African and Mobile Money

According to the BBC report in 2010, many people trust mobile banking services more than banks.

Compiled by Robin Singleton

Mobile banking has transformed the way people in the developing world transfer money and now it is poised to offer more sophisticated banking services which could make a real difference to people’s lives.

Currently 2.7bn people living in the developing world do not have access to any sort of financial service. At the same time 1bn people throughout Africa, Latin America and Asia own a mobile phone.

As a result, mobile money services are springing up all over the developing world. According to mobile industry group the GSMA there are now over 65 mobile money systems operating around the globe, with a further 82 about to be launched.

Most offer basic services such as money transfers, which are incredibly important for migrant workers who need to send cash back to their families.


M-Pesa in Kenya is perhaps the most famous of these and it has attracted 9.4 million Kenyans in just under three years. Now it is ready to move to the next stage. M-Pesa, has recently partnered with Kenya’s Equity Bank to offer subscribers a savings account, called M-Kesho.It means their M-Pesa accounts will no longer be just about money transfer. Instead, they will become virtual bank accounts, allowing customers to open saving accounts, earn interest on their money and access credit and insurance products.Kenya is sending a message to the world: poor people want savings accounts. Mobile banking is a powerful way to deliver savings services to the billion people worldwide who have a cell phone but not a bank account,” said CGAP chief executive Alexia Latortue.

“Kenya is sending a message to the world: poor people want savings accounts.” Alexia Latortue Chief executive, CGAP


Meanwhile in Uganda, MTN, a mobile firm that runs a similar mobile money service has ratcheted up 890,000 users in its first year of operation. This is double what it forecast.

Richard Mwami, head of mobile money at MTN predicted the service will have 2m users by the end of 2011, and 3.5m by 2012. He admits that one of the biggest challenges of setting up the system was regulating the agents that provide the cash. “We have had liquidity problems where customers walk into the shop and there is no money,” he said. And fraud is also a problem, running to one or two cases every couple of weeks. Some 60% of users live in rural areas, where literacy rates are low and agents are often local shopkeepers, authorised to take deposits and issue cash. “There is ignorance about how the service works,” he said. MTN has now begun an education programme, promoting and explaining the service on national radio.

Only 38% of Ugandan citizens have a bank account.