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In
2007, addressing the Connect Africa summit, Rwandan President Paul Kagame said:
“In just 10 years, what was once an object of luxury and privilege, the mobile
phone, has become a basic necessity in urban and rural Africa.”
Three years on, the cellphone continues to be the most important single tool that is spreading technology across sub-Saharan Africa. More people in Africa own cellphones than have bank accounts, and it is against this backdrop that leading telecoms operators across the continent are now providing mobile banking solutions. As a result, the financial services sector in Africa has been transformed, with mobile money providing a potential stepping stone to formal financial services for millions of people who lack access to savings accounts, credit and insurance.
Many households in Africa rely on remittances from family members living in other, economically stronger, countries. According to the World Bank, remittances to sub-Saharan Africa accounted for just 6.2% of the US$338 billion of global remittances in 2008 – but that still equates to US$21 billion.
Kenya has taken the lead in mobile banking solutions through the M-Pesa service, launched in 2007 by Safaricom (the ‘M’ stands for ‘mobile’, while ‘pesa’ is the Swahili word for money). With M-Pesa, seven million Kenyans are now using their cellphones to pay bills and make payments for goods and services; send and receive money; withdraw cash; top up airtime accounts; and manage their bank accounts. The service gives customers security and flexibility, reducing the need to carry cash and ensuring that payments between friends and relatives remain secure. A password is needed for each transaction and the service is protected by a state-of-the-art security application provided by Microsoft.
According to a recent study, the incomes of households using M-Pesa in Kenya
have increased by between 5% and 30% since they started using it. And although
M-Pesa accounts don’t pay interest (for regulatory reasons), some people use the
service as a savings account. Having even a small cushion of savings to fall
back on allows people to deal with unexpected expenses, such as medical
treatment, without having to sell a cow or take a child out of school. Many have
come to realize that mobile banking is safer than storing wealth in the form of
cattle (which can become diseased and die) or gold (which can be stolen), in
neighborhood savings schemes (which may be fraudulent) or by stuffing banknotes
into a mattress.
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Feb 16, 2010 | MTN Middle-East and North Africa Selects Gemalto's SIM Security Solution to Launch Mobile Financial Services in Five Countries
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Making Mobile Financial Services available to everyone
