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The role of mobile money in economic liberation in Africa


Empowering millions with Mobile Money

Among the most significant developments in financial services over the past decade is the explosive growth of mobile money. Globally, these platforms are not just alternatives to traditional banking but are rapidly becoming primary financial conduits, especially in regions where banking infrastructure is sparse or non-existent. For many low to middle-income economies, financial inclusion has been a persistent challenge. However, mobile money has emerged as a powerful means of addressing this gap by offering an accessible, reliable, and cost-effective solution.


Mobile money has effectively bypassed previously insurmountable barriers, leveraging the ubiquity of mobile phones to bring financial services to the unbanked and underbanked populations. While the growth trajectory of mobile money has been impressive worldwide, Africa stands out as an example of its transformative power. The continent, often viewed as a mosaic of emerging markets, is today the largest mobile money market in the world, having racked up USD$3.45 billion in value of daily transactions in 2022.



The mobile money Landscape


The pattern in developing economies of leapfrogging a level of fixed infrastructure, which is difficult to access and unreliable in its provision (telephone landlines, for example) and moving straight into the adoption of new technologies, has long been established. This has been repeated in Africa in the mobile money sector, where traditional banks have underserved remote communities. Mobile money services offer an opportunity for financial inclusion to more people in these low to middle-income emerging economies, allowing them to bypass the services of traditional banks.


Regulatory changes in some African economies have further assisted in the mushrooming of mobile money. For example, in Nigeria, the granting of new licences has led to a 41% growth in registered agents that facilitate transactions for users. The increase in service providers means a growth in job opportunities and as more and more users come on board, their opportunities also expand, as they can finally participate in the local, and even global, formal economy.



Global mobile money transactions


With regulation comes better security and safer and more efficient payment systems. The process is being further strengthened by regulatory sandboxes where collaboration between existing and new fintech players in the market for product testing can take place. Sandboxes have a key role to play in opening the mobile money ecosystem up to smaller players whilst allowing regulators to assess risks to consumers.


The rise of mobile money providers has seen the first non-telco, non-banking companies to receive e-money licences, and more players are set to enter the market. A strong regulatory framework is therefore imperative to manage the vetting and licencing of operators in this new sector.



The crucial role of the mobile money agent (MMA)


Mobile money’s meteoric rise wouldn’t have been possible without mobile money agents. These agents, who have long been the backbone of the mobile money industry, play a vital role in ensuring that people can seamlessly transition between the digital and physical realms of money.


In 2022 alone, mobile money agents were instrumental in digitising an astounding USD$294 million through cash-in transactions, marking an impressive 17% increase from the previous year. These figures indicate the sheer volume of funds that individuals are looking to move into the digital space, underscoring the important position agents play in this process. Remarkably, nearly two-thirds of all incoming transactions were cash-ins, and it’s the agents who stood at the forefront of this transformation, acting as the primary gateway for digital financial inclusion in areas where cash remains king.


Globally, mobile money agents are more than just transaction points; they are the very face of the industry. Their roles extend beyond facilitating transactions; they are instrumental in onboarding and educating hundreds of millions of new users, demystifying the digital ecosystem, and building trust. For countless individuals, especially those taking their first steps into the world of digital finance, agents serve as a trusted, familiar, and easily accessible entry point.


The role of agents in mobile money

The significance of mobile money agents is also reflected in their growing numbers. In 2022, the number of registered agents surged to 17 million, a sizeable 41% year-on-year increase from 12 million in 2021. Sub-Saharan Africa was the main driver of this growth, with agent outlets almost doubling within a year. West Africa, which saw the launch of several new mobile money services in recent years emerged as the world’s fastest-growing mobile money market in 2022. Western Africa’s growth rates are now approaching those of sub-Saharan Africa, highlighting the immense potential and dynamism of the region.



A winning tool to reach the unbanked


The provision of mobile money services has changed the lives of millions of people, many of those in remote areas of Africa. Previously excluded from mainstream economic activity, those living in remote communities no longer have to travel long distances to conduct basic financial transactions. Mobile money also removes risks associated with handling large amounts of cash, with low transaction fees that do not erode capital amounts. Mobile money is the cheapest and most convenient way to send money overseas (or receive money from families in the diaspora). Not only does mobile money enable easy cash-in, cash-out transactions, it also provides a wide range of other services including payment of bills and accounts.


The importance of financial inclusion cannot be underestimated in the growth and development of the entrepreneurial sector in Africa. Mobile money is a catalyst for greater commercial activity and expansion which stimulates livelihoods and contributes to national economic growth and job creation. Mobile money brings women into the economic mainstream and offers them more financial independence. According to the World Bank, more women than men now have a mobile money account in at least seven sub–Saharan African countries.


For those who remain on the outside of commercial activity, mobile money provides governments with a platform on which to deliver social grants more efficiently and securely, without the need for resources or infrastructure to reach outlying communities. It does the same for traditional banks, who can now add mobile/online services to their offerings and grow their customer base.



Closing the gender gap and the future of mobile money


The real story of mobile money isn’t just about financial transactions or tech innovation; it’s intrinsically linked to societal transformation, particularly women’s empowerment and bridging the financial inclusion gender gap. According to the World Bank, a watershed moment has been reached in sub-Saharan Africa where, in at least seven countries, more women than men now possess a mobile money account. However, the journey to gender parity in financial inclusion isn’t without its hurdles. Despite the strides made, a gap persists in account ownership. One major bottleneck is mobile phone ownership among women. To truly achieve parity and unlock the full potential of mobile money’s empowerment capabilities, ensuring increased mobile phone ownership among women is paramount.

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