Mounting evidence shows that a gap in infrastructure is forcing innovative problem-solving in order to bring the latest technological developments to African consumers. The cell phone penetration rate in South Africa is flush with that of the United States, according to Pew research published in 2015, at 89%. Ghana sits at 83%, Kenya is at 82%, Tanzania at 73% and Uganda at 65%.
Texting and taking pictures or video are among the most popular uses for cell phones in the various African markets, but mobile banking is also gaining popularity, at 30% of users. According to the Pew report, “[in] Kenya, Uganda and Tanzania, mobile banking is also relatively common.”
For consumer markets underserved by the financial services industry, mobile banking can be an agile method for moving cash quickly. For the unbanked and underbanked, cell phones present a ready solution. Furthermore, in Kenya, cell phone users may soon be able to bypass brick-and-mortar banking altogether, and open bank accounts through their cell phones. In this way, in-person banking becomes an enhanced feature of mobile banking, instead of the other way around.
In 2013, Safaricom launched the M-Pesa service in Kenya and Tanzania (‘m’ for mobile, ‘pesa’ for money), allowing its users to access and transfer funds through their cell phones. These users are also serviced by local agents, who are easily accessible and able to check account balances and conduct financial transactions through cell phones. Latest assessments hold East Africa as the leader in mobile banking on the continent.
Not only does mobile banking defy the boundaries created by limited infrastructure and challenge negative story lines about the continent, it also helps African entrepreneurs achieve success. In Tanzania, a mobile banking study found that when female entrepreneurs were given access to mobile banking their businesses improved. With East Africa continuing to lead the continent with the most innovative mobile finance apps, the tech industry there is bound to spread prosperity to the rest of the continent.
The African Leadership Network, in its efforts to promote prosperity on the continent will continue to track these interesting innovations in the mobile financial space in Africa.