Richard Attias & Associates
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Richard Attias & Associates
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Africa, where smartphones -- and smart banking -- reign supreme

• Published on 23 Jul. 2014 • Category : Africa • Tags : arica smartphones banking

On the African continent, in particular the sub-Saharan region, mobile phone use has exploded in recent years. Nigeria consumes more media on smartphones than any country on earth (Kenya is fifth), and Africans -- many of whom live off the grid -- use mobile technology to connect to the larger world and to one another. In Kenya, an organization called Peek Vision is even using smartphone apps to give cheap and accurate eye examinations.

More than anything, though, Africa is the home of mobile finance. Africans, everyone from cab drivers in the cities to farmers in remote fields, were the first adopters of mobile money and still lead the world in smartphone-based transactions. In nine African countries -- Cameroon, the Democratic Republic of Congo, Gabon, Kenya, Madagascar, Tanzania, Uganda, Zambia and Zimbabwe -- mobile-money accounts, like the popular M-Pesa in Kenya, outnumber traditional bank accounts. In Tanzania, nearly half the population (44 percent) uses a mobile-money account. And in many countries, mobile money is moving beyond simple person-to-person transactions to a range of financial services, like tax payments, insurance and savings accounts.

Transactions occur via simple text message, requiring only a SIM card, a basic mobile phone and the recipient’s phone number to be conducted. It provides a cheap, quick and safe way to deliver money, whether to family, friends, banks or loan agencies. In Africa, sending money quickly and easily can mean the difference between paying off a loan and long-term debt, between erasing one’s poverty or never escaping it. 

In many of these countries, much of the workforce subsist on just a few dollars per day. This type of poverty is compounded by high-interest loans and, until recently, the difficulty of traveling to deposit money in a bank to repay these debts. Now, with mobile money, even the most remote farmers or shepherds can repay their loans by simple text message. And a cottage industry of microfinance companies and NGOs has cropped up around the mobile money phenomenon, with organizations like the One Acre Fund helping workers pay off these loans in a timely and convenient fashion.

What started as a peer-to-peer financing service has now also expanded into commerce, with companies more willing to incorporate mobile banking into their overall bookkeeping. Kopo Kopo, popular in countries like Kenya and Tanzania, helps businesses seamlessly collect and document mobile money. And whereas mobile banking was always about spending money, there now exist pilot agreements between the mobile banking sector and major banks for savings accounts and loan applications.

The one downside to these mobile-money operators is that it’s currently difficult to transfer money between disparate banking networks. But Africa has taken steps to attack this problem as well. Neighboring countries, as well as opposing domestic networks, have agreed to allow money to transfer across borders.

Africa’s embrace of the mobile banking sector is indicative of the continent’s burgeoning position in a tech-savvy world. Soon, the whole world may catch on to the ease and convenience of smartphone finance; for now, Africa is leading the charge. 

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