Mobile money: The success of Africa’s mobile economy

Associate Managing Director of Business Intelligence and Investigations at Kroll , Alex Booth discusses the success of Africa’s mobile economy.

The African mobile economy is surging . While the rest of the world was heading blindly towards an imminent economic crash in 2007, the genesis of the mobile economy began in Kenya. Mobile payments revolutionised not only how Kenyans paid for goods and services, but also how they transferred money to each other.

Since then, the mobile economy has blossomed into a genuine financial service, the scope of which extends far beyond just transferring money and purchasing. More than just a payments system, boasting of an impressive range of capabilities, the mobile economy is a booming area of innovation with new products continually being introduced. Kenya remains the crucible for development in this area, with other countries following its lead and placing it in a preeminent position within the mobile economy.

Going digital

The mobile economy first emerged in Kenya from proxy money transferrals through airtime credit, originating with Safaricom service M-Pesa . With the ability to send minutes and texts to each other via mobile phones, people began to pay for things without ever handling physical, or even digital, fiat currency. Now, phones can be used to transfer currency to virtual accounts, which are independent of banks and other financial institutions.

Mobile payments were quickly incorporated into business transactions, and for small to medium enterprises (SMEs), these became the main money transfer method. A key benefit of mobile payments is that people don’t need to have a formal bank account to both send and receive funds, making the financial system more accessible by small businesses and those who had previously been unable to engage with incumbent institutions.

The capabilities of mobile money go beyond just transferring funds; with a range of extra services available, people can purchase just about anything through their phone. They can purchase airline tickets, open savings accounts, trade in government bonds and sovereign debt, take out insurance policies, and use money management services, to name just a few of the capabilities on offer.


Unadulterated success

The success of the mobile economy, and of M-Pesa in particular, has been nothing short of extraordinary, in large part thanks to the sheer convenience of the system and the solution it brings to the accessibility problem that had plagued the African financial system.

Long distances and densely clustered physical banking infrastructure in urban areas mean that […]

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