Africa’s mobile-money sector remains the most active of any region in the world, according to GSM Association (GSMA), an umbrella body representing the interests of players in the telecommunications industry. The report shows that registered mobile money accounts in Africa stood at slightly over half a billion in 2020, a 12 percentage point growth from the previous year. The value of transactions hit $495 billion, up 23 percentage points.
East Africa accounts for the bulk of Africa’s mobile money transactions, followed by West Africa. The GSMA report shows that the value of transactions in West Africa had the highest growth after increasing by 46 percentage points to $178 billion (the second highest value after East Africa’s).
Fundamentally, mobile money enables users to send and receive money, as well as to pay utility bills — but in advanced situations like it is across Africa, the wallet turns subscribers’ phone numbers into a sort of proxy for bank accounts.
As it grows, mobile money has come to be a launchpad for digital lenders, who use customers’ mobile money transaction history to determine the amount of instant credit to extend to borrowers — monies that are then directly deposited into customers’ mobile money wallets.
MTN Uganda’s mobile overdraft credit
Innovative products based on mobile money include the newly launched MoMoAdvance , an overdraft loan by MTN Uganda, the country’s biggest telco, and a subsidiary of the MTN Group — whose other affiliated companies have operations in southern, west and central regions of Africa.
MoMoAdvance was launched following a pilot program that started in late 2020, and it allows MTN’s customers to overdraw on its MoMo (mobile money) wallet. Users will be charged an access fee of 2.75% of the amount borrowed, and a daily interest of 0.5% on the outstanding balance for a maximum of 45 days.
“MTN MoMoAdvance will offer the MTN MoMo customers the convenience of transacting beyond their MoMo wallet balance and pay back later… we believe that it will give them the convenience to transact seamlessly beyond their wallet balances during times of need then pay back later,” said MTN Mobile Financial Services, general manager, Stephen Mutana.
MoMoAdvance borrows heavily from a similar overdraft product, Fuliza, by Kenya’s biggest telco, Safaricom , which was launched in January 2019, and allows subscribers to complete transactions even when they have insufficient funds in their M-Pesa mobile wallets.
The overdraft services are based on a borrowing limit that […]
