The growth of mobile payments in
Sub-Saharan Africa is beginning to prove beneficial for
distribution agencies. But in order to bring more sustainable,
long-term benefits to people in the region, more sophisticated
services are needed. Chiara Francavilla looks at those needs and
how they are being met.
A total of 16% of adults in Sub-Saharan Africa
have made at least one mobile payment in the last year, according
to a recent report by the World Bank. Comparing this with the
global average of 5%, for 2011 it is clear that the Sub-Saharan
Africa is further ahead of the curve when it comes to mobile
payments adoption.
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Given that mobile payments allow users to
bypass some of the barriers preventing access to the traditional
banking system, such as reaching a bank branch and providing
identification, this is likely to be a significant factor in the
popularity of mobile payments in Sub-Saharan Africa.
In addition to mobile money payments, another
essential use for the mobile channel is the distribution of
aid.
For example, the World Food Programme (WFP),
in partnership with the mobile operator Orange, recently began a
trial mobile money transfer programme in the urban centres of
Tahoua and Tillabery in Niger, West Africa. The programme’s
4,800 beneficiaries receive a phone and a SIM card linked to an
Orange Money account.
The WFP programme enables a total of $65 to be
transferred to an account every month, which can be withdrawn at
designated distribution centres, such as NGO offices or local bank
branches. “The phones have a dual function. They are both [a
means of ] communication and [allow for a] money transfer,” Giorgi
Dolidze, WFP officer in charge of the project, told Electronic
Payments International.
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Diversifying aid
Mobile money transfers enable the WFP to
diversify aid, which is disbursed mainly through microfinance
institutions.
Mobile money transfers also allow cash to be
distributed at different locations, as well as facilitating the
monitoring process. Orange provides the organisation with a virtual
receipt when cash is withdrawn, which “makes the tracking much
easier for us”, says Dolidze.
Dolidze says the trial in Niger is primarily
aimed at improving food security, but also serves to promote and
boost financial inclusion among participants. He says: “Some of the
distribution points are inside local bank branches. For many
[people] it is the first time they [have been] required to visit a
bank and have a sort of account.”
However, while the potential clearly exists to
develop some kind of banking relationship, this is currently beyond
the scope of the WFP programme.
The beneficiaries are strongly encouraged to
withdraw all the transferred money at once, to avoid misuse. As
such the account is not used for deposit. “The saving functionality
is there, but we don’t use it,” Dolidze says, stressing that the
programme targets the country’s most vulnerable people.
However, other NGOs operating in the continent
have already fully embraced all the opportunities m-banking
offers.
The US charity CARE International has recently
introduced m-banking into its Access Africa programme, which
includes a number of microfinance schemes in 25 Sub-Saharan
Africa countries.
“Mobile money transfer has been a game
changer,” Lauren Hendricks, executive director of CARE’s Access
Africa, told Electronic Payments International.
CARE beneficiaries are usually rural farmers
whose income depends on the harvesting season.
“We observed that when people had access
to a formal savings system, they increase their saving rates by
40%. The formality of the account, and the perception that
the money is safe causes our clients to save more,” says
Hendricks.
Mobile money providers and banks have also
forged partnerships that smooth the transition from m-banking to
traditional banking. For example, in 2010, Safaricom
partnered with Kenyan commercial and microfinance bank Equity Bank
to launch M-Kesho, a banking service that can be linked to an
M-PESA account.
According to the International Monetary Found,
700,000 accounts have been opened since then, with around $8m in
total deposits.
Perception change
Mobile banking should be regarded as an
opportunity for the traditional banking system, rather than a
threat, Bill Gajda, global head at Visa Mobile, tells
Electronic Payments International.
“Mobile payments services are enormously
helpful for unbanked individuals, but they can’t replace banking
services,” he says. “They do not offer sufficient services, and
people, particularly the emerging middle classes, will quickly find
themselves requiring more sophisticated financial products, and
banks must be ready to provide them.
“It has to be a partnership. In most markets
it would be difficult for a bank to develop the physical
distribution network that mobile payments have,” says Gajda. “As
such, mobile operators are a channel for banks to develop new
customer relationships.”
“Users of basic mobile payments services are
the credit, insurance and mortgage costumers of the future,” says
Gajda.
Overall, the smart banks are those who view
mobile payments services not simply as an opportunity in their own
right, but as an opportunity to build long-term relationships.
