts, who are too poor and who cannot afford to possess a bank account with the accompanying fees, especially those living in remote areas. The continent is thus experiencing an explosion of Mobile Money services as banks and financial institutions compete for the “unbanked” customers.
Why Mobile Money?
Even though it is a large part of the population who is unbanked, they still perform economic activities, earning a living. This population of economically active but unbanked society was a share of the market that financial institutions did not have – and given the number of economically active but unbanked people, quite a large market share was not being gained.
The other reason is that due to the poor infrastructure in Africa, there is not reliable telecommunications / landline services available. As such, people in Africa rely heavily on cellphones to do business transactions and to utilise the internet. With this increase in utilising mobile phones on the continent, Mobile Money services serves the perfect tool for users to freely transact.
To gain access to this unbanked population, Mobile Money was introduced to enable anyone with a cellphone (which is practically anyone in the world) to receive, spend and save money.
The Mobile Money concept enjoyed great success in Africa, with 2014 seeing an exponential increase in international remittances via Mobile Money and according to Ventures Africa (See article HERE), the number of current globally active Mobile Money accounts exceeds 100 million, of which 53% is made of sub-Sahara Africa accounts.
In 2014, statistics from East Africa showed that there was almost one mobile money account for every two mobile connections, with transactions worth USD 26.3 billion were made via mobile phones in Kenya.
An association of mobile operators and related companies called the GSM Association (Groupe Speciale Mobile Association) is devoted to supporting the standardising, deployment and promotion of the GSM mobile telephones. They report that international remittances is one of the main sources of incoming funds to Mobile Money.
Who funds Mobile Money remittances?
WorldRemit is a company that understands the need for all people to have quick access to convenient transferring of funds. They are currently the leading sender of remittances to Mobile Money and have recently raised 100 million USD to enable users of its service to transfer money, going from 50 countries to 117 countries in Africa, Asia and Latin America. WorldRemit’s Founder and CEO, Ismail Ahmed, has reportedly stated that the rapid growth of Mobile Money services is one of “the biggest enlargements of participation in the global financial system, ever”.
The global remittance market is said to be worth USD 550 billion and WorldRemit (as well as other remittance providers) are determined to tap into this.
Companies to incorporate Mobile Money
WorldRemit will be partnering with other Mobile Money service providers to ensure an even more effective money transfer service.
The company recently announced a partnership with telecoms giant MTN.
Other companies looking to gain a share of the attractive Mobile Money market in Africa, are VISA and Mastercard. Both companies plan to aggressively expand into Africa, utilising pan-African mobile banking and payment services organisations that provide Mobile Money services.
Welcome to the new world order… where money may become a digital phenomenon over a physical thing!
What do you think the chance of this happening is?
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