If you type “mobile money” into Google you will be served reams of articles about its runaway success in Africa. That’s great PR for a continent used to bad press, but there is a problem. Mobile money has only really taken off in one country out of 55 on the continent.
Thanks to M-Pesa in Kenya, the poster child of mobile money in Africa, there is a mistaken belief among some that it is the norm across Africa. The service allows people to use their phones like a bank account – depositing, withdrawing and transferring money with their handset. People can also pay utility bills and – less commonly – pay for goods in a limited number of shops. It currently has around 20 million subscribers – around half the population of the East African nation.
There are various reasons for this– a receptive regulatory environment, the dominant position of Safaricom, Kenya’s biggest mobile operator and the owner of M-Pesa, as well as a clear demand for its “send money” function, due to high numbers of domestic migrants transferring funds back home.
But in other countries, the quest to replicate Kenya’s success remains a difficult and uphill struggle. Attempts to roll out M-Pesa in countries like Tanzania and South Africa have faced a range of obstacles and have failed to emulate Kenya’s success. While in countries like Nigeria, Uganda and Ghana, other mobile money projects are beginning to pay off, but there is still a long way to go.
It seems mobile money as a stand-alone offering does not excite most consumers who operate in economies where cash is still king. In fact research suggests that even if consumers know their network has a mobile money proposition, very few find any use for it.
But I believe that could change. In particular, I believe mobile-commerce (m-commerce) offers an opportunity to boost mobile money use and give economies across Africa a shot in the arm.
Take an incident that happened to me in Ghana a few weeks ago. After dinner, I pulled out my debit card to pay only to be told by the waitress that it was a cash-only service. Yet, this was at one of the best restaurants in the country. For a continent supposed to be at the forefront of mobile money it was beyond belief.
Now, imagine if I were able to make that payment with my phone. With a simple tap I could have paid for the meal and been on my way. It is this kind of service – already offered in a limited way by M-Pesa - that I believe will allow mobile money to really take off. By allowing small and medium businesses to easily accept payments, it will create an environment where goods and services can be offered and bought via mobiles as easily as someone buying a book on Amazon or paying for a coffee in Starbucks with their debit card. In short, we need mobile payment systems that allow easy payments between companies and customers online and in the real world.
M-commerce, powered by smart mobile payment systems, would radically change the way business is done. Most of sub-Saharan Africa remains a rurally driven agri-economy, with farmers and businessmen having to rely on their local market days to do business. Successful m-commerce would allow the farmers, businessmen and entrepreneurs of Africa to reach a wider range of possible buyers at a relatively low cost.
It would open the door for many online businesses to emerge, and the ease of purchase that will follow will spur consumption, create new jobs and help African companies to develop markets beyond their existing borders and the borders of the continent.