Over the last ten years, mobile money has gone from being a specialised service in a few markets…
Over the last ten years, mobile money has gone from being a specialised service in a few markets to a widespread financial service. This has helped numerous households in low- and middle-income countries (LMICs) shift from using cash informally to being part of a more comprehensive digital economy – Africa is at the centre of this.
According to the The State of the Industry Report on Mobile Money 2023, the value of mobile transactions in 2022 is $1.26trn and transactions in Africa alone was valued at $836.5b, about tw0-thirds of the global value.
Thanks to mobile money, people across Africa increasingly live digital lives, transacting more often and for more reasons than ever before. And, thanks to the pandemic in 2020 (and a CBN naira policy, as in Nigeria), this paradigm shift has accelerated from contactless payments for everyday items and bills to receiving financial support to sending money to family and friends in amazingly seamless ways.
The consistent growth of mobile money has pushed the value of transactions to the trillion-dollar mark – which is approximately $2 million worth of transactions per minute as of 2021.
In 2021, the mobile money industry enjoyed a monumental increase in registered accounts, up 18% since 2020 reaching 1.35 billion globally. The volume of person-to-person transactions was up to more than 1.5 million every hour.
According to Mats Granryd, the DG GSMA – a global organisation unifying the mobile ecosystem, “the habit of using digital payments, enforced by the pandemic, has stuck, leading to mobile money activity growth outstripping new registrations in many countries.”
He continues: “Some of the key contributors to the growth of mobile money in the past few years has been regulatory changes in large markets. In Nigeria, for example, new licenses have seen many new mobile money players emerge, and with this a 41% growth in the number of registered agents. Not only has this created employment for millions of new agents, but mobile money services are now accessible to more people in Africa’s largest economy.”
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Mobile money in sub-Saharan Africa 2021
Per GSMA, the mobile money global industry had 316 live services, 1.35 billion registered accounts, 346 million active accounts, US$53.9 billion in transaction volume and US$1 trillion in transaction value.
Africa contributed the following to the overall 2021 mobile money figures: 173 live services, 621 million registered accounts, 184 million active accounts, $36.7 billion in transaction volume and US$701.4 billion in transaction value.
GSMA
By region:
- East Africa contributed 59 live services, 296 million registered accounts, 102 million active accounts, US$24 billion in transaction volume and US$403.4 billion in transaction value.
- West Africa contributed 69 live services, 237 million registered accounts, 58 million active accounts, US$9.3 billion in transaction volume and US$239.3 billion in transaction value.
- Central Africa contributed 19 live services, 60 million registered accounts, 19 million active accounts, US$2.9 billion in transaction volume and US$50.1 billion in transaction value.
- Southern Africa contributed 14 live services, 13 million registered accounts, 4 million active accounts, US$335 million in transaction volume and US$4.9 billion in transaction value.
- Northern Africa contributed 12 live services, 15 million registered accounts, 1 million active accounts, US$77 million in transaction volume and US$3.7 billion in transaction value.
The value of Africa’s mobile money transactions increased by 39% from $495 billion in 2020.
The mobile money market in 2022
Transaction values grew by 22% between 2021 and 2022, from $1 trillion to around $1.26 trillion
The State of the Industry Report on Mobile Money 2021 by GSMA (covering data from 2020) suggested that transactions could reach $3 billion daily by the end of 2022. The mobile money market exceeded that expectation and recorded $3.45 billion daily in 2022.
The nitty-gritty:
- Registered mobile money accounts grew by 13% year-on-year, from 1.4 billion in 2021 to 1.6 billion in 2022.
- The number of mobile money agents grew from 12 million in 2021 to around 17 million in 2022 – a staggering 41% year-on-year increase.
- In 2022, bill payments rose by 36% year-on-year, becoming the third most common transaction after person-to-person (P2P) transfers and combined cash-in/cash-out (CICO) transactions.
- In 2022, mobile money-enabled international remittances grew by 28% yearly. In the same year, per the GSMA report, Mobile money transactions hit a record high of $1.26 trillion in 2022.
On this phenomenal growth of mobile money (not forgetting that women in countries like Nigeria are still underserved), the CEO of Hormuud Telecom, Ahmed Yusuf told Quartz that mobile money has transformed the way money and cash aid are delivered in the country.
As the world continues to grapple with the challenges of poverty and inequality, mobile money will undoubtedly continue to play a critical role, improving the lives of people in some of the world’s most vulnerable communities.
Ahmed Yusuf
But, there’s still a gender gap as this growth stays consistent – encouraged mostly by the imbalance in mobile phone ownership.
“Women in low- and middle-income countries are 28% less likely than men to own a mobile money account,” the report stated, referencing a cultural anomaly. And without increasing women’s digital skills and awareness, it will be challenging to bridge this gap.
On the other hand, it says that more women have a mobile money account than ever before and are using it at a similar rate as men on a 30-day basis.
Say ‘Africa!’
Africa’s mobile money market is growing rapidly, even if Africans may not believe it, considering Africans trust cash transactions so much. From B2B to P2P to B2C, Africa is not behind.
In 2022, Africa recorded a drop in live services – from 173 in 2021 to 166 in 2022, but experienced growth in all other areas.
- 781 million registered accounts (+17%)
- 219 million 30-day accounts (+15%)
- $44.9 billion in transaction volume (+21%) and
- US$836.5 billion in transaction value (+22%)
The Chief Operating Officer of the Fintech Association of Nigeria, Dr Babatunde Obrimah, says:
Africa is the new digital adoption destination. With 1.3 billion people and increase in mobile phone penetration, fintech investors can’t go wrong.
Why this matters
Technological advancements in Africa are a consistent phenomenon, and with increasing mobile and internet penetration, the continent is not slowing down on adopting innovative solutions to meet the ever-growing demand for digital services.
We have experienced this through the rise of fintech platforms that continue to innovate to serve businesses and individuals. From mobile money to lending to crowdfunding, it shows the continent’s desire to solve its problems, notwithstanding hurdles like inadequate infrastructure and regulatory issues.
The question now is how the digital revolution can enable the widespread agenda of financial inclusion.
Out of 1.3 billion in Africa, 219 million (16%) already have active accounts, which is expected to grow as more governments expand the scope of their policies. This expectation is drawn from the experiences of individuals who live unique digital lives through mobile money.
The UNCDF says “The financial inclusion community should applaud these gains, and also not be satisfied by them as much work is left to do.”
In case you still don’t get it, the objective behind the push for the widespread adoption of mobile money is to provide easy and convenient access to banking and payment services., and expand the consumer base.
Mobile money could become a general platform that transforms entire economies, as it is adopted across commerce, health care, agriculture, and other sectors.
World Bank
Mobile money potentially helps enhance several areas of market failure in developing economies like in African countries. And, as Africa takes out a large chunk of the mobile money market, the horizon reads that financial inclusion is growing at a possible rapid speed.